Memory price surge may crimp on-premise AI, data center deployments

On-premise enterprise AI deployments and any hardware upgrades for servers, PCs and other devices in the works are going to become more expensive as memory prices surge.

Memory prices have been a concern for the technology industry for months. Trendforce is projecting 80% increases in PC and server DRAM. IDC said the memory shortage will affect smartphones and other electronic devices. In addition, enterprise vendors have already said they plan on passing along memory costs to technology buyers. You can thank the AI infrastructure boom for the memory squeeze.

Simply put, prices everywhere are going to go up for hardware and that reality is likely to crimp on-premises enterprise deployments and any tech purchase. For instance, Micron Technology already has agreements on price and volume for everything it can produce in 2026.

Micron CEO Sanjay Mehrotra said:

“Memory is now essential to AI's cognitive functions, fundamentally altering its role from a system component to a strategic asset that dictates product performance from data center to the edge. This structural shift means that system capabilities heavily rely on advanced memory for real-time contextual processing, which is vital for achieving autonomous and intelligent behaviors in AI data centers as well as in applications ranging from self-driving cars to advanced medical diagnostics.”

Pure Storage’s John Colgrove, Founder, Chief Visionary Officer & Director, said memory is an issue. Colgrove said that rising NAND prices will make it harder for enterprises to buy data center gear and he expects more interest in Pure Storage’s subscription plans. “I think as prices continue to go up on NAND as it becomes harder and harder to obtain new gear. I think that tends to move people more towards Evergreen/One,” said Colgrove, referring to Pure Storage’s subscription plan.

In December, Dell Technologies Jeff Clarke, chief operating officer, said the memory supply and demand mismatch is a big issue. Speaking at an investment conference, Clarke said:

“I've been at this for almost four decades. This is the most unprecedented mismatch in demand and supply that I've ever seen in the memory industry, which you're seeing correspondingly reflected in spot price. But there's an equal component is the material going to be available. We're out with our long-term agreements, our partnerships that we've had for many, many years. I've grown up in this industry, know most of those CEOs for a long period of time, and those relationships matter in these times.”

Clarke also said that these higher memory prices are ultimately pass along to the buyer. He said consumers will be more sensitive to the price increases, but enterprises will buy at market rates to solve a problem.

HPE CFO Marie Myers said at an investment conference in December that increased memory costs will be passed on. “Both DRAM and NAND are sort of leading (in price increases). A lot of this has been driven by just the tremendous demand pressure that's been out there with AI. And the last couple of months, I think we've all witnessed some pretty significant price changes in both NAND and DRAM,” said Myers. “We expect to pass on a lot of these increases in commodity costs to customers.”

Taiwan Semi CEO C.C. Wei said on the company’s earnings call that unit growth will be minimal for PCs and smartphones, but his company is benefiting from the AI infrastructure boom too. The takeaway is to stick with the high-end hardware. Taiwan Semi works with more high-end vendors and “the high-end smartphone is less sensitive to the memory price. So, the demand is still strong,” said Wei.

Bottom line: Hardware upgrades are likely to become more expensive for a wide swath of technology buyers.