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AI Summary
You might remember the price of your last phone, perhaps one you bought two or three years ago. If you were planning to replace it this year, prepare for a nasty surprise at the checkout. This isn't due to inflation, and for once, it's not the fault of any political figure or foreign power. The issue stems from a single component: a small piece of silicon found in virtually everything that performs a calculation â your phone, PC, car, fridge, internet box, everything. This component is RAM (Random Access Memory). Currently, there simply isn't enough of it to go around. Artificial intelligence is consuming the entire global production, to the point where Samsung, the world's largest memory manufacturer, is refusing to sell to its own subsidiaries. Prices have tripled in a year, impacting major companies like Apple, Tesla, and Sony, while three companies are reaping a multi-hundred-billion-dollar windfall. This phenomenon is being dubbed "Ramageddon."
This discussion won't delve into technical details, as that's not the focus here on Money Radar. Instead, it will concentrate on finances and strategy. The race for memory is on, and markets have yet to grasp the full implications of what's unfolding. This video aims to reveal the dangers this shortage poses to the AI economy, how long it might last, and, most importantly, whether investing in this sector is a viable option.
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The global electronics industry is experiencing a "burnt capacitor" smell. The executives of tech giants, when addressing shareholders, all express the same concern: "There's no more memory." Micron, the sole American memory manufacturer, describes the shortage as "unprecedented," a word that barely scratches the surface. By 2025, DRAM, the standard RAM found in almost all electronic devices, has seen its price surge by 172%, with an additional 40% increase expected by mid-year. The consequences are already widespread. In Tokyo, electronics stores are rationing memory module sales. In Shenzhen, the world's largest component market, prices fluctuate hourly, with no one knowing where it will end. Tim Cook, Apple's CEO, has already warned about the impact on iPhone profit margins, with Apple's procurement teams practically camping at Samsung to secure deliveries. Elon Musk has stated that Tesla will need to build its own memory factory, the "Tesla Terrafab." Dell has increased PC prices by $130 to $765, depending on configuration, and is stocking memory far beyond its usual needs. Acer warns that its manufacturing costs have surged, necessitating price increases across its entire product line. Sony might postpone the next PlayStation, planned for 2027, to 2029. Nintendo is also considering raising the price of its newly released Switch 2.
The smartphone market is even more affected. High-end phones with 16GB of RAM are becoming a thing of the past, with several manufacturers preparing to revert to 8GB or even 6GB, levels not seen since the early 2000s. Memory could soon account for 30% of the manufacturing cost of an entry-level smartphone, up from just 10% at the beginning of 2025, and this trend is expected to continue. Analysts estimate that current demand already exceeds supply by 10%, and this gap is widening monthly, exacerbated by a deal signed in Seoul last October. Sam Altman, the CEO of OpenAI, met with the leaders of Samsung and SK Hynix, the two largest memory manufacturers globally. The outcome was an agreement to supply OpenAI with 900,000 silicon wafers per month for "Stargate," the largest AI infrastructure project in history, with a $500 billion budget. The objective is to build a network of data centers capable of running the next generation of ChatGPT and similar models. These wafers are the raw material for memory, and 900,000 per month represents about 40% of global production, all for a single company. Even the South Korean president attended the signing, underscoring the magnitude of the contract.
To understand why this deal was a turning point, it's crucial to grasp what RAM is. Simply put, RAM is your device's "workbench." The larger the workbench, the more tasks you can handle simultaneously and the faster you can work. The hard drive, conversely, is like a storage closet; it holds your data, but accessing it requires more effort. AI models like ChatGPT process vast amounts of data in real-time, requiring an enormous "workbench" â amounts of memory far exceeding what a phone uses. Furthermore, AI utilizes a specialized type of memory: HBM (High Bandwidth Memory). This "RAM on steroids," stacked in layers around Nvidia processors, is essential for AI performance. Without it, a $30,000 processor is as useless as a Ferrari without fuel. The bottleneck is that this premium memory is manufactured in the same factories, using the same machines, as regular RAM for phones and PCs. However, HBM is significantly more profitable. When Sam Altman arrives with a $70 billion check, manufacturers make a choice, and neither consumers nor the general public benefit. Samsung and SK Hynix are redirecting their production lines to HBM and the "Stargate" orders, relegating standard DRAM, which everyone needs daily, to the back of the queue. There is no alternative.
Samsung Electronics, a colossal South Korean conglomerate founded in 1969 and still indirectly controlled by the Lee family, boasts $230 billion in revenue, an $800 billion market capitalization, and 260,000 employees. It's the global leader in memory, displays, and televisions. Now, it's refusing to supply its own divisions to fulfill more profitable AI orders. Alongside its competitor SK Hynix and American firm Micron, Samsung controls 95% of the world's memory production. All three have prioritized serving the AI sector and its profits, leaving the rest of the electronics industry waiting. New factories announced by Micron in New York and SK Hynix in Korea won't be operational until at least 2027 or 2028. This means at least a two-year period of shortage, requiring consumers to open their wallets. Everything containing electronics will become more expensive due to this scarcity. Your next phone, PC, car, or smart appliance will cost more. An essential component has become scarce, and since no one will forgo their smartphone or computer, everyone will pay a premium. For those planning to upgrade their hardware this year, analysts' advice is clear: buy now, as prices will only increase.
