Is a "DRAM Storm" Brewing for the Auto Industry?

According to market analysis, the latest global automotive industry research report from UBS indicates that a supply chain shock triggered by DRAM (Dynamic Random Access Memory) chips is approaching the automotive sector. Influenced by the generative AI boom, which is diverting global wafer production capacity toward high-performance chips, automotive-grade memory chips are facing a dual squeeze of soaring prices and supply shortages, with the negative impact expected to manifest starting in the second quarter of 2026. UBS points out that the world's three major DRAM suppliers—Samsung, SK Hynix, and Micron—are shifting their production focus toward High Bandwidth Memory (HBM) required for AI servers in pursuit of higher profits. This strategic adjustment directly squeezes the supply space for automotive-grade DDR memory. As of the report's release, DRAM chip prices have surged by over 100%, and this upward trend is anticipated to transmit to automotive-grade products, potentially creating a severe supply vacuum for the auto industry during this technological transition period. UBS modeling shows that under the pressure of significant DRAM price increases and an inability to fully pass on costs, the profitability of component suppliers will be significantly impacted. In a baseline scenario (assuming a 120% DRAM price increase and an 80% cost recovery rate from OEMs), UBS calculates that automotive component suppliers' EBIT could decline by 5%-6% in 2026. In a more pessimistic extreme scenario—where DRAM price hikes expand to 200% and the OEM cost recovery ratio drops to 50%—the EBIT decline could skyrocket to 24%, shrinking profits by up to 480 million euros, nearly half of their original EBIT scale. For automakers (OEMs), the impact is characterized by lag and structural features. While there are currently no signs of supply disruptions, supply chain stability is a concern for the next 12-24 months. In particular, premium brands and new automakers utilizing centralized computing architectures, due to their higher DRAM content per vehicle, will face greater risks from cost volatility.

The core reasons for this crisis lie in the reallocation of global semiconductor resources and a mismatch with technology iteration cycles. Starting from 2025, surging demand for HBM from AI servers has prompted the three major suppliers, who hold over 90% of the global market share, to adjust wafer allocation. Since automotive-grade DRAM and AI chips share the global silicon wafer production capacity, every wafer allocated to HBM means a reduction in production capacity for automotive DDR memory. Simultaneously, the automotive industry is in a transition period from older technologies like DDR4 and LPDDR4 to newer technologies like DDR5. Suppliers are gradually phasing out production capacity for older technologies, but the automotive industry's process for testing, validating, and procuring new chips typically takes over two years. This implies that between 2026 and 2027, the industry will face a "technology gap," where supply of older chips contracts before new chips become widely adopted. The impact on the profitability of component suppliers is a key focus of UBS's calculations. Using Europe as an example, UBS quantified the specific impact of DRAM price increases on component suppliers by constructing a financial model. The calculation used a generic component supplier with annual sales of 20 billion euros and an EBIT margin of 5% as a baseline sample. In the baseline scenario, assuming a 120% increase in DRAM chip prices and that the supplier can recover 80% of the increased costs from OEMs, the company's 2026 EBIT is projected to decline by approximately 5%-6%, directly shrinking profits by about 100-120 million euros. However, in a more pessimistic scenario, if DRAM price increases expand to 200% and the cost recovery ratio drops to 50%, the EBIT decline would surge to 24%, potentially shrinking profits by up to 480 million euros, close to half of its original EBIT scale. This calculation result indicates that the profit safety cushion for component suppliers is thinning. UBS emphasizes that companies with a higher proportion of electronics and ADAS (Advanced Driver-Assistance Systems) business face greater risk exposure. In the European and American markets, companies like Visteon and Aumovio (formerly Continental's automotive business), where related businesses account for over 50% of revenue, are the most directly affected by the "DRAM storm." For automakers (OEMs), while the proportion of DRAM cost to the vehicle's selling price is not high, DRAM content per vehicle has reached $25-$150 due to increasing levels of智能化, with even higher amounts in premium models. UBS notes that companies like Tesla and RIVN, which utilize centralized computing architectures, are more significantly affected due to the substantial memory capacity demands of their high-level automated driving and smart cockpit systems. Although there are no signs of large-scale supply instability or price renegotiations at present, UBS warns that the automotive industry lacks an advantage when competing for DRAM capacity against well-funded tech giants. In the long term, cost pressures from price increases could trigger protracted retrospective compensation negotiations, thereby exacerbating financial volatility for OEMs. Regarding coping strategies, UBS believes that existing inventory and long-term procurement contracts can only provide short-term buffers, with long-term solutions dependent on product redesigns after 2028. Market data suggests that global DRAM industry revenue is forecast to grow 148.4% year-on-year to $36.6 billion in 2026, indicating a persistent supply-demand gap, with the average price per Gb for DDR memory expected to reach $0.92.