<p>The automotive chip shortage is back, with institutions such as UBS and S&amp;P Global recently issuing warnings that global automakers will face dual blows of production interruptions and soaring costs as early as 2026. Tesla founder Elon Musk also admitted that even with all mainstream suppliers, it is difficult to meet demand. UBS reports indicate that the price of DRAM chips has risen by more than 100%, and automakers will ultimately have to &#34;bear&#34; about 80% of the costs. Unlike in 2021, this shortage is caused by the AI boom occupying production capacity, leaving the automotive industry as a &#34;sacrificed group.&#34; The Chinese market has become a disaster zone, with Xiaomi Corporation (1810) Chairman Lei Jun stating that the cost of each SU7 will increase by several thousand yuan.</p>
<h2>DRAM is an Indispensable Component for Automobiles</h2>
<p>DRAM (Dynamic Random Access Memory) is an essential semiconductor component for automobiles, primarily used to drive infotainment systems, digital dashboards, advanced driver-assistance systems (ADAS), and electric vehicle systems.</p>
<p>As the automotive industry transitions to software-defined architectures and centralized computing, the demand for DRAM will only increase. According to Japanese media reports, memory prices soared in January 2026, with the benchmark DDR4 8GB product trading at around $13 each, doubling from November to December 2025 and skyrocketing 7.4 times from a year ago.</p>
<p>At the same time, the automotive industry is not the only sector that requires DRAM. The culprit behind this supply shortage is the explosive growth of artificial intelligence (AI), especially the extreme demand for high-bandwidth memory (HBM) DRAM from data centers. Since HBM profits far exceed those of traditional DRAM, major producers are reallocating wafer production capacity to prioritize this more lucrative market, squeezing the supply of DRAM for the automotive industry.</p>
<h2>Automotive Industry Accounts for Only a Single-Digit Percentage of Global DRAM Capacity</h2>
<p>An employee from a German chip manufacturer explained to our publication that the industry prioritizes supplying the AI market because &#34;AI has substantial backing and support from various national policies, essentially in a state where burning money is not a concern.&#34; He further stated, &#34;Look at the annual reports of major chip manufacturers; how much does the automotive business account for? They wouldn't pay much attention to it.&#34;</p>
<p>UBS data further confirms this point. The automotive industry's revenue accounts for only a low single-digit percentage of global DRAM capacity, while smartphones account for about 35%, computers 25%, and servers and data centers about 20%. In other words, the automotive industry has negligible bargaining power in capacity allocation.</p>
<p>Currently, over 90% of global DRAM production is monopolized by three giants, including South Korean companies Samsung and SK Hynix, and American company Micron Technology. Micron Technology predicts that its earnings per share will grow more than fourfold year-on-year in the second quarter; SK Hynix has stated that its production capacity for 2026 is already sold out, continuing the record-breaking trend of 2025.</p>
<h2>May Be Forced to Switch to New Chips, Increasing Costs</h2>
<p>The crux of the problem lies in the technological generational gap between the automotive industry and AI. The automotive industry currently mainly uses DDR4 and LPDDR4 chips, while AI applications rely on the more advanced DDR5 generation, which offers higher memory capacity and more significant profit margins
Some analysts indicate that as production capacity shifts towards DDR5, automakers may ultimately be forced to switch to the new generation of chips, further driving up costs.</p>
<p>However, even as production capacity clearly leans towards AI, Samsung, SK Hynix, and Micron are hesitant to completely sever ties with automakers. After all, they have personally experienced the surge in demand for consumer electronics chips post-pandemic, followed by a rapid market saturation in 2022, leading to a sharp decline in shipments and a corresponding drop in prices.</p>
<p>Therefore, in this round of price increases, the giants are also taking precautions against risks. On one hand, they are signing long-term contracts with AI companies to lock in production capacity and avoid repeating the mistakes of 2022; on the other hand, they are also maintaining relationships with automotive clients. For instance, SK Hynix originally planned to stop DDR4 shipments in the first half of this year but ultimately retained some capacity to support automotive and industrial clients; Micron has also made it clear that DDR4 will cease production after the first quarter of this year, but will continue to provide a small supply for long-term automotive clients.</p>
<h2>The Chinese Market Becomes a Hard-Hit Area for Shortages</h2>
<p>In this wave of chip shortages, the Chinese market can be considered a hard-hit area. In early March, Chery Automobile's (9973) Exeed brand raised the price of the high-end version of the Exeed ET5 by 5,000 yuan due to rising chip prices and other factors. Production lines have also sounded the alarm, as GAC Honda was forced to adjust its production pace in January this year to cope with the chain reaction brought about by tight semiconductor supply.</p>
<p>Many automotive industry leaders have also spoken out. Xiaomi Chairman Lei Jun stated in a live broadcast in early January that the new SU7 is facing quarterly rising memory cost pressures, with the cost of each vehicle expected to increase by several thousand yuan. Almost simultaneously, Nio (9866) founder Li Bin also mentioned that rising memory prices have become the biggest cost pressure in the automotive industry this year, even suggesting consumers &#34;should buy cars as soon as possible.&#34; The supply chain head of Li Auto (2015) further warned that the supply satisfaction rate for automotive storage chips in 2026 may be less than 50%.</p>
<h2>Some Supply Chain Intermediaries Hoarding for Profit</h2>
<p>In addition to production capacity issues, there is another force in the market exacerbating the situation. Zhao Haijun, co-CEO of SMIC (981), stated, &#34;We are indeed seeing some channels and supply chain intermediaries hoarding large amounts of memory, as they hope to sell at higher prices in a supply-demand imbalance. This inventory may be released later this year after new production capacity comes online.&#34;</p>
<p>Zhang Xiang, a visiting professor at Huanghe Science and Technology College, analyzed that this shortage issue is difficult to resolve in the short term, with the direct impact being an extension of new car delivery cycles, and some automakers may even reduce configurations for delivery. He suggests that for consumers with recent car purchasing needs, especially those in urgent need of a vehicle, it is advisable to place orders as soon as possible, as there are still stock vehicles available, and timely pickup will be more secure</p>

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<p>The shortage of automotive chips has intensified again, with UBS and S&P Global warning that global automakers may face production disruptions and cost surges by 2026. Musk stated that mainstream suppliers are struggling to meet demand. DRAM chip prices have skyrocketed, and costs in the automotive industry will increase by about 80%. This shortage stems from the AI boom occupying production capacity, making the automotive industry a victim. The situation is particularly severe in the Chinese market, with the chairman of Xiaomi stating that the cost of the SU7 will increase by thousands of yuan. DRAM is an essential semiconductor for automobiles, and demand will continue to grow as the industry transforms</p>

- A new wave of automotive chip shortages is expected to disrupt global car production from 2026, as warned by various institutions including UBS and S&P Global.  
- The shortage, driven by rising demand from the AI sector, is significantly impacting costs, with some car manufacturers facing increases of several thousand yuan per vehicle.  
- DRAM chip prices have surged, with reports indicating a rise in prices over 100%, exacerbating challenges for the automotive industry that relies heavily on these essential semiconductor components.

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Automakers lack chips and become victims of AI, with production capacity far behind that of smartphones and servers. The Chinese market has become a disaster zone