The surge in memory prices that began in the second half of last year has impacted numerous terminal equipment manufacturers, particularly smartphone and PC makers, who are facing increased cost pressures. Apple is no exception, having discontinued several Mac models. The upcoming iPhone 18 Pro series this autumn is also contending with higher memory costs.
However, according to the latest reports, NVIDIA appears to have navigated this round of memory price increases successfully. The company anticipated the price surge due to rising demand and placed advance orders accordingly.
This insight was shared by NVIDIA's CFO, Colette Kress, in a recent interview. Kress stated that the current memory shortage should not come as a surprise to companies across the technology sector. As demand for AI hardware continues to accelerate, memory prices have been climbing steadily, putting pressure on firms that failed to secure their supply chains in advance.
Kress further revealed that NVIDIA foresaw the rapid increase in AI computing demand would place significant strain on memory supply, especially for advanced chips used in data centers and AI accelerators. Anticipating this price hike, the company placed its orders well before the market supply tightened.
For other companies affected by the soaring memory prices, Kress suggested they should plan ahead and place orders early, similar to NVIDIA's strategy.
However, it is challenging for other firms to emulate NVIDIA's approach, as they do not possess the same depth of market intelligence. The current global memory price surge is closely linked to NVIDIA. Manufacturers developing AI technologies are procuring its computing chips in large volumes, leading to a substantial increase in demand for high-bandwidth memory. NVIDIA itself needs to purchase significant quantities from suppliers like SK Hynix and Samsung Electronics, further driving up memory demand. Having earlier and more detailed insights into the memory market's supply and demand dynamics allowed NVIDIA to act preemptively.
It is worth noting that while NVIDIA placed advance orders, the memory price surge may not be entirely without impact. The current memory shortage and elevated prices are expected to persist for some time. If this period extends beyond the duration of NVIDIA's existing contracts, the company could face higher prices when its current agreements expire.
Additionally, even with advance orders securing supply, the contracted prices likely are not at pre-surge levels and may have increased to some degree. The exact terms are known only to NVIDIA. In an industry-wide supply crunch, if subsequent demand exceeds their projections, adjusting memory supply could prove difficult.
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