Semiconductor supply chain disruption
Auto sector at risk as chip suppliers favour AI data centres, says S&P
Chip supply problems continue to cause concerns for the automotive industry and in the latest research from S&P Global Mobility, higher margin supply to AI data centres is threatening supply to premium carmakers.
A new report from the market analyst says that the automotive industry is facing another chip shortage as manufacturers of dynamic random access memory (Dram) chips reallocate capacity in preference of high-bandwidth memory (HBM) for AI data centres. According to S&P Global Mobility, the profitability and demand for HBM far exceed those of traditional automotive applications, which could leave automakers increasingly vulnerable to supply chain deficit that could rival previous shortages.
The development and application of AI tools has escalated sharply since ChatGPT was launched (in 2022) and that has increased demand for demand centres, according to S&P. Those data centres rely on graphic processing units (GPUs). In addition, each GPU module requires the specific type HBM Dram chips, which use more wafer area than the standard Dram chips used in vehicles.
What is more, the margins for Dram chips in data centres are significantly higher than those for automotive applications, according to S&P, which has resulted in the top three Dram makers – Samsung Electronics, SK Hynix and Micron Technology – focusing their resources on data centres over automotive needs.
S&P said that the shift means that as demand for AI applications increases, the supply for automotive use is diminishing. That is a problem for makers of premium vehicles (both combustion and electric) that have advanced cockpit features that require more Dram content for infotainment, continuous sensor processing and over-the-air updates.
It is also the case that chip makers are phasing out older semiconductor technology still widely used by the automotive sector, including DDR4 and LPDDR4 memory chips. Those are used in advanced driver assist systems (Adas), engine control units (ECUs) and infotainment systems.
That phase out is causing panic in the automotive supply chain and a rush to secure components similar to what was seen in 2021, said S&P. However, building in buffer stock is only a short-term solution. Since the crisis of 2001 which followed the Covid-19 pandemic, carmakers have been working to more closely integrate with semiconductor manufacturers to secure supply, as seen with BMW and GM.
Explaining the manufacturing challenge, S&P said: “Dram manufacturers did not foresee this explosion in demand and there is now a deficit of capacity for Dram wafer fabrication. While new investments in capacity have surged since 2023, is still takes years to build a new wafer fab.”
In its report S&P said that Dram capacity will be “constrained but elastic” over the next two years and those automotive customers that are willing to pay as much as other industries Dram chips will be the ones able to secure required volumes. For new contracts, this means Dram prices could rise between 70-100% in 2026 compared to the last year. “This is a significant increase for premium cars with advanced cockpit and autonomy features which already had north of $150 of Dram in 2025,” S&P said.
However, S&P has forecast that carmakers will be able to absorb the cost as they did with higher costs triggered by US tariffs and it did not expect the price increases to impact light vehicle production.
