Memory Shortage Plunges Consumer Electronics into Mire

The surge in artificial intelligence demand is tearing apart the global chip industry chain, with memory manufacturers reaping the benefits of skyrocketing prices, while consumer electronics manufacturers from gaming consoles to smartphones are mired in cost dilemmas, and the performance and stock price divergence between these two types of companies has widened to an unprecedented level.

Bloomberg data shows that as of this year, memory pricing issues have been mentioned more than 550 times in earnings calls and quarterly reports, exceeding any year since the institution began tracking global stock data in 1999.

Memory stocks soar, consumer electronics suffer

The Bloomberg Memory Stock Index has soared about 120% this year. Samsung Electronics announced last month that its chip business quarterly profit increased 48 times year-on-year, with a market value exceeding 1 trillion dollars; Micron Technology and SK Hynix have also released strong financial reports, with stock prices continuously hitting historical highs. SanDisk's stock price has risen by more than 500% this year, boosted by the rise in NAND flash memory prices; its partner, Kioxia Holdings, has also risen by more than 360% this year.

In stark contrast, Nintendo warned on Monday that high memory costs would compress the profit margins of the Switch 2 gaming console, and its stock price随即 fell, with a cumulative drop of more than 30% so far this year. Xiaomi Group has fallen more than 20% this year, Canon has fallen about 10%, and the consumer electronics stock index has only risen slightly by about 3% during the same period.

Manufacturers forced to raise prices to shift pressure

Under pressure from profits, more and more terminal manufacturers are choosing to cope with rising costs by raising prices, even though this may suppress consumer demand. Nintendo raised the price of the Switch 2 last week, and several months earlier, Microsoft Xbox and Sony PlayStation 5 have also increased prices, with Meta Platforms' VR headset products also raised in price.

IG International market analyst Fabien Yip said: "The degree of pain depends on two factors: the proportion of memory in the company's costs, and the company's bargaining power in securing supplies or passing on prices." She believes that the smartphone and gaming console businesses face high risks, while PC manufacturers and hyperscale data center operators bear medium pressure.

Shortage may continue until 2030

Michael Brown, a senior research strategist at London's Pepperstone Group, said: "It is becoming increasingly clear that the memory shortage is not only more severe than anticipated, but also lasts longer than expected. As AI demand continues to surge, we have learned from informed sources that the possibility of this shortage continuing in some form until 2030 cannot be ignored."

As AI moves from the training phase to large-scale application, the range of beneficiaries is expanding. Investors start to lay out the technologically less sophisticated DRAM manufacturers and various flash memory and hard disk drive enterprises, betting that the entire storage industry chain continues to benefit from this structural supply and demand imbalance.