Global storage crisis deepens as AI demand and Middle East tensions collide
The global storage market is facing a deepening crisis as multiple pressures collide. Rising tensions in the Middle East have pushed energy prices higher, while surging demand for AI chips strains supply chains further. Experts warn that shortages could last for years, with no quick fixes in sight.
The conflict in the Middle East has disrupted key shipping routes, including the Strait of Hormuz. This blockade has driven up energy costs, adding to production expenses for memory manufacturers. Meanwhile, the AI boom has intensified existing bottlenecks in the storage sector.
Nvidia CEO Jensen Huang recently highlighted a staggering '10,000-fold' increase in demand for AI chips. This surge has diverted production capacity toward high-bandwidth memory (HBM), leaving less room for DRAM and NAND chips. Major suppliers like Micron, SK, and Samsung have prioritised HBM, reducing output of other essential memory products.
The shift has hit non-AI sectors hard. Since 2023, demand for DRAM and NAND in consumer electronics has fallen due to market saturation. However, industries such as automotive, industrial IoT, and data centres now face severe shortages. Prices have climbed sharply, with no prior agreements in place to stabilise costs.
SK Group Chairman Tae-won Chey offered a grim outlook, predicting the shortage will persist for at least four to five years. He warned that constraints could extend until 2030, as manufacturers focus on high-margin products and expand production overseas.
The storage crisis shows no signs of easing soon. With energy costs rising, AI demand soaring, and production shifts prioritising profitability, shortages will likely continue. Industries reliant on memory chips must now navigate prolonged supply constraints and elevated prices.
