Daily: Memory crunch continues
9 min read.
Highlights
Memory bottleneck. The memory supply bottleneck in AI and the subsequent skyrocketing of memory chip prices continues to be a major trend in the markets. What was once a highly commoditised, thin-margined industry with quarterly contracts has shifted to large profits and three to five year contracts. Samsung’s chip branch beat earnings expectations, with a massive 48x jump in profit.
Meanwhile, the consumers of memory chips are desperate for more with Meta extending the life span of their data centres from six to seven years as the memory bottleneck limits new data centre construction.
China wants Nvidia chips. Nvidia CEO Jensen Huang recently said in the Dwarkesh Podcast that “the amount of compute they have in China is enormous” in his defence of why Nvidia should be allowed to sell advanced AI chips to China. Reports suggest that China is facing limitations in advanced node production, both in quality (stuck at about 7nm node) and quantity (cannot produce at truly mass scale). Nvidia can produce at quality and quantity.
Reuters reports that a Nvidia B300 server, which retails in the US for about US$550,000, is available on the Chinese black market, fetching sums of about US1 million. This signals that Nvidia is still better than anything China has on its market and that Nvidia chips are available in some quantities, despite regulatory crackdowns from both Washington and Beijing.
The influential House Foreign Affairs committee is visiting Silicon Valley to discuss AI and export controls with Big Tech companies.
China self-sufficiency drive. AI chips capacity is growing in China, with Huawei set to capture the largest share of the Chinese AI chip market. The firm’s chip sales are expected to jump by at least 60% this year. Cambricon, a Chinese startup that seeks to compete in the AI chip inference space, saw its stocks jump 14% with quarterly sales doubling year-on-year.
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1. Policy and Geopolitics
1.1
Reuters (04/30): Prices of Nvidia’s B300 server at $1 million in China on US curbs, sources say
Strong demand for AI computing equipment in China has nearly doubled prices for Nvidia’s B300 servers to about 7 million yuan ($1 million) each, industry sources said, as a crackdown on chip smuggling dries up black-market supply.
Prices of Nvidia’s most advanced and powerful server, critical for artificial intelligence tasks, have climbed since early this year, but rose sharply after the grey market, a key supply channel, came under pressure, the four sources said.
A B300 server, which houses eight B300 GPUs, is priced at about $550,000 in the United States, up from around $500,000 late last year, two of the sources said.
1.2
Axios (05/01): House Foreign Affairs lawmakers head to Silicon Valley to talk AI exports
House Foreign Affairs Committee members are heading to Silicon Valley next week to discuss AI and export controls with leading tech companies, according to an invitation seen by Axios.
Why it matters: The trip underscores how AI is becoming a foreign policy priority, even as the White House has diverged from the Hill on whether China should have access to the most advanced chips.
The committee advanced the MATCH Act earlier this month, legislation meant to cut off China’s access to the tools needed to make advanced chips.
1.3
FT (05/01): Pentagon signs new military AI deals with Nvidia, Microsoft and Amazon
The Pentagon has struck new agreements with tech companies to use their AI tools and infrastructure on classified networks, as the US military broadens its AI options after its relationship with Anthropic collapsed.
The defence department said on Friday it has reached deals with Nvidia, Microsoft, Reflection AI and Amazon Web Services for the “lawful operational use” of their technology. The deals are similar to those previously struck with SpaceX, OpenAI and Google.
1.4
Bloomberg (04/30): EU Chips Act Overhaul Aims to Boost Investment
The European Union’s revamped plans to stimulate the semiconductor industry would allow the bloc’s executive arm to invest directly in manufacturing and would prioritize development of new technologies, people familiar with the draft said.
The proposal for the Chips Act II, expected in late May, is an attempt to improve on its 2022 predecessor after major chip production plans in Europe were delayed or scrapped, and the bloc’s own auditing body said it was unlikely to meet its targets to double the EU’s share of global chip production.
The draft proposals will recommend empowering the European Commission to invest in large, cross-border projects directly, whereas previously it was limited to funding research and approving aid from member states, the people said, asking not to be identified because the draft proposal isn’t yet public. The commission-backed projects would still be public-private partnerships, they said.
1.5
Reuters (05/01): Intel’s Sambanova deal gets U.S. antitrust clearance
U.S. antitrust authorities have completed their review of Intel’s investment in SambaNova, a chip startup chaired by Intel CEO Lip-Bu Tan, according to a regulatory notice circulated on Friday.
Intel put $35 million into SambaNova in February, which, along with other financing, boosted Intel’s stake in the startup to 8.2% from 6.8% last year.
2. Economy, Finance, and Business
2.1
FT (04/29): Memory chipmakers hope AI frenzy signals end to boom and bust
Investors are betting on a prolonged boom for memory chipmakers amid voracious AI demand that has prompted customers to lock in multiyear contracts with SK Hynix and Samsung Electronics.
Hynix, the world’s second-largest memory chipmaker and a key supplier to Nvidia, said the “structural shift” differs from past booms because customers are prioritising security of supplies over price amid an acute shortage. That shift is reinforcing expectations that an industry long defined by boom-and-bust cycles may be shaking off its volatile past.
Many view the shortage as structural rather than temporary because demand has shifted from cyclical consumer electronics to deep-pocketed AI hyperscalers rapidly increasing capital spending.
2.2
Bloomberg (05/03): Nvidia’s Push Into Physical AI Sparks Rally in Asian Partners
The list of Asian stocks that benefit from business partnership with Nvidia Corp. is getting longer, as the region further integrates into the AI chip giant’s business ecosystem.
