Nvidia's Move Could Double Server Memory Prices

Nvidia's Memory Strategy and Market Impact

Nvidia has decided to use memory chips typically found in smartphones for its artificial intelligence servers. According to a report published by Counterpoint Research, this decision could lead to a doubling of server memory prices by the end of 2026.

In the last two months, global electronics supply chains have faced a shortage of older memory chips as manufacturers focus on high-performance memory chips designed for artificial intelligence applications. However, Counterpoint indicates that a new problem is on the horizon.

Nvidia has decided to switch the type of memory used in its artificial intelligence servers to LPDDR to reduce power costs. This low-power memory type, typically found in phones and tablets, will replace the DDR5 commonly used in servers.

Since each artificial intelligence server requires more memory chips than a smartphone, this change is expected to create a sudden surge in demand. However, Counterpoint states that the industry is not ready to meet this demand.

Companies producing server memory chips, such as Samsung Electronics, SK Hynix, and Micron, have begun experiencing shortages in older dynamic random-access memory products as they focus on producing high-bandwidth memory. Counterpoint expresses that this squeeze in the lower segment of the market could risk spreading upwards.

Indicating that Nvidia's shift to LPDDR could lead to it becoming a large customer like a smartphone manufacturer, the firm noted that this would signify a major change for the supply chain. Counterpoint expects server memory prices to double by the end of 2026.

Higher server memory prices could increase costs for cloud service providers and artificial intelligence developers. This situation may place additional pressure on data center budgets, which are already struggling with record expenses for graphics processing units and power upgrades.