Hardware market is in a dire situation—prices of DRAM have risen severalfold due to insufficient supply, a situation driven by the artificial intelligence craze and the plans of various involved companies to build massive AI server parks costing hundreds of billions. If you are wondering how long this state of affairs may last, Micron, as one of the three largest memory manufacturers, has bad news for you.
The company closed the first quarter of its fiscal year at the end of November (as, similar to Nvidia for example, it operates on an offset fiscal calendar) and has now announced the results, including record revenues of 13.64 billion USD. Given its focus on the AI market and massively increased DRAM prices, this is not surprising. During the earnings call, however, Micron’s representatives also commented on the current market problems.
According to Micron, the shortage and high prices of memory are the result of a combination of insufficient current production volume and, at the same time, strong and long-lasting demand from the computer industry (especially that focused on artificial intelligence). This situation, however, is expected by the company to persist for a long time—it anticipates that these conditions will last beyond the end of calendar year 2026 and into the following year. It is precisely this so-called excess of demand over supply that drives price growth—sellers can pick whom to sell to, and will select those willing to pay the highest price.
According to Micron, large customers are now securing supply in advance (apparently even at the cost of higher prices) in multi-year contracts, but these contracts may then keep memory prices elevated even after the current extreme conditions potentially subside. Expensive memory supplies purchased under long-term commitments—such as those PC manufacturers have agreed to pay for several years ahead—might later transform into excess inventory that’s hard-to-sell on the open market, but could still push up the prices of complete computers in which manufacturers try to digest the inventory in.
Unfortunately, the same market conditions also mean that the prices will continue to be under pressure to stay high or even continue rising. Even though partial improvements cannot be ruled out—for example, if increased production and subsiding of the worst market panic were to lead to some relief (so instead of five- or sixfold increases over previous prices we might be talking about “only” three- or fourfold increases)—prices would still remain elevated afterward and could even start rising again.
The PC market will decline
Expensive memory and SSDs will inevitably affect the prices of hardware that uses them, as well as entire computers and mobile devices. IDC currently estimates that PC prices will rise by up to 8% on average in 2026 (more optimistic estimates speak of 4–6%), which likely also reflects the fact that some models will receive lower memory and SSD capacities due to pricing pressures. Separately, companies such as Dell, HP, Asus, and Acer have informed customers that prices of specific PCs will increase by 15–20% through the second half of 2026, which likely represents systems that will retain pre-crisis higher memory capacities.
IDC expects PC sales to decline next year due to memory costs—in the best case, the drop will be around 2.4%, in the pessimistic scenario as much as 8.9%, and the “mid-range scenario” predicts a sales decline of about 4.9%. That is coming after PC sales being higher year-on-year for most of 2025; according to IDC, up to November the market was showing roughly a 6.6% annual increase.
There is little left but to hope that Micron’s view may be somewhat influenced by the fact that, unlike those who have to pay the increased memory prices, this company essentially benefits from the crisis. Its profits would benefit from the demand outstripping supply and several-fold price increases lasting as long as possible. The company’s forecasts therefore likely deliberately favor the scenario in which the AI hype continues with today’s force. That is something that may happen, but it cannot be ruled out that the bubble will partially or completely burst instead.
The only real hope for a substantial improvement and a return of prices to their previous low levels is likely a significant drop in the sharply increased demand from the AI sector. That would require its hunger for server purchases to be satisfied—for example, if investors were no longer willing to risk further funding. This could happen if investors and planners start paying more attention to the profitability of AI services and whether hundred-billion-dollar investments have any chance of being recouped through future revenues. That math could halt some purchases and reduce demand for server memory and HBM-type memory. The supply shortage causing high prices could then ease significantly, along with the prices that manufacturers currently enjoy.
A partial relief could come from the expansion of DRAM production in China. New manufacturers there are somewhat behind the traditional players, but they have one advantage. Samsung, Hynix, and Micron are hesitant to aggressively expand production because of the AI craze, as they lack certainty that the bubble will not burst before new fabs are completed and paid off. By contrast, Chinese companies would likely rely on state financing when building new capacity. This kind of state support is quite generous in China, and in recent years loss-making factories with no real economic use have been built precisely due to easily available subsidies. That means the prospect of building a DRAM fab that might lack customers in a few years is probably a smaller deterrent and financial risk in China—although it is another matter for that officials responsible for such a project, who could face serious legal problems as individuals.
English translation and edit by Jozef Dudáš
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