Memory chip prices are surging as artificial intelligence demand creates a global shortage, threatening to drive up costs for smartphones, laptops, and gaming consoles by hundreds of dollars, a crisis highlighted by Micron Technology’s record earnings report.

The memory chip maker posted numbers Wednesday evening that were nothing short of remarkable. Sales hit $13.6 billion for its fiscal first quarter, up 57% from the same time last year. Operating income also broke company records.

What Micron told investors about the coming months is even more eye-opening. Revenue will reach $18.7 billion in the quarter ending February, more than double what the company brought in a year earlier. Adjusted operating income? That’s expected to surge more than five times to $11.3 billion.

Wall Street knew the numbers would be strong. They just didn’t know how strong. Micron’s revenue forecast landed 31% higher than what analysts predicted. That’s the biggest miss by experts in at least five years, FactSet data seen by WSJ shows.

Investors loved it. The stock jumped 8% in after-hours trading Wednesday. It had already more than doubled over the past year.

Here’s the problem, though. All this great news for Micron spells trouble for the rest of us.

Artificial intelligence is eating up memory chips. Companies building AI systems need specialized memory, and they’re buying massive quantities. That leaves less supply for everything else—your laptop, your phone, your tablet, even gaming consoles. All these devices need memory chips just to work.

The numbers don’t lie. A standard dynamic random-access memory module now costs more than 60% higher than it did six months ago, according to Trendforce. Next quarter, the price will hit $500. Last year at this time? About half that.

New factories won’t help soon

Building more chip factories would help. But these plants don’t pop up overnight. Micron CEO Sanjay Mehrotra said Wednesday the company will break ground on a new facility in upstate New York early next year. Don’t hold your breath waiting for chips from that plant, though. They won’t roll off the line until 2030.

Micron is spending big to increase production elsewhere. The company plans to drop a record $20 billion this fiscal year on expanding capacity. Over the past five years, they averaged just over $10 billion annually.

Still not enough. Mehrotra doesn’t think even this massive spending spree will satisfy demand for the high-bandwidth memory AI needs. “We believe that the aggregate industry supply will remain substantially short of the demand for the foreseeable future,” he said on the call.

Tech companies sound the alarm

Computer makers see what’s coming. Jeff Clarke, Dell’s Chief Operating Officer, addressed the situation last month. “We’re going to do everything we can to minimize the impact,” he said. “But the fact is the cost basis is going up across all products.”

HP issued its own warning last month. Rising memory costs could push operating profits to the low end of their long-term range for the current fiscal year, executives told investors.

So consumers will pay the price? Well, Someone has to pay for all this.

The smartphone industry already sees trouble ahead. Counterpoint Research changed its forecast earlier this week. The firm now expects smartphone sales to drop 2.1% next year. They had previously predicted a slight increase. High-end phones with AI features are in a particularly tough spot since they need more memory.

Even video games are caught up in this mess. Nintendo’s stock has dropped 18% over the past month. Doug Creutz, an analyst at TD Cowen, says worries about memory prices are mostly to blame. He ran the numbers. If memory costs add $40 to each Switch 2 console, it would slash about 20% off his pretax earnings forecast for Nintendo’s fiscal year ending March 2027.

His guess? Nintendo might raise the Switch 2 price by $50 instead to cover the cost.

Mario fans won’t be happy about that. But for Micron, basic economics is working in its favor. Supply and demand are pushing the company toward record profits.

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