We lived through the semiconductor shortage that brought auto production to a standstill in the wake of the COVID-19 pandemic, and something similar could happen to us in the not-too-distant future.
Artificial intelligence (AI) companies are driving up prices for dynamic random access memory (DRAM) chips as they build data centers for their power- and processing-hungry applications. Accordingly The Register Consumer prices for the most common storage capacities rose by 63 percent in Europe in the last quarter of 2025.
Analysts at S&P Global and UBS say this will have a ripple effect on the auto sector as chipmakers are likely to prioritize high-margin data center customers over automakers and auto suppliers.
S&P Global’s Matthew Beecham predicts automotive-grade DRAM prices could rise by 70 to 100 percent, likely leading to “panic buying and production disruptions across the industry.”
UBS believes automakers like Tesla and Rivian that prioritize autonomous driving systems are at greater risk than traditional manufacturers like Ford and General Motors. The investment bank assumes that disruptions in the automotive industry’s supply chains could occur as early as the second quarter of this year.
Time will tell whether this potential chip shortage will be as disruptive to the automotive industry as the one the sector experienced post-COVID.
At the start of the COVID-19 pandemic in 2020, many automakers reduced their forward orders for computer chips in anticipation of a recession and a sustained decline in demand.
As economies around the world recovered faster than expected, automakers found themselves at the back of the semiconductor queue and forced to scale back production.
Faced with long waiting lists, some car manufacturers made it a point to produce more expensive models and variants to maximize profitability. Long waiting lists forced many potential new car buyers onto the used car market and drove up prices there too.
