Global vehicle production faces a new potential crisis as demand for memory chips from artificial intelligence (AI) companies surges, driving up prices and threatening to prioritize data centers over automakers. The industry is bracing for a repeat of the semiconductor shortages experienced after the COVID-19 pandemic, but this time the pressure comes not from supply chain disruptions, but from competing demand.
DRAM Price Surge and Industry Impact
Dynamic random access memory (DRAM) chip prices have already jumped 63% in Europe during the final quarter of 2025, according to The Register. Analysts at S&P Global and UBS predict that chipmakers will favor lucrative AI data center clients over automotive suppliers, potentially causing a 70-100% price increase for automotive-grade DRAM.
Matthew Beecham from S&P Global warns this could trigger “panic buying and production disruptions across the industry”. The risk is particularly acute for automakers heavily invested in autonomous driving systems, such as Tesla and Rivian, as AI development is far more profitable to chip manufacturers. UBS suggests supply chain disruption could begin as early as the second quarter of this year.
The Echo of Past Mistakes
This situation echoes the semiconductor crisis of 2020, when automakers slashed chip orders anticipating economic recession. When demand rebounded faster than expected, they found themselves at the end of the supply chain. Manufacturers then shifted production to maximize profitability by prioritizing higher-margin models, causing long waiting lists and driving buyers into the used car market.
Why This Matters
The shift in chip priorities reflects the growing dominance of AI in the tech landscape. Data centers require massive amounts of memory chips to power their operations, making them more attractive customers for semiconductor companies. This raises questions about the sustainability of the automotive industry’s chip supply as AI continues to expand.
The industry must adapt by diversifying suppliers, increasing chip stockpiles, and rethinking long-term procurement strategies. If not, another period of production cuts and inflated prices is likely.
The future of automotive manufacturing will depend on how effectively automakers navigate the competition for limited chip resources, which will determine whether they can continue to meet rising demand.
