AI Will Demand Much More Memory Chips, And Chipmakers Are Banking on It for Growth

For chipmakers, unless you’re Nvidia (NASDAQ:NVDA) — you’re probably wondering when the pain will stop.

The memory chip market is in its worst downturn in over a decade:

• Catching up: The pandemic sent electronic demand soaring → chipmakers ramped up production → electronic demand crashed — and chipmakers were left with too much inventory.
• The world’s largest memory chip maker, Samsung, saw profits collapse 95% this quarter.

But after recent earnings reports, memory chipmakers are in consensus of a recovery later this year.

Chipmakers place hopes on AI

Generative AI and large language models like GPT require a lot of memory chips. And memory chipmakers are banking on the sector’s growth to drive memory chip demand.

• ”Growing high-performance server market for AI” will benefit the memory chip maker — South Korea’s SK Hynix’s CEO
• “When you look at the future, it equals AI. And AI equals memory” — Micron’s (NASDAQ:MU) CEO.

⚠️ Caution: Why investors need to be careful over Nvidia’s ~90% gain this year.