Samsung reportedly raises memory chip prices by 60% amid global AI demand — will the hike impact customers?

Samsung Electronics has increased memory chip prices by up to 60% this month compared to September amid a global shortage driven by rising demand for AI. This price increase is affecting server makers and could raise costs for smartphones and computers, according to a report by Reuters, citing people familiar with the development.Shares of Samsung, SK Hynix, and US chipmakers surged following the development, highlighting how the AI boom has driven strong demand for chips tailored for AI applications and the memory chips used in them.The price hike comes after Samsung, the world's biggest memory chip manufacturer, decided to delay a formal announcement of pricing for supply contracts in October, the report said. Pricing details are typically announced on a monthly basis. Will the price hike impact customers?The rising prices of these memory chips, primarily used in servers, are expected to add pressure on large companies building their data infrastructure. They are also likely to increase the prices of other products, such as smartphones and computers that use these chips, which could affect customers.Rising costsMany leading server manufacturers and data centre developers now acknowledge that they don't receive enough supply. The prices being paid as premiums are very high," Tobey Gonnerman, president of semiconductor distributor Fusion Worldwide, told Reuters.Samsung contract prices for 32 gigabyte(GB) DDR5 memory chip modules rose to $239 in November from $149 in September, he said.DDR memory chips are used in servers, computers, and other devices to enhance computing performance by temporarily storing data and facilitating quick data transfer and retrieval.The South Korean firm raised the prices of its 16GB DDR5 and 128GB DDR5 chips by approximately 50% to $135 and $1,194, respectively. Prices of 64GB DDR5 and 96GB DDR5 have surged over 30%, Gonnerman said. Samsung has not shared any official update on reported price hikes. Livemint could not independently verify the report.On Sunday, Samsung announced plans to construct a new chip manufacturing line at its South Korean plant, anticipating that AI will boost demand over the medium and long term.The chip shortage has been so intense that it has led to panic buying among some customers, the report said, citing industry executives and analysts.Chinese smartphone manufacturer Xiaomi warned last month that rising prices have increased the cost of producing phones.The shortage, however, benefits Samsung, which has fallen behind competitors in providing advanced AI chips and has not experienced as much profit growth until recently.Samsung's gradual move to AI chips has given it stronger pricing power compared to smaller memory competitors like SK Hynix and Micron, the report said, citing Jeff Kim, head of research at KB Securities.TrendForce analyst Ellie Wang told the news portal that Samsung is likely to increase quarterly contract prices by 40% to 50% in October-December, surpassing the expected industry average of 30%."They are really confident that the price is going to increase. And the main reason is that now the demand is really strong, and everyone is working on long-term agreements with the suppliers," she said.