Memory chip shortage threatens entry-level device manufacturers

A global memory chip shortage is placing significant pressure on hardware manufacturers, particularly those producing entry-level smartphones and laptops. Industry experts warn that availability, rather than just price, has become the primary constraint. Raymond van Eck, CEO of Fairphone, noted that failing to secure an allocation can effectively eliminate a manufacturer from the market.

For low-end devices, memory components can account for up to 60% of total material costs. This volatility makes the production of budget-friendly electronics potentially unprofitable. TrendForce estimates that DRAM contract prices could rise by 13% to 18% this quarter, following massive increases earlier in the year. The SK Hynix CEO has predicted that 2027 could be the most challenging year for industry supply, with demand potentially exceeding capacity through 2030.

To survive, smaller manufacturers are adopting various mitigation strategies. Finnish maker Jolla has developed dual-variant motherboards to switch between integrated and discrete chip sets, while also testing batches to prevent the use of refurbished components. US-based Framework utilizes modular memory designs to allow for component reuse. While large companies like Apple use their market power to secure supply, smaller players are forced to redesign products, adjust pricing, or place long-term orders with uncertain final costs.