Such shortages create opportunities for those who anticipate them and identify the right signals. This is precisely what the Money Radar newsletter aims to provide every Tuesday: a market recap, an in-depth analysis of a potential stock, and a breakdown of a trend impacting finances. With over 53,000 subscribers, the newsletter is aiming to break into the top five finance newsletters in France.
For businesses, this presents a strategic dilemma. Major tech companies dependent on memory must choose between raising prices and losing customers, reducing product performance, or sacrificing profit margins and disappointing shareholders. Smaller companies, such as independent PC assemblers and low-cost smartphone manufacturers in emerging markets, and hardware startups, are most vulnerable. Lacking the volume or contracts to negotiate, they have little leverage against suppliers and some may not survive a two-year shortage. Even sectors not typically associated with memory, like healthcare (medical imaging equipment, scanners, diagnostic devices) and automotive (modern cars with dozens of chips for GPS, screens, and driver assistance), are affected. Industrial automation, robots, and control systems also rely on RAM. Memory has become a strategic asset, akin to oil or rare earths. Three companies â two Korean and one American â control almost the entire global supply. Europe has no domestic production. China is attempting to compete with its champion CXMT, but lags far behind and is hampered by US technology embargoes. This means the digital sovereignty of entire continents now depends on decisions made in Seoul and Boise, Idaho.
The waiting line continues to grow, as it's not just OpenAI purchasing memory; Google, Microsoft, Amazon, and Meta are all doing so simultaneously, armed with ten-figure checks, all believing that whoever has the most memory will develop the best AI models. For the manufacturers, this is a windfall. Samsung's Q4 2025 results in January were spectacular, with operating profit up 208% to $13.8 billion in three months, an absolute record. The memory division alone achieved an operating margin exceeding 50%, a level typically seen in software companies, not component manufacturers. Samsung isn't even the top performer. SK Hynix, its Korean rival, surpassed it in operating profit for the first time, driven by HBM, the high-performance memory indispensable for AI. SK Hynix plans to build the world's largest advanced memory factory for $12.9 billion and is openly announcing 70% price increases to its clients, on a take-it-or-leave-it basis.
Across the Pacific, American firm Micron is in robust health. Revenue has surged by 56% in one year, and its stock has climbed 242% over the past 12 months. Gross margin stands at 56%, and forecasts for the next quarter have analysts salivating, with expected revenues of $18.7 billion and a gross margin potentially nearing 68%. Micron is currently constructing a mega-factory in upstate New York, the largest semiconductor facility ever built in the US, and its entire memory production for 2026 is already sold out. They are manufacturing the same product with the same facilities and are uniquely positioned to meet demand. An oligopoly facing a shortage is a perfect money-making machine, and the effects are spreading. The Seoul stock exchange is up 75% year-to-date, driven by these two memory giants. The semiconductor sector as a whole is booming, and even Nvidia indirectly benefits, as the scarcity of memory increases the value of each server assembled, thus boosting its own margins.
The crucial question, and likely the most relevant to you, is whether it's still a good time to invest. Frankly, those who bought Micron or SK Hynix a year ago have already seen substantial gains. Micron has tripled, SK Hynix has quintupled from its lows, and Samsung is up 75% for the year. The question is no longer *if* one should invest, but *if* there's still upside. The answer is yes, but with caution and as part of a well-diversified strategy. Many observers see this not as a bubble, but as the beginning of a new industrial cycle. The shortage is expected to last at least until 2027, with new factories still under construction and prices continuing to rise. The three manufacturers possess unprecedented pricing power, which will persist as long as AI continues to absorb production. For direct investment in the sector, Micron (listed in New York), SK Hynix (in Seoul), and Samsung (also in Seoul) remain the key companies to watch. For diversification, ETFs like the VanEck Semiconductor ETF or the iShares Semiconductor ETF provide exposure to the entire semiconductor supply chain. To gain direct exposure to South Korea, the iShares MSCI South Korea ETF is heavily weighted, with nearly 46% in Samsung and SK Hynix.
It's important to note, however, that memory is the most cyclical sub-sector in the entire tech industry. Technology evolves rapidly; demand rises, prices skyrocket, manufacturers invest to the point of overcapacity, causing prices to plummet, then technology advances, and the cycle repeats.
One more significant risk looms over the entire sector and its triumvirate of AI, manufacturers, and memory suppliers. "Stargate" is far from complete, and if deliveries of super-memory are delayed, the entire project could be pushed back. Sam Altman has committed to $500 billion in infrastructure, but this computing power is useless without the memory to power it. The CEO of Pisen, a major producer of storage components, predicts that entire electronics companies could shut down by the end of the year. If critical suppliers to the AI supply chain fail, the domino effect could trigger market panic and massive capital withdrawals, essentially causing a bubble to burst. Therefore, extreme caution is advised.
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