New Delhi: The world’s tech industry is currently facing an unprecedented memory chip crisis. The situation is so serious that even big tech companies are taking extraordinary steps to obtain the required chips at any cost. At the root of this crisis is the rapidly increasing demand for Artificial Intelligence (AI) hardware, which has put tremendous pressure on the global supply chain.
As AI models become more complex and powerful, the need for cutting-edge memory chips like high-bandwidth memory (HBM), DRAM, and enterprise solid-state drives (eSSD) to run them has increased. Without these chips, large-scale AI accelerators and hyperscale data centers cannot operate effectively. This is the reason why their demand has suddenly started touching the sky.
According to the report of South Korea’s Seoul Economic Daily, the impact of the memory crisis has been seen even within Google. It is reported that the company has removed some senior officials who were responsible for the sourcing of HBM in South Korea. It is alleged that these officials failed to enter into long-term supply agreements in time, due to which the company had to face difficulties in obtaining additional memory.
The real challenge is that only a few companies across the world have the capacity to make advanced memory chips. Currently, SK Hynix, Samsung Electronics and Micron are the only companies that can mass produce state-of-the-art HBM. According to reports, the production capacity of these companies for the coming year has already been completely booked, leaving very limited options for those placing orders late.
Not only Google, Microsoft is also facing this crisis. It is being told that senior Microsoft officials are going directly to Korea and talking to semiconductor manufacturers. However, this conversation was not easy. According to industry sources, suppliers have expressed their inability to supply on Microsoft’s terms, which created tension in the meetings.
Seeing the seriousness of the situation, companies like Google, Microsoft and Meta are now deploying their officers in Asia instead of doing procurement management from America. By having a direct presence in countries like Korea, Taiwan and Singapore, companies want to better coordinate with suppliers and make faster decisions, so that supply chain risks can be reduced.
In the case of Google, it is being told that the company takes large quantities of HBM from Samsung for its tensor processing units. But when demand for AI grew more than expected, efforts to secure additional supply failed. After this, the management admitted internally that not being able to accurately estimate future demand was a big mistake.
The memory chip crisis has made it clear that hardware supply has become the biggest challenging front in the AI race. In the coming times, it will be important to see how strong the tech companies are able to strengthen their supply strategies and whether new manufacturers are able to enter this limited market or not.
