Trade groups warn US gov't of strain in chip supply on AI boom

WASHINGTON

A memory chip shortage driven by artificial intelligence demand is posing risks to sectors like consumer electronics and automobiles, trade groups warned Wednesday, as they called on the Trump administration to help boost supplies.

"Expanding artificial intelligence (AI) data centers consume an enormous share of available memory chip capacity," said the coalition of nine trade groups.

This has caused a surge in chip prices and reduced supply for manufacturers.

It could threaten higher consumer costs and supply chain disruptions, they added, in a letter addressed to U.S. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.

"While recent developments in AI offer the promise of generational technological advances and are important for U.S. tech leadership, we must also ensure other key industries are not negatively impacted by this disruption in the marketplace," the coalition said.

Those who signed the letter include the Alliance for Automotive Innovation, National Retail Federation and the Medical Device Manufacturers Association.

They called on President Donald Trump's government to support greater expansion of chipmaking capacity in the United States, and to ensure that all segments of the market are served by memory chip capacity.

The letter noted that effects are already showing, including cost hikes for electronics and risks to the availability of vehicles and medical devices.

Federal contractors are also having a tough time meeting procurement obligations.

Massive demand has sent profits skyrocketing for memory chip makers.

As chipmakers prioritize the lucrative AI industry, they had been reducing output of less flashy chips that are used in everyday consumer electronics like phones and laptops, pushing up device prices.

Chey Tae-won, chair of SK hynix's parent company, estimated that shortages could last until 2030 given that it takes several years to build factories.