Nvidias High-Stakes Bet On Lpddr5X Memory Could Spark Industry Memory Shortage

The Memory Crunch: How Nvidia’s Demand for LPDDR5X Could Send Smartphone and Server Memory Prices Soaring

In the ever-evolving world of technology, memory prices have become a significant factor in shaping the industry’s landscape. The recent surge in demand for Low Power Double Data Rate 5 eXtended (LPDDR5X) memory, primarily driven by Nvidia’s adoption of this technology in its Grace and Vera CPUs, has sent shockwaves throughout the supply chain. Counterpoint Research has warned that the resulting shortage could lead to a seismic shift in the industry, with even smartphone-class memory not being immune to the price hikes.

The Current State of DRAM Prices

As of November 19, the average spot price for a 16GB DDR5 chip had reached $24.83, up from $6.84 on September 20. This represents a staggering increase of over 50% year-to-date and is expected to continue rising in the fourth quarter, with prices forecasted to rise by another 30% in early 2026. Server-grade DDR5 prices are also poised to follow suit, with Counterpoint predicting that they will double year-over-year by late 2026.

The Impact on the Industry

While the immediate effect of this shortage is most evident in the DIY PC market, its repercussions will be felt across various sectors. The automotive industry, which relies heavily on logic chips and memory, is already facing pressure from price hikes and supply constraints. Smartphone manufacturers, which are heavily reliant on LPDDR4 memory for budget handsets, will be among the first to feel the impact.

As demand for advanced memory technologies like HBM (High Bandwidth Memory) continues to grow, the lack of new DRAM manufacturing capacity coming online soon is driving commodity DRAM prices to new highs. This has significant implications for industries that rely on inventory worth months of sales, such as server and automotive manufacturers.

The Role of Nvidia in Shaping the Market

Nvidia’s decision to adopt LPDDR5X memory in its Grace Blackwell and Vera Rubin platforms has sent shockwaves throughout the industry. The company’s recent pivot to this technology means it is now a major customer on the scale of a major smartphone maker, posing significant challenges for the supply chain.

“The bigger risk on the horizon is with advanced memory as Nvidia’s recent pivot to LPDDR means it is a customer on the scale of a major smartphone maker — a seismic shift for the supply chain which can’t easily absorb this scale of demand,” said MS Hwang, research director at Counterpoint Research. This shift in market dynamics has significant implications for manufacturers and suppliers alike.

Budget Smartphones First to Feel the Pinch

The impact of this shortage will be most pronounced on budget smartphones that rely on LPDDR4 memory. As prices rise, these devices may become less competitive in the market, potentially straining manufacturer margins or leading to higher prices.

Higher-end handsets and broader consumer electronics are also exposed to the risks associated with this shortage. Some mid-tier and premium devices may face bill-of-materials increases of roughly 25%, which will either tighten manufacturers’ margins or make them more expensive.

The Warning from SMIC

Zhao Haijun, co-CEO of SMIC, has warned that the DRAM shortage could hit automotive and smartphone makers sooner rather than later. The company’s customers are reluctant to place too many orders in the first quarter as they are not sure how many memory chips they can secure.

SMIC is far from the world’s largest producer of microelectronics for the automotive or smartphone industries, yet the share of automotive in its revenue is growing, accounting for 11.9% ($283.5 million out of $2.382 billion in revenue) in the third quarter. The smartphone share of SMIC’s revenue declined to 21.5% ($512.13 million) from 25.2% in the prior quarter.

The Future of Memory Prices

As the industry navigates this uncertain landscape, one thing is clear: the memory crunch will have a significant impact on various sectors. Whether it is the DIY PC market, automotive manufacturing, or smartphone production, the effects of this shortage will be felt across the board.

One possibility is that advanced memory technologies like LPDDR5X could become more widespread in devices, leading to increased performance and efficiency. However, this would require significant investments from manufacturers and suppliers, which may not be feasible given the current supply chain constraints.

In conclusion, the recent surge in demand for LPDDR5X memory has sent shockwaves throughout the industry, with even smartphone-class memory not being immune to price hikes. As Nvidia’s adoption of this technology continues to shape market dynamics, it is clear that the future of memory prices will be marked by uncertainty and volatility.