Radical Transformation of the Electronics Market: Affordable Gadgets in Shortage Due to AI

Artificial intelligence is exacerbating the shortage of consumer gadgets. Phison Electronics CEO Khein-Seng Pua has issued a grim new forecast for the industry: due to a total deficit of DRAM and NAND memory, many companies will find themselves on the brink of bankruptcy.

Market Under Supplier Control 

According to the Phison CEO, the market is now completely under sellers’ control. Shortages are so critical that memory chip suppliers are demanding prepayments for three years in advance. 

Basic components have also skyrocketed in price. For instance, 8GB eMMC memory, which cost about $1.5 at the beginning of 2025, has surged to nearly $20.

Smartphones and PCs Under Threat of Disappearance 

Pua predicts a massive reduction in product variety and the number of active companies in the consumer market. This level of component shortage could lead to a reduction in the smartphone market by 200–250 million units, a cut in PC and TV production, and a consumer shift toward repairing old gadgets instead of buying new ones. 

In smartphones, memory accounts for 20% of the cost, while for server equipment, it is only 5-6%. This allows data centers to absorb costs more easily than consumer electronics manufacturers.

Pua: "Memory Shortage is Directly Linked to AI Component Demand"

Pua emphasizes that the deep memory deficit, likely to last until 2030, is driven by the development of AI infrastructure. As an example, he cites the Nvidia Vera Rubin AI accelerator.

"Each such accelerator will require an SSD with a capacity of over 20 TB. If Nvidia ships 10 million units, these drives alone will consume 20% of last year's total global NAND production," highlighted Khein-Seng Pua. 

Manufacturers unable to secure even a single critical component will be forced to shut down assembly lines, likely leading to a series of bankruptcies in the consumer electronics sector by the end of next year.