Concerns are growing that a memory chip crunch will affect the auto industry. As the spread of software-defined vehicles (SDV) expands, demand for memory chips in autos is rising, while supply is expected to tilt toward the artificial intelligence (AI) market, triggering shortages. Some automotive chip corporations are analyzed to possibly have to change product designs because of a lack of memory supply.
According to the industry on the 26th, a memory chip supply crunch is expected to raise prices and cause shortages of automotive semiconductors. A semiconductor industry official said, "Risks could emerge in the automotive semiconductor supply chain starting in the first half of this year," and noted, "The industry expects memory chip prices to rise more than twofold." UBS Securities said, "A shortage of memory chips could pose significant risks to the global auto industry," and "It is highly likely to put financial pressure on both (automotive semiconductor) suppliers and (finished car) manufacturers."
With explosive growth in demand for DRAM used in AI servers and for high bandwidth memory (HBM) inside AI Semiconductor, the upward trend in memory chip prices is continuing. Market researcher TrendForce said, "In the fourth quarter of last year, DRAM prices surged by 53–58% on strong demand for DDR5," and added, "In the first quarter of this year, DRAM prices will rise more than 60%, and some items will climb to nearly double."
Not only prices but also supply shortages of memory chips across all sectors, including mobile, PCs, and home appliances—a "memory crisis"—are likely to spill over into autos. Until now, memory chips did not take up a large share of automotive semiconductors. But as technologies such as advanced driver-assistance systems (ADAS), Autonomous Driving, and infotainment systems continue to advance, demand for high-performance DRAM is growing. As the adoption rate of software-defined vehicles (SDV) increases, the amount of memory chips installed per vehicle is known to have risen sharply.
The production capacity of global memory chip players such as Samsung Electronics, SK hynix, and Micron is projected to be limited through 2027, and the automotive semiconductor supply crunch is expected to continue for nearly one to two years. Kim Un-ho, an analyst at IBK Securities, said, "AI investment by global big tech corporations is driving explosive growth not only in high bandwidth memory (HBM) but also in commodity DRAM," and added, "Considering the start of operations at Samsung Electronics' and SK hynix's Yongin campuses and the timing of Micron's new production line, meaningful supply increases are expected to be limited until before 2028."
There are even concerns that automotive semiconductor corporations may have to change some designs because of the memory chip supply crunch. For safety reasons, automotive semiconductors take longer to complete reliability verification than general semiconductors, and with memory chip corporations' limited production capacity, they are expected to struggle to secure sufficient volumes even after reliability verification is completed. In particular, corporations pushing to shift from legacy memory such as DDR4 to installing the latest memory like DDR5 are likely to take a bigger hit.
A semiconductor industry official said, "Production of legacy DDR4 is being reduced, and DDR5 is siphoning off demand in the AI market, leaving supply short," and added, "Some corporations are pushing to change product designs by reducing the amount of memory chips installed."