Washington wants more memory chips made in America. The factories will take years. Tariffs could arrive much sooner, adding another cost to components already in short supply.
AI’s appetite for advanced chips has sent prices soaring, leaving manufacturers and their customers competing for supply they can’t quickly replace.
US factories cannot close the gap
The US has one commercial memory plant, operated by Micron Technology in Virginia, and it produces older-generation parts. The administration is preparing import tariffs to encourage domestic manufacturing, but buyers would face those costs well before new factories could help.
Micron has pledged roughly $250B through 2035 for US facilities. Its New York megasite isn’t expected to begin production until 2030.
Making the chips is only part of the job. High-bandwidth memory still depends on final packaging in Asia. SK Hynix’s US packaging plant is expected to open in 2028, with mass production following in 2029.
Executives at Samsung Electronics, SK Hynix, and Micron expect shortages to persist for anywhere from another year to several years.
“Tariffs on semiconductors would be self-defeating.”
Troy Stangarone, Korea Economic Institute of America
Higher costs reach the electronics aisle
TrendForce expects flash storage prices to reach four times their mid-2025 level by year-end. Server memory is heading for an increase of more than sixfold.
Apple has raised Mac and iPad prices, citing memory costs. Its iPhone 18 Pro and Pro Max each cost $100 more than their predecessors. The shortage is becoming a problem for shoppers who have little to do with building AI models.
Counterpoint Research expects global smartphone shipments to fall 14% this year, with a possible further decline of 1% in 2027.
Qualcomm is pushing ahead with premium hardware. Its Snapdragon 8 Elite Gen 6 chips use Taiwan Semiconductor’s 2-nanometer technology for phones from Motorola, Xiaomi, and ZTE. CEO Cristiano Amon sees the industry moving toward devices built around AI agents, even as component costs make upgrades more expensive.
The stock rally runs into doubt
Memory and storage stocks surged in the first half before retreating from their highs. Sandisk, Western Digital, Seagate, and Micron have all lost ground despite the shortage.
MoneyFlows chief investment strategist Alec Young argues that the trade has become vulnerable to macroeconomic pressures, including interest rates, war, and expensive oil.
The 10-year Treasury yield moved above 5% for the first time since 2023, while traders priced in three quarter-point Fed increases by March. Calls from Anthropic chief Dario Amodei to slow AI development added another concern, sending chip stocks, including Nvidia, lower.
Micron and Sandisk still trade at relatively low earnings multiples: 6.5 and 7.3 times forward earnings, respectively, putting both among the Nasdaq 100’s 10 cheapest stocks.
The disagreement is over how long those earnings can hold up. Citi analyst Atif Malik expects memory prices to peak in the second quarter of 2027, ahead of forecasts pointing to 2028 or later.
Micron’s long-term customer agreements could offer some protection. The company has accepted price caps in exchange for guaranteed margins, potentially tempering the earnings swings that have defined previous memory cycles.
Cheap earnings meet crowded positions
New Street Research upgraded Micron to buy, pointing to growth and balance-sheet strength. It sees a potential $2T–$3T market value by decade’s end, compared with a little over $1T today.
Crowded ownership could complicate the trade. Morgan Stanley found Sandisk was the most over-owned large-cap technology stock relative to its S&P 500 weight in the second quarter.
Tariff exemptions remain unsettled, too. Commerce Secretary Howard Lutnick has suggested foreign companies investing in US production could receive relief, but the treatment of Micron and SK Hynix is unclear.
Micron reports Sept. 30, with Citi forecasting $51B in revenue and $31.45 in earnings per share. Those results will give investors another read on the shortage’s payoff. The harder question is how much of that payoff survives higher rates, new tariffs, and an eventual turn in memory prices.
