Attempts by the U.S. government to solve the global memory chip shortage by influencing prices or production capacity will exacerbate the historic supply deficit caused by the artificial intelligence boom, a group of semiconductor industry representatives warned the Trump administration, UNN reports citing Bloomberg.
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In a letter to senior Trump administration officials, the SEMI association urged the U.S. instead to allow companies to continue entering long-term agreements with customers and extend tax incentives aimed at increasing production in the U.S. The three largest memory chip manufacturers — Micron Technology Inc. of Idaho, SK Hynix Inc., and South Korea's Samsung Electronics Co. — are members of the SEMI group.
"While targeted policies can help accelerate the recovery of domestic supply, interventions that distort pricing or production capacity decisions risk prolonging the demand downturn," the SEMI letter said.
"Current market conditions are being addressed through investments in U.S. manufacturing and an increasing focus on long-term procurement agreements," the organization added. Industries from automotive to consumer electronics are facing an unprecedented shortage of memory chips, demand for which is at record highs for use in high-performance processors powering data centers for AI. Apple Inc. is now reportedly seeking Trump administration approval to purchase memory components from two Chinese companies blacklisted by the Pentagon.
The July 1 letter is addressed to U.S. Treasury Secretary Scott Bessent, one of the officials, among whom is outgoing Apple CEO Tim Cook, lobbying on the issue of Chinese memory chips, along with Defense Secretary Pete Hegseth, Commerce Secretary Howard Lutnick, and Secretary of State Marco Rubio.
The SEMI letter does not mention Chinese suppliers, but, as the publication writes, it reinforces the sense that the memory shortage is becoming a growing political issue in Washington. While investors welcome the sharp rise in stock prices of memory manufacturers, politicians concerned about the financial situation of voters are monitoring the impact on consumers, as evidenced by decisions by Apple and Microsoft Corp. to raise prices on the most popular goods.
To mitigate the effects of rising electronics prices, SEMI proposed a different solution than the one Apple offers. It called on the administration to work with Congress to develop policies that would offset rising prices for phones and laptops by developing consumer-oriented tax deductions or benefits.
Although SEMI in its letter, citing industry data, stated that memory production capacity is expected to grow by about 19% per year, it added that explosive demand growth from AI infrastructure will outpace supply, limiting the availability of everything from laptops to cars and home appliances.
While all major memory manufacturers plan production expansions, this will take years, while the supply-demand imbalance is already driving up prices.