Elon Musk and Tim Cook warn of growing memory chip shortage amid AI boom. Who will bear the brunt?

Tesla chief Elon Musk and Apple Inc Chief Executive Officer Tim Cook are now joining the ranks of tech industry leaders who are warning about a global crisis of deepening shortage of memory chips, a crisis that could ripple across industries and push up prices for consumers worldwide, Bloomberg reported on 16 February.

Since the beginning of 2026, several tech leaders have raised alarms over the shortage of dynamic random access memory (DRAM), considered to be the foundation of almost all technology, which will constrain production.

While the Apple CEO warned that such a shortage could compress iPhone margins, Micron Technology called the blockage “unprecedented,” and Elon Musk announced that Tesla will have to build its own fabrication plant to address the problem. In late January, Musk said that the company would build a “TeraFab”, a facility that would manufacture semiconductors. He further said, “In order to remove the probable constraint in three or four years, we are going to have to build a Tesla TeraFab. A very big fab that includes logic, memory, and packaging, domestically.”

Reason behind the shortage

According to the Bloomberg report, the fundamental reason behind this shortage is the development of artificial intelligence (AI) data centres. Tech giants like Alphabet and OpenAI are consuming an ever-larger share of global memory chip output as they continue to purchase millions of AI accelerators from Nvidia. The surge in demand has left consumer electronics manufacturers scrambling for a shrinking pool of supply from major memory producers like Samsung Electronics and Micron.

DRAM prices soar

Between December 2025 and January 2026, the cost of a type of DRAM soared nearly 75% and accelerated price hikes throughout the quarter.

Tim Archer, chief executive officer of chip equipment supplier Lam Research Corp, said, “We stand at the cusp of something bigger than anything we’ve faced before. What is ahead of us between now and the end of this decade, in terms of demand, is bigger than anything we’ve seen in the past, and, in fact, will overwhelm all other sources of demand.”

While the prices continue to spike, what’s worrying is that the supplies are running dry, long before the AI giants go ahead with their data centre construction plans.

Alphabet and Amazon have unveiled plans for a capital spending surge this year that could reach roughly $185 billion and $200 billion, respectively, levels that would rank among the largest single-year capital expenditure outlays ever undertaken by any company.

Electronics sector to pay a heavy price?

Citing a Bernstein analyst, the report said that the memory chip prices are going “parabolic” and added that while this may favour firms like Samsung, Micron, and SK Hynix, the rest of the sector will end up paying a heavy price in the coming months.

Yang Yuanqing, the CEO of Lenovo Group, explained that the chip crunch will continue through the rest of the year and said this structural imbalance between supply and demand is not a short-term fluctuation.

Sony Group is also considering pushing back the launch of its next PlayStation console to 2028 or 2029. Nintendo, on the other hand, is considering raising the price of its new Switch 2 console.