Mumbai, JAN 22 : The global auto industry is bracing for potential production disruptions as the rapid expansion of AI data centers drives soaring demand for dynamic random access memory (DRAM) chips. Analysts warn that this semiconductor squeeze could significantly impact vehicle manufacturing as early as Q2 2026.
UBS analysts, led by David Lesne, reported that the booming data center sector has already triggered price hikes exceeding 100% for certain memory chips. “We would not rule out some material downside risk to global vehicle production,” Lesne noted.
While automakers rely on older generation DRAM chips compared with AI servers, both segments compete for a limited supply of silicon wafers. Top DRAM producers Samsung Electronics, SK Hynix, and Micron Technology are prioritizing higher margin AI applications over automotive needs, analysts said.
S&P Global Mobility research analyst Matthew Beecham added that carmakers now face a narrowing window to redesign systems and secure chip supply. Manufacturers with advanced driver assistance systems and electronics heavy vehicles, such as Tesla and Rivian, are particularly vulnerable, while suppliers like Visteon Corp. and Aumovio SE face heightened risk.
The auto sector has previously faced widespread semiconductor disruptions, notably during the COVID-19 pandemic, costing millions of vehicle outputs. More recently, production halts at companies like Honda Motor Co. have highlighted the industry’s ongoing vulnerability to supply chain shocks.
As AI adoption accelerates, automakers will need to act swiftly to mitigate the semiconductor crunch or risk further production setbacks.