PETALING JAYA: The next TV, smartwatch or phone you buy could cost significantly more, as the global artificial intelligence (AI) boom has prompted chipmakers to shift production towards AI-focused chips, squeezing the supply of older memory chips used in everyday devices.
Pua Khein-Seng, chief executive of Phison Electronics, a major supplier of controllers used in solid-state drives and other flash storage products, said companies have shifted to producing “highly profitable” products such as high-bandwidth memory (HBM) and DDR5 RAM chips.
Memory chips, which are integral to every device, mainly come in the form of RAM (random access memory) for short-term or working memory, and NAND for storage. HBM chips in particular are increasingly used in AI applications because they can transfer large amounts of data at very high speeds.
Pua said the main problem is that much of the consumer electronics market still relies on older parts.
“Many products still need these older parts: set top boxes, smart TVs, wearables, routers and some car systems,” he told FMT.
He said that as costs for older components rise, retail prices for TVs, smartphones and laptops could increase by 30% to 50%. The supply crunch could take two to four years to ease, he added, given the time needed to redesign components and expand foundry capacity for older memory chips.
Pua said brands may have to make cuts to keep prices affordable, with budget phones coming with less RAM and storage than before.
“Some phone brands might even bring back microSD card slots so users can add more storage themselves,” he said.
Pua said smaller consumer brands are likely to be hit first, as they often lack the financial reserves to secure scarce chips in advance, unlike the world’s largest tech firms.
“Suppliers were burned by the boom-and-bust cycle after Covid-19, so they are reluctant to invest without firm commitments.
“That is why buyers are having to pay upfront to secure future stock, and suppliers use that money to finance new factory space,” he said.
Pua warned that the shortage could pose a major threat to manufacturing hubs such as Penang, as factories may be forced to halt operations if a vital chip cannot be secured in time.
“If you are building a TV and cannot get just one key memory part, you will not be able to finish the product. You might have hundreds or thousands of parts, but if just one memory chip is missing, the whole production line stops,” he said.
Pua said that while Malaysia excels at assembling and testing electronics, its lack of control over key components leaves the country with little influence when global supplies tighten.
