Consumer tech brands may go bankrupt or exit industry due to rising AI memory costs, warns Phison CEO

There has been growing reporting on rising global memory chip prices, driven by the reallocation of manufacturing capacity towards AI data centres and cloud infrastructure. Major memory manufacturers have prioritised high-value and high-bandwidth memory modules for AI accelerators (or NPUs) over components used in everyday consumer devices. Digit recently examined how this shift could push up television prices. Now, Phison Electronics chief executive Pua Khein-Seng has weighed in through a YouTube interview, commenting on the ongoing memory shortage and its potential impact on both consumer and enterprise electronics markets. This report outlines the translated summary of his remarks.

Summary of Phison’s comments on chip supply strain

The original interview is in Chinese without any English subtitles. So, we have referred to a post by X user 駿HaYaO for the following information, and these shall not be taken as literal quotes of Pua’s words.

• Memory shortages could last until 2030: Due to AI demand and strain in DRAM and NAND supply, foundries are demanding up to three years of prepaid contracts, signalling an extreme seller’s market. Internal estimates suggest tight supply could persist for the rest of the decade.
• Capacity expansion will be slow: Building new semiconductor fabrication plants (fabs) takes years. Even announced expansions from major players will not yield output for at least two to three years.
• Rising prices and allocation strategies: Rising memory prices and demand for prepayments prompt manufacturers to secure long-term allocations and prioritise higher-margin segments, leaving consumer device makers competing for limited inventory.
• Consumer electronics will be squeezed: Smartphones, PCs, and TVs will face production cuts because servers can afford higher memory prices. Memory makes up over 20 percent of a smartphone’s bill of materials, making low-margin consumer brands vulnerable.
• Industry consolidation is possible: From late 2025 into 2026, weaker system brands may shut down or exit product lines due to a lack of memory allocation. Low-end devices could temporarily disappear from the market.

Note that Phison supplies NAND flash controllers and other components integral to storage devices. Pua does highlight the company’s ‘minimal DRAM + specialised Flash’ solution, like aiDAPTIV+, which can replace the need for large amounts of DRAM. So, such commentary can influence buyer behaviour, investor expectations and strategic planning across the supply chain.

Position of India and China in this memory situation

China plays a dual role in this environment:

• It is a large consumer of memory components and a strategic priority for semiconductor expansion under national industrial programmes.
• Domestic memory producers, such as YMTC and CXMT, are increasing capacity but remain a small share of the overall global market. Capacity expansion in China is also largely focused on satisfying internal demand, rather than substituting significantly for established production in South Korea, Japan and Taiwan.

Ongoing export controls on advanced semiconductor manufacturing equipment further limit how quickly China can scale production of cutting-edge memory technologies.

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So, China may avoid some volatility in consumer supply, but it isn’t in a position yet to ease global shortages. Pua says China’s capacity initially accounts for only 3 to 5% the global total, and is unable to fill the 10 to 20% demand.

India is primarily an importer of memory-dependent components used in mobile phones, laptops, televisions and other consumer electronics. Persistent memory strain and price volatility could lead to higher prices and longer lead times in the Indian market, particularly for low-margin segments. 

At the same time, India’s government has signalled its ambition to grow semiconductor manufacturing through incentive programmes and foreign investment. Only a few days back, Pua met PM Modi in Kuala Lumpur and committed to technology transfer and talent training in India for silicon design, firmware, software, and AI solutions.

While this may reduce long-term import exposure, we may be far from a reliable memory fabrication capacity to mitigate near-term global supply shortages.

Industry analysts broadly agree that memory supply strain will continue at least through 2026, with some forecasts extending further if capacity expansion slows or demand continues to increase. Let’s see how it goes.

Keep reading Digit.in to stay updated on the memory landscape.

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