A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse.Since the start of 2026, Tesla Inc., Apple Inc. and a dozen other major corporations have signaled that the shortage of DRAM, or dynamic random access memory — ...

By Debby Wu, Takashi Mochizuki and Yoolim Lee   A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse.   Since the start of 2026, Tesla Inc., Apple Inc. and a dozen other major corporations have signaled that th ...

Core Viewpoint - A global shortage of memory chips is emerging, significantly impacting profits, corporate strategies, and prices across various sectors, including consumer electronics and automotive industries. This situation is expected to worsen as demand from AI data centers escalates [1][2]. Group 1: Industry Impact - Major corporations like Tesla and Apple have indicated that the shortage of DRAM will limit production capabilities, with Apple warning of compressed iPhone margins [2][8]. - The demand for memory chips is being driven primarily by AI data centers, with companies like Alphabet and OpenAI consuming a large share of production to support their applications [4][17]. - The price of DRAM has surged dramatically, with one type increasing by 75% from December to January, leading to daily price adjustments by retailers [5][12]. Group 2: Corporate Responses - Companies are adapting to the crisis; for instance, Tesla is considering building its own memory fabrication plant to mitigate supply issues [2][3]. - Sony is contemplating delaying the launch of its next PlayStation console to 2028 or 2029 due to the memory shortage, which disrupts its strategic planning [9]. - Chinese smartphone manufacturers are reducing shipment targets, with Oppo cutting its forecast by up to 20% for 2026 [10]. Group 3: Future Projections - Analysts predict that memory chip prices will continue to rise, with Bernstein's Mark Li stating that prices are going "parabolic," benefiting manufacturers like Samsung and Micron while hurting the broader electronics sector [7][22]. - The demand for high-bandwidth memory (HBM) is expected to increase by 70% year-over-year in 2026, further straining the supply of standard DRAM [19][21]. - The current supply-demand imbalance is projected to persist throughout the year, with significant implications for various industries, including automotive and telecommunications [22][23]. Group 4: Economic Implications - The rising costs of memory chips could lead to DRAM accounting for up to 30% of the bill of materials for low-end smartphones, tripling from 10% in early 2025 [25]. - Companies across the electronics sector are warning consumers to prepare for higher prices, particularly ahead of key midterm elections in the US, where inflation may become a critical issue [25][26].

Core Insights - The global consumer electronics sector has seen a decline of 10% since the end of September, while memory makers, including Samsung Electronics, have surged approximately 160% [1][17] - Current valuations in the market largely assume that supply disruptions will normalize within one to two quarters, but there are concerns that this tightness may persist longer [2][17] Industry Trends - Memory chip shortages and rising prices are frequently mentioned in earnings reports, indicating a significant impact on various companies [17] - Companies like Qualcomm and Nintendo have experienced stock declines due to concerns over memory constraints affecting production and profitability [5][17] - The demand for memory chips is being exacerbated by massive AI infrastructure spending, shifting production capacity towards high-bandwidth memory [8][17] Market Dynamics - Spot prices for DRAM have increased by over 600% in recent months, despite weak demand for end products like smartphones and cars [11][17] - Memory chip makers have emerged as significant winners in the tech sector, with companies like SK Hynix, Kioxia Holdings, and Nanya Technology seeing stock increases of over 150% to 400% since the end of September [12][17] - The current memory cycle is described as a "supercycle," breaking traditional boom-and-bust patterns, with no signs of demand momentum softening [9][13][17]

Core Insights - Saudi Arabia is advancing its strategy to become a gaming hub through a significant deal to take Electronic Arts Inc. private, with the Public Investment Fund being the largest contributor to the $36 billion equity financing for the transaction [1][2]. Group 1: Investment and Financial Details - The Public Investment Fund is rolling over a $5 billion equity stake into the new entity and is providing more fresh capital than partners Silver Lake Management and Jared Kushner's Affinity Partners [1]. - The deal is set to be the largest leveraged buyout in history, with JPMorgan Chase & Co. providing $20 billion in debt financing [6]. - Electronic Arts reported earnings of $1.12 billion on sales of $7.46 billion in its latest fiscal year, with a new game release anticipated on October 10 [5]. Group 2: Strategic Goals and Background - Crown Prince Mohammed bin Salman, a gaming enthusiast, is focusing on the gaming sector as part of a national strategy to create tens of thousands of jobs and diversify the economy away from oil [2][4]. - The kingdom has invested approximately $30 billion in the gaming industry, including stakes in Nintendo and the acquisition of a game publisher [3]. - Saudi Arabia's overarching strategy aims to generate jobs over the next 20 years, with Electronic Arts fitting well into this vision [4]. Group 3: Historical Context - Saudi Arabia initially invested in Electronic Arts in 2021, acquiring a $1.1 billion stake, which has since increased to a holding valued at $4.8 billion as of September 26 [7]. - The Public Investment Fund's portfolio also includes investments in other gaming companies such as Embracer Group AB, Take-Two Interactive Software Inc., and Nexon Ltd. [7].

Group 1 - Nintendo Co., Ltd. reported FY 2025 earnings, but the focus is on future guidance and commentary regarding the Switch 2 [1] - The earnings report indicates that the current year's earnings are not deemed relevant for investment decisions [1] Group 2 - Best Anchor Stocks emphasizes finding high-quality companies that are currently experiencing downturns, presenting asymmetric investment opportunities [2] - The portfolio of Best Anchor Stocks has shown a track record of revenue growth with below-average volatility since its inception in January 2022, outperforming the market [2]