Artificial intelligence has made 23-year-old technology more expensive

The global DRAM memory chip market is facing a strange upheaval, almost unheard of in modern technological history. Tech giants such as Samsung, SK hynix and Micron have long ago focused most of their production capacity on making advanced HBM memory and server modules to power artificial intelligence data centers. As a result, there has been a shortage of standard chips, setting off a chain reaction that has now reached the bottom of the technology ladder, namely DDR2 system memory.

The shortage did not directly affect the production of DDR2 system memory, but rather was the result of a "spillover" of demand. As DDR4 memory supplies began to run out, PC manufacturers began adapting their devices to the older DDR3 standard. But when that ran out too, some changed existing plans to support the even older DDR2. It is therefore not surprising that the latter has also started to rise in price due to increased demand.

There are only a few manufacturers left on the market that still maintain DDR2 production lines, but they are responding to the situation very differently. Winbond is gradually reducing its DDR2 production and is shifting its capacity to the more profitable DDR3, DDR4 and LPDDR4 standards. In contrast, ESMT is increasing DDR2 production at its partner processor PSMC in order to "catch" the customers that Winbond is leaving. However, as Taiwanese suppliers, including Nanya, struggle to keep up with the surge in orders, Winbond's withdrawal is reducing supply faster than ESMT can replace it.

Of course, you won't find these memories in modern PCs. The consequences of these price increases will be felt primarily by manufacturers of embedded systems, networking equipment, industrial controllers, and automotive electronics. These are devices with long life cycles, where re-certification and adaptation to more modern DDR4 or DDR5 memories would simply be financially unacceptable.

Everything indicates that we are facing a prolonged period of shortage, as prices continue to rise with no signs of slowing down. However, according to optimistic forecasts, significant new production capacity that could solve the situation is not expected before the end of 2027.