Samsung and SK Hynix Alert on Chip Supply Shortages Amid AI Demand

Impact of AI on Chip Supply

By Heekyong Yang and Hyunjoo Jin

SEOUL, Jan 29 (Reuters) - Two of the world's top chipmakers warned on Thursday that computer and smartphone companies were set to bear the brunt of a worsening shortage of DRAM chips used in their products, as the makers prioritise demand for more lucrative chips required to build AI infrastructure.

The warnings by Samsung Electronics and SK Hynix, which control two thirds of the DRAM chip market and count the likes of Apple as customers, underscore growing margin pressure on consumer electronics makers and potential supply chain disruptions.

Challenges for PC and Mobile Manufacturers

"PC and mobile customers are having difficulties securing memory supplies, as they are being directly and indirectly affected by supply constraints and strong demand for server-related products," Park Joon Deok, head of DRAM marketing at SK Hynix, told analysts on a post-earnings call.

The race to build AI infrastructure has prompted chipmakers to divert manufacturing capacity toward high-bandwidth memory (HBM) for AI servers, squeezing the supply of conventional DRAM chips.

Chipmakers, bruised by aggressive capacity expansion after the 2017 supercycle, have been more conservative about adding more production lines in recent years, a move that has contributed to the current supply shortage. Samsung said such expansion would remain limited in 2026 and 2027.

As the crunch is set to persist, some manufacturers have already started adjusting their products to cope with the shortage and surging prices, they said.

"Due to a recent surge in memory chip prices, PC and mobile customers are adjusting purchase volumes," SK Hynix said in its earnings conference call.

"Some customers are taking a more conservative approach to shipment plans or considering adjusting (memory chip) specification in their price-sensitive product ranges."

Research firms IDC and Counterpoint both now expect global smartphone sales to shrink at least 2% this year, reversing earlier forecasts for growth. The PC market is expected to shrink at least 4.9% in 2026, IDC estimated, after an 8.1% growth last year.

Market Adjustments and Forecasts

Samsung, the world's second-largest smartphone maker, is also bracing for the impact of the chip shortage, with its mobile business profit slumping 10% in the fourth quarter.

Cho Seong, a Samsung mobile business executive, warned of a "challenging year" in 2026, expecting flat global smartphone shipments this year and risks of downward adjustment due to memory chip prices.

Investors will look for comments from its bigger smartphone rival Apple on how it aims to navigate a global memory chip crunch, as it reports quarterly results later on Thursday.

PRIORITISING AI DEMAND

Prioritization of AI Demand by Chipmakers

Samsung prioritised supplying server customers in the fourth quarter and plans to continue increasing the portion of AI related products, a move that could lead to further constraints in the output of conventional memory chips.

Samsung's aggressive push into AI memory chips comes as the tech giant seeks to narrow its market share gap with SK Hynix in the lucrative segment.

SK Hynix, a leading chip supplier for Nvidia, led the HBM chip market last year with a 61% share, followed by Samsung at 19% and Micron at 20%, according to Macquarie Equity Research.

HBM chips are used to build AI chipsets.

SK Hynix vowed on Thursday to maintain its "overwhelming" market share in the next-generation HBM4 chips, highlighting intensifying competition with Samsung, as they vie for market share in the AI chip race.

(Reporting by Heekyong Yang and Hyunjoo Jin; Editing by Miyoung Kim and Raju Gopalakrishnan)