Buying a new phone, laptop or gaming console has got noticeably costlier this year, and the reason sits inside the device. Memory chips, the DRAM and storage every gadget relies on, have climbed so steeply that brands across categories have passed the cost on to buyers. Now OpenAI CEO Sam Altman, whose AI data centres compete for the same chips, has said that keeping this memory in personal devices is a poor use of a scarce resource.Speaking on Cheeky Pint, the podcast hosted by Stripe co-founder John Collison, which went live on October 29, Altman pushed back on the idea that running open-source AI models on personal computers would take the load off data centres. “From a global allocation perspective, actually, it’s quite terrible to have everybody have a bunch of the world’s limited supply of DRAM sitting in their own computer,” he said, adding that the memory ends up “being used 5% of the time.“
Sam Altman says local AI is the wrong answer to the memory shortage
Altman’s point is about utilisation. Memory in a data centre serves many users through the day, while the RAM in a laptop or phone sits idle for long stretches. “You want maximum utilisation in the cloud if you’re trying to deal with this very supply-constrained environment,” he said. “Somehow many people’s intuition is the opposite of that.”He also said he wants a lot more supply in the market. Altman said OpenAI has built its own chip, is learning to build data centres, and plans to point its robotics programme at making more of them. On memory prices, he admitted the market has not corrected itself, saying “the invisible hand is failing right now.”
Memory chip shortage pushes up prices of phones, laptops and consoles
The squeeze is visible in India’s smartphone market. OnePlus, Samsung, Oppo and others have revised prices more than once because of rising memory costs, and industry watchers say mobile-grade memory now costs several times what it did a year ago, putting phones under Rs 10,000 at risk.PCs are taking a bigger hit. On October 29, the same day the podcast went live, Intel forecast fourth-quarter revenue of $15 billion to $16 billion, short of the roughly $17 billion analysts expected, and its shares fell over 20% in extended trading. The company expects the PC market to shrink 12% this year and another 10% in 2027, and does not see memory supply or pricing easing next year. HP has said memory made up about 35% of a laptop’s production cost in July, up from 15-18% a quarter earlier.Consoles have not escaped either. Sony has raised PS5 prices twice this year, the Xbox Series X now costs 60% more in the US than it did at its 2020 debut, and Nintendo raised the Switch 2’s price in September.
Memory makers post record profits as shortage may last till 2030
Chipmakers are on the other side of this. SK Hynix reported a record quarterly operating profit of 83.3 trillion won (about $62 billion) this week, said more than half its production for 2027 and 2028 is already booked under long-term deals, and warned the shortage could last through 2030. Samsung’s preliminary figures put its July-September operating profit at around 107.4 trillion won, its fourth straight record quarter.Altman described the shift on the podcast. Memory makers, he said, once spent $20 billion on capacity to earn $19 billion, and are now each set to make about $100 billion in free cash flow a year. Having nearly gone bankrupt in past cycles by overbuilding, they remain cautious about new factories, which means relief for gadget buyers is unlikely to come quickly.