Days after Xiaomi’s ‘warning’, Samsung increases memory chip prices by up to 60%: What it means for smartphone buyers and technology companies

Samsung has raised prices of certain memory chips by as much as 60% compared to September, intensifying a supply crunch driven by the global race to build artificial intelligence (AI) data centres and threatening to increase costs for smartphones and computers. Notably, the price hikes by the South Korean giant comes just days after Chinese smartphone manufacturer Xiaomi warned that surging memory chip prices have already raised the cost of making phones, signaling potential price increases for consumers.

Citing two people with knowledge of the increases, news agency Reuters reported that Samsung delayed its formal pricing announcement for supply contracts in October before implementing the steep hikes this month. The move affects DDR5 memory chips primarily used in servers but also found in smartphones and computers.

Contract prices for 32GB DDR5 memory chip modules jumped to $239 in November, up from $149 in September, according to Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide.

“Many of the largest server makers and data center builders are now accepting that they won't get nearly enough product. The price premiums being paid are extreme,” Gonnerman said.

Samsung also increased the prices of 16GB DDR5 and 128GB DDR5 chips by approximately 50% to $135 and $1,194, respectively. Prices of 64GB DDR5 and 96GB DDR5 modules have increased by more than 30%, he added.

DDR memory chips assist with computing performance by temporarily storing data and managing rapid data transfer and retrievals in servers, computers, and other devices.

Panic buying and smartphone price hike

The report said that the chip crunch has been so severe that it has spurred panic buying by some customers, according to industry executives and analysts.

Xiaomi, which manufactures smartphones, electronics, and automobiles, warned last month that the surging prices have raised the cost of making phones, a warning that now appears prescient as Samsung's price increases take effect.

The soaring prices are likely to add stress for major companies building out data infrastructure and threaten to increase costs for consumer products like smartphones and computers.

Meanwhile, the shortage represents a significant opportunity for Samsung, which has lagged rivals in offering advanced AI chips and had not seen its profits climb nearly as much until recently.