What Happened to Microchip Prices?

By: Noah Solinga

My computer recently ran out of storage. Luckily, it has upgradable RAM and storage. I was putting off this upgrade for a while, but the time has come. 

When I first went looking for an Solid-State Drive (or SSD) that would allow me further storage capacity, I was expecting to find one that would grant me 1 Terabyte of space  for around $80; however, I found most 1-TB sticks with decent read and write speeds cost upwards of $150. 

While I am a victim of the violent uptick in storage prices, I was fortunate enough to buy RAM last year, before the price rise. 

And what is RAM? The computer company Lenovo defines RAM as “a computer's short-term, high-speed memory that temporarily stores active data and application instructions for immediate access by the CPU”.

I bought 2 sticks with 8 Gigabytes of memory for $25, and it is now being sold for $120. I also bought 1 stick of DDR5 memory for $20, and it now goes for $90. 

Additionally, as someone trying to start a basic laptop upgrade business (please WhatsApp me if interested), I have learned that some major performance boosts come from cleaning fans, replacing batteries, and upgrading RAM.

 However, while I have gotten decent business from batteries and clean-out fans for free while upgrading batteries, I have not gotten a single request to upgrade RAM.

These experiences made me ponder two related questions: What happened to the price of storage? And what happened to the price of RAM?

Well, there is one thing common with both RAM and storage: they are both essential microchips for every single device. So the real question is: what led to the rise in prices of microchips?

Since the mid 2000s, RAM prices have been reasonable. Companies produced a lot, and consumers bought a lot. Therefore, companies made a lot of money through selling more with a lower profit margin, and consumers were satisfied with these prices.

However, RAM production is somewhat of an oligopoly (a monopoly of a few companies). The only 3 companies that manufacture memory are Samsung, SK-Hynix, and Micron Technology. It’s illegal for these three companies to collude together to set a price in common, but they can all raise prices at the same time. In doing so, the consumer has no choice but to buy anyway.

Think for a moment about your AI usage. Around a year ago, a response took 8-10 seconds. Now, though, a response is almost instantaneous. This is in large part due to companies like Google and OpenAI using ultra-fast microchips. 

However, this great need for high-powered chips has created a shortage. According to the writer Jason England, this dynamic “leaves the small group of chip fabrication plants with the ability to charge whatever they want in this drought, causing the prices to soar, as they decide whether the money they make off consumer RAM is even worth being in the business of furnishing consumer PCs.”

In fact, Micron ended its “Crucial” series of consumer RAM and storage, as they were not making nearly as much money from these consumers as from the AI companies.

While some say that microchip prices may come back down as early as this year, some say this could last into the 2030s.

All in all, this entire situation is very uncertain, and only time will tell what will happen going forward.