Costly memory: AI-fuelled chip boom sends prices soaring, Singapore retailers reeling

SINGAPORE: Behind a retail counter at Sim Lim Square, Mr Abdul Bari has been seeing memory chip prices being marked up in a way that he has never seen before. As recently as a month ago, some brands of random access memory (RAM) chips – electronic components that are fundamental parts of modern computing – were upped by eye-watering amounts in a single price adjustment, said Mr Abdul, a store-in-charge who works for computer retailer Dynacore Technologies. A 32GB RAM chip that would have cost less than S$200 just about a month and a half back, now costs between S$600 to S$700, which the store manager said is the highest it has ever been. Because of this, customers are holding back on buying new computers or upgrading existing ones, with several Sim Lim Square retailers telling CNA that they are making significant losses. Such a price spike has "never happened before”, said Mr Abdul, who has been in this line for over a decade. Essentially, RAM is what computers use for short-term memory storage. It is necessary to run the device’s operating system and applications efficiently and has an impact on the computers’ processing speed. The reason for unprecedented price increases in recent months is twofold. Artificial intelligence (AI) has fuelled a surge in demand for silicon of all varieties, and chip manufacturers have responded in kind by limiting consumer supply and redirecting production capacity to AI chips that have higher profit margins. Amid the supply crunch, electronics makers are rushing to stockpile chips to meet their production needs, major outlets including Bloomberg and Nikkei Asia. This, said those in the industry, is the other side of the AI boom that led to Singapore’s unexpected economic boost at the tail end of 2025. In his New Year’s message, Prime Minister Lawrence Wong said Singapore benefited from the surge in demand for semiconductors and electronics driven by the AI boom. As a result, the manufacturing sector expanded by 15 per cent in the fourth quarter of 2025 alone. RECORD HIGHS Retailers here told CNA that the prices of RAM units have surged to record highs, impacting their earnings and changing customers’ purchase habits. Demand for higher capacity versions, like DDR5, have seen manufacturers Samsung , SK Hynix and Micron — who account for over 90 per cent of the RAM market — pivot towards that space, a move which is more profitable, but limits supply for regular computer users. US memory giant Micron produces about 98 per cent of its top-end flash memory chips in Singapore. At Computer Safari, chief executive Tanveer Ahmad said that prices have surged across all memory segments, regardless of the type of RAM. His shop sells the older DDR4 version. Three weeks ago, a 32GB unit cost around S$65. It is now S$160, which is around a three times increase, noted Mr Ahmad. While such price movements happen seasonally, this year’s spike is exceptionally high, he noted. Agreeing with Mr Abdul from Dynacore, Mr Ahmad said this hike has been the worst in his experience as a computer retailer for two decades. Likewise, a manager at Bizgram Asia told CNA that RAM prices have risen almost 400 per cent over the past month, with 32GB units now going for S$600, 64GB ones for S$1,399 and the massive 128GB units at S$2,699. Vendors from Taiwan have informed the retailers that the price hikes will likely continue through 2027, maybe even trickling into 2028, due to the global demand for chips and the resulting shortage. Associate Professor Goh Puay Guan, from the analytics and operations department of the National University of Singapore’s Business School, said that higher end AI memory chips have higher profit margins. As such, manufacturing resources are being diverted to make these, instead of the RAM type that is needed for smartphones and consumer electronics, he explained. “It takes time and a lot of capital investment to build up semiconductor manufacturing capacity,” noted Assoc Prof Goh. “With limited manufacturing capacity, it would make more sense for manufacturers to produce higher end products which are more profitable.” IMPACT ON RETAILERS The rapid rise in RAM prices has brought significant losses for retailers, along with shifts in customer behaviour. Mr Ahmad shared that Computer Safari’s earnings have dropped between 50 and 60 per cent in the past month. This is due to a drop in sales as customers — including regulars — hold off upgrading their devices if it is not urgent, said Mr Ahmad. In the past when each RAM unit was about S$60 each, Mr Ahmad said his firm would sometimes provide free upgrades to customers. “Then the customers will be happy. But right now, at S$160, of course we cannot afford as well,” he said. Mr Abdul shared that Dynacore’s business has seen losses of around 20 per cent. RAM sales contribute 15 to 20 per cent of its sales each month. His customers — which comprises both retail consumers and also corporate clients — still buy the RAM chips as they need to use their computers, but cut down on upgrading other aspects of their machines. “They have to spend money on the RAM, no choice. Because of the RAM (price) increase, they cut down on the other parts, maybe like the graphic card or CPU,” he said. The Bizgram manager shared that the high prices have driven his customers to buy lower capacity RAM units instead. “I think the people who used to buy the higher capacity of RAM, they've come down to lower capacity, like in the old times,” he said. He explained that customers used to buy 8GB to 16GB RAM modules, but started buying higher capacity ones like 64GB and 128GB when the parts became cheaper. Some customers use their devices for work and cannot wait for the prices to drop as they really need it urgently, he said. Those customers will run their devices on lower capacity parts while monitoring the prices, and upgrade when the prices drop in future, he said. The Bizgram manager said there are also spillover effects on other aspects of business too. “There’s an impact on graphics cards, for instance, because people have budgets. They will not invest on that (graphics cards) because they need to invest on RAM. Both are balanced,” he said. Packaged computers from brands like HP and Dell will also become more expensive due to the RAM modules within, he added. Assoc Prof Goh noted that the rising prices could bump up the prices of other products too. “RAM chips make up between 10 to 20 per cent of the price of a smartphone. With the increase in RAM prices, this would also have an impact on phone and electronics prices,” he said. RESPONDING TO PRICE HIKES Despite the price pressures, retailers told CNA there is ultimately no real way to pivot away from RAM, as it remains essential for computers to function. Mr Abdul said his shop is staying calm and adopting a wait-and-see approach for now, even as it has almost fully sold out its existing stock. “We sell at around S$400, because it's a mix of the older stock and new purchases, so we do an average and are selling at that average price,” he said In the past, retailers may order and stockpile an item if it is expected to face a shortage. However, they are hesitant in the current pricing landscape. “Now we are so scared that if the price suddenly drops, we have to suffer losses on our side,” said Mr Abdul. Echoing his sentiments is Mr Ahmad, who shared that his firm only procures the necessary units upon customers’ orders. “Now, buying power is difficult. We can't buy so expensive because we do not know when it (prices) could suddenly go down again, and then we will have a loss,” he said. Mr Ahmad said he intends to monitor if the prices fall in the months ahead, and will start to hold inventory again if they return to a more acceptable level. Previously when the prices were more regular, his firm would stock around 10 to 20 units for each RAM model, he added. At Bizgram, the manager said his shop will start stocking up on lower capacity RAM, as demand for the higher capacity units falls. “We will still keep up bringing in the stock and all, because if you stop supply, then you can't sell right?” he said. Industries that use RAM are also adapting to the pricing developments with adjustments to their business plans, said Assoc Prof Goh. For instance, the smartphone industry is adapting by using lower end products or slowing their new product introductions, he said.