Just in the past week, South Korea’s LG Electronics Inc., Taiwan’s Nanya Technology Corp., as well as China’s Huizhou Desay SV Automotive Co. and Pateo Connect Technology Shanghai Corp. have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer.
Asian suppliers now account for about 90% of Nvidia’s production costs, up from roughly 65% last year, according to data compiled by Bloomberg. The explosive growth of the chip designer’s products has intensified its reliance on Asian partners that dominate manufacturing, assembly and key components.
2.3
Bloomberg (04/30): Samsung’s Chip Profit Soars 48-Fold Due to AI Spending Spree
Samsung Electronics Co.’s semiconductor arm brought in historic profit over the March quarter, beating expectations with a 48-fold jump as AI data center orders delivered hefty margins.
The chipmaking unit, which competes with SK Hynix Inc. and US-based Micron Technology Inc. in memory, reported an operating income of 53.7 trillion won ($36 billion) in the first quarter. The result compares with the average analyst estimate of 35.3 trillion won. Group-wide net income rose to 47.1 trillion won.
The results reflect massive spending by hyperscalers, with both Meta Platforms Inc. and Alphabet Inc. planning to plow even bigger sums into artificial intelligence infrastructure. That’s spurring some investors to bet that high-bandwidth memory — one of the key bottlenecks to AI’s rise — is no longer beholden to boom-and-bust cycles and can tap sustained growth.
2.4
FT (05/01): Huawei’s AI chip sales surge as Nvidia stalls in China
Huawei is set to capture the largest share of China’s AI chip market this year, with sales jumping by at least 60 per cent amid strong demand from Chinese companies seeking domestic alternatives to Nvidia.
China’s tech groups have placed large orders for Huawei’s latest Ascend processor 950PR, according to two people with knowledge of the matter, as the Shenzhen-based company races to make inroads into a sector long dominated by the $5.1tn US chip group.
Huawei expects revenues from its AI chips to reach about $12bn this year based on orders it has already received, up from $7.5bn in 2025. The majority of orders this year are for 950PR, which entered mass production in March. It also plans to launch an upgraded version of 950DT in the fourth quarter, the people said.
2.5
Bloomberg (04/29): Cambricon Shares Jump 14% After Its AI Chip Sales Surge in China
Chinese AI chipmaker Cambricon Technologies Corp.’s shares surged 14% in Shanghai, after its first-quarter sales more than doubled thanks to Beijing’s push for self-sufficiency in critical technologies including semiconductors.
Revenue rose to 2.88 billion yuan ($421 million) in the January-to-March period, compared to 1.11 billion yuan a year ago, according to a filing to the Shanghai Stock Exchange on Wednesday. Net income soared to 1.01 billion yuan in the first quarter of this year, from 356 million yuan in the same period a year ago. On Thursday, the chipmaker’s shares in Shanghai rose the most since late August.
2.6
Bloomberg (04/30): Qualcomm Rallies on Data Center Inroads, China Recovery
Qualcomm Inc. rallied in late trading after the company said it was making headway in the lucrative data center market and predicted that the China phone industry would bounce back.
When reporting quarterly results Wednesday, the chipmaker said that a top hyperscaler — an industry term for the largest data center operators — was on track to begin using its components later this year.
2.7
FT (05/01): Shares in Japanese toilet maker Toto soar on AI-related pivot
Japanese toilet maker Toto’s shares surged 18 per cent to a five-year high on Friday after unveiling plans to boost production of semiconductor components and posting record annual profits.
Its advanced ceramics business has turned Japan’s largest toilet manufacturer into an AI play and caught the attention of activist investor Palliser Capital.
The stock closed at ¥6,425 ($40.86), the highest level since 2021 and bringing the gain this year to more than 46 per cent.
3. Technology
3.1
WSJ (04/29): Meta Will Run Some Servers Longer in Response to Memory Shortage
Meta Platforms is getting thrifty in the face of the memory crunch. The company is extending the useful life of some of its data center servers from six to seven years as it grapples with a “significant server supply deficit” due to the shortage of memory chips, according to two internal memos viewed by The Wall Street Journal.
3.2
Bloomberg (05/01): Nebius Agrees to Buy Startup That Makes AI Run Faster, Cheaper
Cloud computing provider Nebius Group NV agreed to buy Eigen AI, a startup that boosts the performance of chips used to run artificial intelligence tasks, for about $643 million in stock and cash.
Eigen, a 20-person California startup cofounded by alumni of a prominent MIT AI lab, works on optimizing the performance of some of the leading open-source models from OpenAI, Alibaba Group Holding Ltd., Meta Platforms Inc. and Nvidia Corp. Eigen’s technology maximizes the number of tokens — the basic units of data in large language models — generated by each Nvidia chip that Nebius uses for inference, or running AI models, said Roman Chernin, Nebius co-founder and chief business officer. That helps Nebius provide better and cheaper services to customers.
3.3
Reuters (05/04): MediaTek hires former TSMC executive to boost AI chip packaging
Taiwanese chip designer MediaTek said it has appointed former TSMC executive Douglas Yu as a part-time adviser as it steps up advanced packaging work and expands into the AI chip market.
Yu joined TSMC in 1994 and retired in 2025, holding a range of roles in backend research and development. He played a key part in developing TSMC’s advanced packaging technologies, including its CoWoS (Chip on Wafer on Substrate).
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