Rising AI server demand is dampening the IT and smartphone markets as US hyperscalers suck up reminiscence, forcing everybody else to simply accept larger costs
A lot of the deal with useful resource depletion has been round AI infrastructure, specifically the vitality and water calls for, plus rising building prices, however the rush to embed AI in every thing has huge implications for the patron IT and smartphone markets this 12 months – and these should not good.
Taiwan-based analysts TrendForce reckon typical DRAM contract costs in 1Q26 are forecast to rise 55–60% QoQ, whereas NAND Flash costs are anticipated to extend 33–38% QoQ. The DRAM supply-demand hole continues to widen as US-based hyperscalers lock in capability, forcing different consumers to simply accept larger costs; server DRAM costs are projected to surge by greater than 60% QoQ.
As well as, NAND Flash demand is more and more polarized between shopper and AI functions, with enterprise SSDs changing into the biggest section; consumer SSD costs are forecast to rise by over 40%. For anybody screaming “so what”, DRAM suppliers in 1Q26 will proceed to reallocate superior course of nodes and new capability towards server and HBM merchandise to help rising AI server demand. This shift has considerably restricted provide in different markets, particularly PC/notebooks/smartphones.
Because of this, TrendForce stated regardless of weaker pocket book shipments and slower progress in reminiscence demand because of potential specification downgrades, PC DRAM costs are nonetheless set to rise sharply within the first quarter. DRAM suppliers have concurrently tightened provide to PC OEMs and module makers, forcing some OEMs to acquire reminiscence at larger costs by means of modules makers.
Affect on smartphones
Though smartphone manufacturers usually expertise decrease reminiscence demand throughout the seasonal lull, the tight provide of cellular DRAM is unlikely to loosen up quickly, and contract costs might enhance additional within the upcoming quarters. Consequently, manufacturers are persevering with to pursue robust procurement efforts in 1Q26. Each the LPDDR4X and LPDDR5X markets are anticipated to remain undersupplied with uneven distribution of assets, which helps larger costs.
Within the eMMC/UFS section, smartphone demand is weakening as a result of promotional gross sales within the first half of 2025 have already accelerated consumption, and the market is transferring into a list adjustment section within the first quarter of 2026. Because of this, smartphone shipments are anticipated to fall considerably QoQ.
Korean press reported Samsung this week is leaning in direction of worth will increase for its Galaxy S26 collection set to debut on the Galaxy Unpacked occasion in San Francisco on 25 February. Whereas Samsung stated nothing has been determined but, it’s now within the place of getting to resolve whether or not to soak up the upper prices to maintain an edge over rivals or as a substitute use the surge in reminiscence costs as grounds to lift its costs.
In line with market analysts Omdia, the costs of 96-gigabyte Low Energy Double Information Price 5 (LPDDR5), a DRAM for smartphones, have surged roughly 70 % from early 2025, whereas that of NAND flash for smartphone storage have risen 100%. TrendForce additionally assumes that this 12 months’s smartphone invoice of supplies (BoM) prices will develop by 5 to 7 % in comparison with 2025.
For the Galaxy S26, Samsung initially sought to safe a worth benefit by utilizing its in-house Exynos 2600 software processor for the usual mannequin. However reminiscence costs have surged far sharper than the corporate anticipated, leaving it with little selection however to replicate the will increase in product pricing, in accordance with the report.
Reuters studies that shares of the world’s high reminiscence chip suppliers rose this week as buyers wager on additional worth positive aspects because of a worldwide provide crunch pushed by surging demand for AI infrastructure. Little doubt, some telecom inventory holdings have been trimmed because of shifting investor appetites for AI.
In a bind
Regardless of tight total DRAM provide, TrendForce says shopper consumers are ready to pay extra to safe precedence entry in 1Q26 and mitigate future scarcity dangers. Although, cautious capability progress from some suppliers and the requirement to allocate output for higher-density merchandise will preserve provide beneath demand within the close to time period, supporting ongoing worth will increase.
AI inference-driven infrastructure developments are constantly driving procurement for the hyperscalers. Since late 2025, these firms have been pulling in orders, creating elevated demand for server DRAM. Backed by robust previous buying traits and constructive demand forecasts, they’re gaining a bigger portion of the bit provide progress from suppliers. Provide tightness continues to accentuate with suppliers’ inventories approaching depletion and cargo progress reliant solely on wafer output will increase.
TrendForce predicts that in 1Q26, consumer SSD demand will decline because of a QoQ drop in pocket book shipments and the downgrading of some entry- and mid-range fashions to cut back BOM prices. In the meantime, suppliers targeted on revenue maximisation are shifting provide from consumer SSDs to knowledge middle SSDs. The provision of high-capacity, low-cost QLC merchandise is very restricted. Because of this, contract costs for consumer SSDs are anticipated to extend by a minimum of 40% QoQ, marking the biggest rise amongst all NAND Flash merchandise.
Nonetheless, TrendForce forecasts the worldwide server market to achieve its peak in 2026 as US massive tech quickens investments in AI infrastructure. This progress is boosting demand for enterprise SSDs, making them the main NAND Flash software section. Provide is changing into tighter because of restricted capability and suppliers prioritising income and controlling shipments, which is driving up enterprise SSD costs.
This text initially appeared on Mobile Europe.
