Micron Technology has raised alarms about an escalating global shortage of memory chips, indicating that the situation is unlikely to improve in the near future. As a key supplier of memory for major artificial intelligence companies such as Nvidia, Micron”s forecast carries significant weight in the tech industry. The company has recently initiated construction on a $100 billion chip manufacturing facility in New York, underscoring the urgency of addressing this supply crisis.
The new facility will feature four expansive fabrication plants, each comparable in size to 10 football fields. Micron anticipates that the first chips from this site will not be ready until 2030. Additionally, Micron is expanding its operations in Boise, Idaho, where two more fabrication plants are being established adjacent to their research and development facilities. One of these plants is expected to commence operations in 2027, while plans for the other are still in development.
This expansion is part of Micron”s strategy to shift 40% of its DRAM production to the United States, aided by a $6.2 billion grant from the Chips Act awarded in 2024. The company is also benefiting from a 35% tax credit that becomes applicable during the construction phase.
Manish Bhatia, who oversees Micron”s operations, explained that the demand for high-bandwidth memory, essential for AI applications, is consuming a substantial portion of the industry”s total production capacity. Consequently, there is little room left for other products. Manufacturers of smartphones and personal computers are now racing to secure chip supplies for the coming years, particularly as demand is projected to surge after 2026, especially with the anticipated public offerings of companies like OpenAI.
Recent reports indicate that major Chinese smartphone manufacturers, including Xiaomi, Oppo, and Transsion, are adjusting their shipment forecasts for 2026. Oppo, for instance, may reduce its shipments by 20% due to rapidly increasing memory prices. According to Counterpoint Research, global smartphone sales are expected to decline by 2.1% this year, as rising chip costs disrupt production schedules.
Both Dell and other personal computer manufacturers have expressed concerns about potential delays and a decrease in production volumes. The memory chip market is increasingly focused on AI, with Micron, Samsung, and SK Hynix experiencing stock surges last year. However, the availability of products has diminished significantly, with SK Hynix confirming it has no chips left for 2026. Micron has declared a similar situation regarding its AI-focused memory for this year.
In December, Micron made the strategic decision to discontinue its Crucial brand for consumer memory products, prioritizing supply for its large AI customers. The demand from this sector is so substantial that Micron is accelerating its efforts to construct additional fabrication plants in both the United States and Asia. Recently, the company announced an investment of $1.8 billion to acquire a plant site in Taiwan that already has existing infrastructure, allowing for quicker production of DRAM wafers. Operations at this new site are expected to begin in the latter half of 2027.
The production of DRAM is pivotal for chips manufactured by both Nvidia and Intel, as it serves as a crucial component in high-bandwidth memory, enabling AI systems to perform complex tasks. Bhatia mentioned that the Taiwanese site, along with other facilities in Asia, will continue to innovate in chip technology, although the majority of new capacity will be located in the United States.
