Will Trump’s new industrial policy make a tough global memory chip shortage worse?

The US government warns major memory chipmakers to either pay 100 per cent duties or build their products in America

The shortages and associated price increase in the global memory chip sector could potentially intensify, as the US government threatened to impose hefty new tariffs on some major foreign manufacturers.

Speaking at Friday’s groundbreaking ceremony for Micron Technology’s US$100 billion factory in New York, US Commerce Secretary Howard Lutnick warned that memory chipmakers – without naming any company – had two options: “They can pay 100 per cent tariff, or they can build in America.”

Lutnick said tariffs specified under a new trade deal with Taiwan could also apply to semiconductor firms in South Korea under the industrial policy of the administration of US President Donald Trump.

What is the memory chip super cycle?

Memory is a core component of the type of graphics processing units (GPUs), such as those designed by Nvidia and Advanced Micro Devices, needed to train and run artificial intelligence models.

According to a Bank of America (BofA) report, 2026 was shaping up as a “super cycle similar to the boom of the 1990s”. It forecast global dynamic random access memory (DRAM) revenue to surge by 51 per cent from the previous year, with the average selling price rising by 33 per cent.

It also estimated the 2026 high bandwidth memory (HBM) market to reach US$54.6 billion, a 58 per cent increase from the previous year.

According to a Morgan Stanley report last week, the steep pricing in the market was expected to persist through 2027.

As manufacturers focused more on higher-margin HBM chips used in AI data centres, production capacity decreased for traditional memory chips used in everything from personal computers and smartphones to cameras and other electronic devices.

As investments in servers for AI training and inference expanded, the capacity of high-end DRAM and HBM installed per AI server would steadily increase, according to analysts. Demand for other storage products, such as enterprise solid-state drives, was also rising.

That meant the shortage of commodity memory chips would not be addressed any time soon, according to a January 16 report by Oxford Economics. “Although major memory chipmakers are investing to expand production capacity, new plants take at least a few years to become operational,” the report said.

SK Hynix had reportedly sold out its entire 2026 production capacity of HBM and advanced DRAM chips to major clients as early as October last year, which illustrated just how fiercely major tech firms were investing in AI.

How does the latest US policy impact the global memory chip market?

The latest US industrial policy touted by Lutnick was expected to put pressure on Samsung Electronics and SK Hynix, the world’s top two manufacturers of memory chips, to take part in Washington’s efforts to boost US hi-tech manufacturing, while memory chip prices continued to climb.

Micron’s new Idaho plant and fabrication facility complex in New York were already set to bring full-scale HBM manufacturing to the US, with the goal of meeting growing AI-driven demand.

In the second quarter last year, SK Hynix, Micron and Samsung controlled a combined 79 per cent of global HBM shipments with shares of 62 per cent, 21 per cent and 17 per cent, respectively, according to Counterpoint Research.

The three companies also led the price increase in global memory products over the past few quarters.

Global memory chip prices were expected to rise 40 per cent to 50 per cent in the first quarter of 2026, Counterpoint estimated. It projected a further 20 per cent rise in the second quarter of this year.

What is China’s foremost memory chipmaker’s position in the market?

ChangXin Memory Technologies (CXMT) has emerged as a critical player in its industry, despite US tech sanctions.

CXMT, the country’s largest and the world’s fourth-largest DRAM maker, carved out a 4 per cent share in the global DRAM market last year, according to data from Omdia.

The company’s new Double Data Rate 5 synchronous DRAM, designed for state-of-the-art AI servers and stacks, underscored its ambition to join Samsung and SK Hynix in supplying some of the world’s most advanced memory products.

Parent CXMT Corp aimed to raise 29.5 billion yuan (US$4.2 billion) from an initial public offering (IPO) in Shanghai’s Nasdaq-style Star Market to fund technology upgrades.

Analysts, however, saw a gap between China and the major memory chipmakers in both technology and scale of fundraising.

Chinese memory chip firms’ target fundraising was expected to be worth US$6 billion out of the total offerings of under US$15 billion from about 10 mainland semiconductor and AI companies, who had either announced or executed their IPO in January and December, according to a BofA Securities research note. “We believe this is too small, accounting for only a single digit percentage of global memory capex,” it said.