9 trade groups urge Trump administration to ease memory chip crunch

Nine US trade groups warned the Trump administration that AI-driven demand for memory chips is starving automotive, medical device and retail supply chains, threatening price increases across the economy.

A coalition of nine US trade associations warned the Trump administration that AI data center expansion is consuming so much memory chip capacity that automotive, medical device and retail supply chains face disruption and price increases.

"AI data centers are absorbing an unprecedented share of memory chip output, driving prices to levels that squeeze out traditional manufacturing sectors," the groups wrote in a letter Wednesday to Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.

The signatories — including the Alliance for Automotive Innovation, the Medical Device Manufacturers Association and the National Retail Federation — said memory chip prices have surged to "unprecedented" levels as Nvidia Corp. and Advanced Micro Devices Inc. compete for high-bandwidth memory (HBM) needed to build AI hardware. Micron Technology Inc. and SK Hynix Inc., the two largest memory makers, each surpassed $1 trillion in market capitalization last month. Micron shares have gained 278% year-to-date, making it the second-best performer in the S&P 500.

The supply crunch threatens to raise consumer electronics prices, inflate internet and telecommunications infrastructure costs, and delay production of automobiles and medical equipment. Federal contractors — particularly small businesses — are struggling to fulfill procurement obligations, the groups said.

AI Demand Reshapes Memory Market

The structural shift in chip allocation traces directly to the AI boom. Nvidia and AMD are buying HBM — the specialized memory that sits alongside AI accelerators — at premium prices, prompting suppliers to prioritize those customers over traditional industrial and consumer buyers. This has created a two-tier market where automotive-grade and commodity memory chips face persistent shortages.

Supply Expansion Lags Behind

Micron is building new fabrication capacity in New York and Idaho, but most of those additions will not come online for several years. Commerce Secretary Lutnick has been pressing South Korea's SK Hynix and Samsung Electronics Co. to build memory fabs in the US. Samsung is constructing a logic chip plant in Austin, Texas, while SK Hynix plans a packaging facility in Indiana. For now, Micron remains the only company producing memory wafers on US soil.

The supply gap has drawn attention from Congress. Senator Bernie Moreno, an Ohio Republican, wrote to the Commerce Department in April warning that memory chip prices could rise 100% this year and urging the agency to prioritize domestic supply for the automotive sector.

For investors, the shortage creates a clear divergence. Memory producers like Micron, SK Hynix and Samsung benefit from sustained pricing power and potential policy support, including CHIPS Act allocations or tariff relief. Downstream industries face margin compression: automakers, medical device companies and retailers will either absorb higher component costs or pass them to consumers. The letter signals that the AI-driven reallocation of chip supply is no longer a tech-sector issue — it has become a broad economic concern with implications for inflation and industrial output.

This article is for informational purposes only and does not constitute investment advice.