The next television, smartwatch or smartphone you purchase could carry a noticeably higher price tag, as the global surge in artificial intelligence demand has led chipmakers to prioritise production of specialised AI chips, tightening the supply of older-generation memory chips used in everyday consumer devices.
Shift to high-profit AI chips
Pua Khein-Seng, chief executive of Phison Electronics, a leading supplier of controllers for solid-state drives and flash storage products, explained that manufacturers are now focusing on more profitable lines such as high-bandwidth memory (HBM) and DDR5 RAM.
These memory chips are essential in all electronic devices, coming mainly as RAM for temporary working memory and NAND for long-term storage.
HBM chips, in particular, have become critical for AI applications due to their ability to handle massive data transfers at exceptionally high speeds.
Pua noted that much of the consumer electronics sector continues to depend on older-generation components.
“Many products still need these older parts: set top boxes, smart TVs, wearables, routers and some car systems,” he told FMT.
Potential price hikes and supply timeline
He warned that rising costs for these legacy components could push retail prices of televisions, smartphones and laptops up by 30 to 50 percent.
The supply shortage is expected to persist for two to four years, as redesigning components and expanding foundry capacity for older memory chips takes considerable time.
To keep devices affordable, brands may have to reduce specifications, with budget smartphones potentially featuring less RAM and storage than previous models.
“Some phone brands might even bring back microSD card slots so users can add more storage themselves,” Pua suggested.
Impact on smaller brands and manufacturing hubs
Smaller consumer brands are likely to feel the pinch first, as they often lack the financial strength to lock in scarce chips ahead of time, unlike the world’s biggest technology companies.
Pua pointed out that suppliers remain cautious after the boom-and-bust cycle following Covid-19, making them hesitant to invest without firm orders.
As a result, buyers are increasingly required to pay upfront to secure future supply, with suppliers using those funds to build new production capacity.
He cautioned that the shortage poses a serious risk to manufacturing centres such as Penang.
“If you are building a TV and cannot get just one key memory part, you will not be able to finish the product,” he said.
“You might have hundreds or thousands of parts, but if just one memory chip is missing, the whole production line stops.”
Pua added that while Malaysia performs strongly in assembly and testing of electronics, its limited control over critical components leaves local industries vulnerable when global supplies become constrained.
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