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Micron Struggles to Meet AI-Driven Memory demand, Supply shortage Expected to Last Until 2027
The rapid growth of artificial intelligence (AI) is creating a significant
demand for memory, and Micron Technology, a leading U.S.-based memory
manufacturer, is struggling to keep up. The company admits it is unable to
fulfill all RAM orders from key customers, with the supply crisis
anticipated to persist until at least 2027.
Micron CEO Sanjay Mehrotra stated the company is currently fulfilling only
50% to 66% of demand from its primary customers. This shortfall is
attributed to the unexpectedly rapid increase in memory requirements for
AI data centers, which has outpaced the industry’s current production
capacity.
“In recent months, our customers’ AI data center construction plans have
driven memory demand projections up significantly,” Mehrotra explained,
according to reporting by Reuters.
the AI Demand Surge: A Deeper Look
The current surge in memory demand isn’t simply a gradual increase; it’s an
exponential leap driven by the computational needs of large language models
(LLMs) and other AI applications. These models require vast amounts of
high-bandwidth memory (HBM) to process and analyze data efficiently. HBM,
specifically, is a type of DRAM that is stacked vertically, allowing for
greater density and faster data transfer rates.
According to a Gartner report released August 3, 2023, worldwide AI software revenue
is forecast to reach $192 billion in 2023, an increase of 21.3% from
2022. this growth directly translates to increased demand for the
underlying hardware, including memory.
The demand is notably strong for High Bandwidth Memory (HBM),which is
critical for AI workloads. TrendForce reports that HBM demand is surging,and a supply shortage
is expected to continue into 2024.
Micron’s Response and Future Outlook
Micron is actively investing in expanding its production capacity to address
the growing demand. Though, building new fabrication facilities (fabs) and
increasing output is a time-consuming and capital-intensive process. The
company is focusing on increasing HBM production, but the lead times for
new capacity are significant.
Mehrotra indicated that Micron expects the supply-demand imbalance to
gradually improve after 2027, as new capacity comes online. However, the
exact timing will depend on the pace of AI adoption and the ability of the
industry to ramp up production.
the situation highlights the critical role of memory in the AI revolution
and the challenges of scaling production to meet rapidly evolving demands.
