Nvidia’s shift to using smartphone-style memory in its artificial intelligence servers could cause server memory prices to be doubled by the end of 2026, according to a report published by Counterpoints research.
Electronics supply chains around the world have been hit by a shortage of legacy memory chips in the last two months, as manufacturers turned their focus to high-end memory chips suited to semiconductors designed for AI applications. However, Counterpoint, a technology-focused market research firm stated that there is another problem.
Nvidia recently decided to reduce AI server power costs by changing the kind of memory chip it uses to LPDDR, a type of low-power memory chip normally found in phones and tablets, from DDR5 chips, which are typically used in servers. Since each AI server needs more memory chips than a handset, the change is expected to create sudden demand that the industry is not equipped to handle, according to Counterpoint.
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Memory suppliers like Samsung Electronics, SK Hynix, and Micron are already facing shortages of older dynamic random-access memory products after reducing production to focus on high-bandwidth memory, which is necessary to make the advanced accelerators that power the global AI boom.
“The bigger risk on the horizon is with advanced memory, as Nvidia’s recent pivot to LPDDR means they’re 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,” Counterpoint said. The firm also said that it expected prices for server-memory chips to double by the end of 2026, and that overall memory chip prices were likely to rise 50% from current levels through the second quarter of 2026.
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Higher server-memory prices would raise costs for cloud providers and AI developers, potentially adding pressure to data center budgets that are already stretched by record spending on graphics processing units and power upgrades.
Nvidia is set to have its earnings call today. Stocks moved higher on Wednesday to recover from a tech-led sell-off as investors awaited this earnings call, which will set the tone for the next leg of the AI trade.
Nvidia also recently teamed up with Dell to bring more AI capabilities to enterprises, integrating its advanced hardware into Dell’s servers to support artificial intelligence workloads and high-performance computing. The company is also part of an investment deal with Anthropic, alongside Microsoft, and will invest up to $10 billion into the startup.