We are all tired of hearing about AI and about supply shortages and price increases. But it’s important to understand how we got here and why AI’s appetite for memory is starving your surveillance supply chain.
If you’ve noticed memory and storage getting harder to source and more expensive to buy, you’re not imagining things. The AI boom isn’t just transforming technology—it’s fundamentally reshaping the semiconductor market in ways that directly impact every video surveillance project you’re quoting today.
The Bottom Line: AI datacenters are consuming DRAM and NAND chip manufacturing capacity at unprecedented rates, creating shortages and price increases across the entire memory and storage ecosystem. It will likely get worse before it gets better.
What’s Happening
Memory chip manufacturers (Samsung, SK Hynix, Micron) face a perfect storm:
1. They’re caught flat-footed. After years of oversupply and razor-thin margins (2022-2023), these companies delayed new factory construction. Memory fabs take 2-3 years to build and cost $15-20 billion each. Now demand has exploded, but new capacity won’t arrive until 2027-2028.
2. AI requires exotic memory. AI inference demands High Bandwidth Memory (HBM)—essentially DRAM chips stacked vertically like a high-rise building, delivering 10-15x the data throughput of standard memory. Without HBM’s extreme bandwidth, AI processors would sit idle waiting for data. Think of it like having a fire hose but only a drinking straw to fill it.
3. The money follows the margin. HBM commands 3-5x the price of standard DRAM chips with better profit margins. Manufacturers have aggressively shifted production lines to HBM and high-capacity DRAM for AI servers, starving the supply of commodity chips. Simple economics: why make $100 when you can make $300 using the same equipment?
4. Tariffs are compounding the pain. Recent US tariffs on semiconductor imports are adding 10-25% to chip costs depending on country of origin, layering trade policy pressure on top of existing supply constraints.
Why This Matters to You
These DRAM and NAND chips are the building blocks for everything in our industry. DRAM chips become the server memory modules (RDIMMs, UDIMMs) that power VMS platforms. NAND chips become the SSDs that store surveillance footage. But the same chips also go into IP cameras, NVRs, PoE switches, access control panels, video encoders—and beyond our industry into cars, smartphones, satellites, industrial controllers, and medical devices. We’re all competing for the same limited chip supply, and AI is winning.
What This Means for You
Expect continued allocation constraints and price escalation on memory and storage components through 2027, directly impacting costs across your entire surveillance ecosystem—from servers to edge devices. Video cameras, switches, laptops, workstations, and everything else will continue to increase in price and get harder and harder to find.
Plan accordingly—lead times are extending and costs aren’t coming down until 2027 or later.
