# Morgan Stanley: Memory chip prices have spiked six-fold in the past year.

*semiconductor, business · news · 2026-06-03 · Reuters*

## Key points

- Memory chip prices have increased six-fold in the past year due to AI-driven demand.
- Cloud and AI companies are locking up chip supply through long-term agreements, squeezing traditional buyers.
- Morgan Stanley warns the current chip crunch may represent a lasting supply-demand reset, not a typical cycle.
- New manufacturing capacity will take years to affect supply due to high cost and complexity.
- Rising chip prices are causing increased cloud costs and delayed technology rollouts, with potential 2026 device market shrinkage.

June 3 (Reuters) - Soaring memory chip prices driven by massive AI demand risk stoking "chipflation," Morgan Stanley analysts cautioned, as makers of devices from smartphones to PCs are forced to ​choose between raising prices and settling for thinner margins. The brokerage said on Tuesday that ‌memory chip prices have spiked six-fold in the past year, as manufacturers have struggled to keep up with Big Tech's AI infrastructure spending spree and prioritized higher-margin data center chips over those used in everyday devices. Sign up here. "What began ​as an AI infrastructure bottleneck is now spreading into hardware margins, device affordability, cloud ​costs, inflation and policy," Morgan Stanley said in a 66-page note, adding the ⁠crunch has "become a macroeconomic concern." To be sure, some chipmakers are building capacity, but the analysts said ​that would likely take years, given the cost and complexity of setting up new manufacturing plants. Unlike ​past boom-bust cycles, the brokerage said the current surge could be a "durable supply-demand reset" as large cloud and AI companies lock up capacity through long-term agreements and other commitments, leaving traditional buyers scrambling for a smaller, tighter and ​more volatile supply pool. While the direct impact on consumer inflation may be limited, the pressure is ​showing up across producer prices, corporate margins, cloud costs, capital spending and delays in rolling out new technology, ‌the brokerage ⁠wrote. Microsoft, for instance, said in April that about $25 billion of its $190 billion in spending this year will come ​from higher chip prices. Research ​firm IDC has estimated ⁠that both the PC and smartphone markets would shrink sharply in 2026, as rising prices dissuade potential buyers, especially in the lower segments. "Memory producers ​benefit from stronger pricing, margins and visibility. Downstream hardware companies must absorb ​costs, pass ⁠them through, redesign products or risk demand destruction," according to Morgan Stanley. U.S.-China ​tensions over chips and export curbs are fragmenting supply chains and tightening supply, while subsidies offer little near-term relief as ​new capacity will take time, the brokerage said. Reporting by Kanishka Ajmera in Bengaluru; Editing by Sriraj Kalluvila

**Companies:** Microsoft
**Countries:** United States, China

[Read the full story on Reuters](https://www.reuters.com/business/retail-consumer/ai-chipflation-spreading-data-centers-wider-economy-morgan-stanley-warns-2026-06-03/)

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