AI data centers are swallowing the world's memory and storage supply, setting the stage for a pricing apocalypse that could last a decade
News Analysis
By Luke James published yesterday
Once-cheap SSDs, DRAM, and HDD prices are climbing fast as AI demand and constrained supply converge to create the tightest
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Nearly every analyst firm and memory maker is now warning of looming shortages of NAND and DRAM that will result in skyrocketing pricing for SSDs and memory over the coming months and years, with some even predicting a shortage that will last a decade. The looming shortages are becoming increasingly impossible to ignore, and the warnings from the industry are growing increasingly dire, as the voracious appetite of AI data centers begins to consume the lion's share of the world's memory and flash production capacity.
For the better part of two years, storage upgrades have been a rare bright spot for PC builders. SSD prices cratered to all-time lows in 2023, with high-performance NVMe drives selling for little more than the cost of a modest mechanical hard disk. DRAM followed a similar trajectory, dropping to price points not seen in nearly a decade. In 2024, the pendulum swung firmly in the other direction, with prices for both NAND flash and DRAM starting to climb.
The shift has its roots in the cyclical nature of memory manufacturing, but is amplified this time by the extraordinary demands of AI and hyperscalers. The result is a broad supply squeeze that touches every corner of the industry. From consumer SSDs and DDR4 kits to enterprise storage arrays and bulk HDD shipments, there's a singular throughline: costs are moving upward in a convergence that the market has not seen in years.
From glut to scarcity
The downturn of 2022 and early 2023 left memory makers in dire straits. Both NAND and DRAM were selling below cost, and inventories piled up. Manufacturers responded with drastic output cuts to stem the bleeding. By the second half of 2023, those reductions had worked their way through to sales channels. NAND spot prices for 512Gb TLC parts, which had fallen to record lows, rose by more than 100% in the span of six months, and contract pricing followed.
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