Bad turn for tech in South Africa
People in South Africa can expect to see dramatic increases in the prices of everything from media players to networking products as a global chip shortage, fueled by AI demand, intensifies.
Craig Nowitz, the CEO of IT distributor Syntech, has told MyBroadband that suppliers have notified them of impending processor shortages and price increases on all items featuring flash storage and RAM.
“Things are only getting worse. We are now experiencing both Intel and AMD CPU shortages, and getting graphics card allocations with substantial price increases,” Nowitz said.
“We have also been notified of price increases on all items with NAND flash and DRAM, like media players, networking products, and the rest to follow.”
Dynamic Random Access Memory (DRAM) is used in everything from TV sets to supercomputers. While the shortage was initially felt in higher-end variants, demand has led to a shift in production capacity.
This has caused a knock-on effect, with fewer components based on older, cheaper technology being manufactured.
Last year, Micron even announced the shuttering of its consumer business, Crucial. Micron is one of the world’s three major manufacturers of DRAM and NAND flash chips, along with Samsung and SK Hynix.
NAND flash is the core component of the solid-state storage used in smartphones, most laptops, and many desktop computers. Cloud providers and hosting companies also use solid-state drives in servers.
While many PC builders and other electronics manufacturers believe that the AI bubble will burst, restoring balance to the industry, it remains unclear when this will happen.
One surprising prediction came from Phison Electronics CEO Pua Khein-Seng, who said last year that the NAND flash shortage could last for ten years. Phison makes controllers for flash-based drives.
While others predicted that shortages would last a year or two, Tech Taiwan reported that Pau said a combination of factors would prolong the issue.
Phison’s dire warning — and solution
He said that after prior cycles of heavy investment led to price collapses, flash manufacturers pulled back, slowing expansion.
Around 2023, a significant share of capital was redirected into high-bandwidth memory used for model training, where profit margins were much more attractive.
Pua explained that, as a result, NAND received less attention just when demand began rising again. At the same time, demand from cloud providers shifted from training to inference.
Simply put, inference is where an AI service processes a user’s request and produces an output using an already-trained model that is stored on a disk.
While inference also requires significant amounts of computational power and memory, it is much less than what is needed by training workloads.
Therefore, whereas AI model training requires fast graphics cards with massive amounts of RAM, inference workloads and model storage substantially increase demand for NAND flash.
Putting his money where his mouth is, Pua and the team at Phison developed an add-in cache for laptop solid-state drives called aiDAPTIV.
Although initially conceived as a product for the “AI PC” market, Pua told Wired at CES last week that aiDAPTIV could also be a solution to the memory component shortages.
He explained that aiDAPTIV effectively expands memory bandwidth using the SSD, allowing laptop makers to reduce the amount of DRAM in a machine without reducing its capabilities.
However, given that the industry was facing both a NAND flash and DRAM shortage, aiDAPTIV merely seems like a way to balance the outlandish cost of one against the massive price hike of the other.
Structural shift in the IT industry
“What we’re witnessing isn’t just a temporary spike; it’s a structural transformation driven by the explosive growth of AI infrastructure,” Nowitz told MyBroadband in November last year.
“Global hyperscalers like Microsoft, Google, and Amazon are building out AI data centres at breakneck speed, and manufacturers are prioritising these high-margin enterprise clients.”
Nowitz said that as the CEO of an IT distributor, he has had a front-row seat to one of the most dramatic shifts in the tech supply chain in recent years.
“Over the past year, demand for server-grade DRAM and high-bandwidth memory has skyrocketed,” he said.
“As a result, consumer-grade DDR4 and DDR5 modules, the bread and butter of our retail and integrator channels, are becoming harder to source and significantly more expensive.”
Nowitz said that he’s told several of their key partners that where they used to see stable pricing and predictable availability, they are now navigating weekly volatility and allocation constraints.
“It’s a new reality, and we need to adapt quickly,” he said.
The supply-demand imbalance is stark, with reports suggesting that even tier-1 hyperscalers were receiving only 70% of their DRAM orders, while smaller OEMs are fulfilling just 40%.
For distributors like Syntech, this means tighter allocations, longer lead times, and the need for strategic forecasting.
“We’ve had to become more agile, more proactive, and more transparent with our partners. The old playbook doesn’t apply anymore,” said Nowitz.
“This is a defining moment for our industry. While it brings challenges, it also opens the door to innovation and smarter collaboration,” Nowitz said.
Loading ...