Trump’s Memory Chip Tariff Threat Deepens Global Shortage

• US Commerce Secretary threatens 100% tariff on overseas memory chipmakers.
• Targets South Korean giants Samsung and SK Hynix.
• Tariff ultimatum comes as global memory chip prices surge 40-50%, threatening to drive costs higher for APAC enterprises.

US Commerce Secretary Howard Lutnick’s threat to impose 100% tariffs on foreign memory chipmakers risks exacerbating an already severe global shortage that is driving chip prices to historic highs – with Asia-Pacific enterprises bearing the brunt of supply constraints and cost pressures as they race to build out AI infrastructure.

Speaking at Micron Technology’s groundbreaking ceremony for a US$100 billion factory in New York on Friday, Lutnick delivered an ultimatum to memory chip manufacturers: “They can pay 100% tariff, or they can build in America.”

While Lutnick did not name specific companies, the warning clearly targets South Korea’s Samsung Electronics and SK Hynix, which together with US-based Micron control 79% of the global high bandwidth memory market, important for AI data centres.

The tariff threat comes at a precarious moment for global technology markets. Memory chip prices are already projected to surge 40% to 50% in the first quarter of 2026, with analysts expecting steep pricing to persist through 2027 as manufacturers prioritise high-margin HBM chips for AI applications over commodity memory used in consumer electronics, smartphones, and standard data centre equipment.

Memory chip super cycle collides with trade policy pressure

The semiconductor industry is experiencing what Bank of America analysts describe as a “super cycle similar to the boom of the 1990s,” with global DRAM revenue forecast to surge 51% in 2026 and average selling prices rising 33%. The HBM market specifically is expected to reach US$54.6 billion in 2026, a 58% increase from the previous year, according to BofA estimates.

The explosive growth is driven by insatiable demand for AI infrastructure. As technology companies invest heavily in servers for AI model training and inference, the capacity of DRAM and HBM installed per AI server continues to climb. SK Hynix reportedly sold out its entire 2026 production capacity for HBM and advanced DRAM chips to major clients as early as October 2025, illustrating the intensity of competition for the limited supply.

However, this focus on AI chips has created a secondary crisis. As manufacturers shift production capacity toward higher-margin HBM products, the traditional memory chip supply has tightened significantly.

According to Oxford Economics, the shortage of commodity memory chips will not ease “any time soon” because “major memory chipmakers are investing to expand production capacity, new plants take at least a few years to become operational.”

Lutnick’s 100% tariff ultimatum threatens to worsen this supply-demand imbalance by potentially disrupting established production networks and forcing manufacturers to choose between paying prohibitive duties or making massive capital commitments to US facilities that will take years to come online.

APAC enterprises caught between rising costs and supply uncertainty

Counterpoint Research projects global memory chip prices will rise an additional 20% in the second quarter of 2026, following the 40-50% first quarter increase. Escalating costs directly impact APAC enterprises investing in AI infrastructure, cloud services expansion, and digital transformation initiatives that require substantial memory capacity.

Regional impact extends beyond data centres. Consumer electronics manufacturers, automotive companies deploying advanced driver assistance systems, and industrial automation firms all rely on a stable memory chip supply and pricing.

Supply constraints and price volatility complicate production planning and product roadmap decisions in multiple sectors. Samsung and SK Hynix, both South Korean companies, face particular pressure.

Lutnick explicitly stated that tariffs specified under the new US-Taiwan trade deal “could also apply to semiconductor firms in South Korea” under the Trump administration’s industrial policy. This suggests the Commerce Secretary views South Korean memory manufacturers as potential targets for the same coercive trade tactics being applied to Taiwan’s semiconductor industry.

The two companies must now weigh massive investments in US manufacturing capacity – likely requiring tens of billions of dollars and multiple years to operationalise – against the risk of punitive tariffs that could price them out of the crucial American market. Either choice carries implications for their APAC customers and regional supply chain stability.

China’s memory chip ambitions and regional competitive dynamics

The tariff threat and supply shortage are accelerating China’s push for memory chip self-sufficiency, with implications for regional competitive dynamics and long-term supply diversification.

ChangXin Memory Technologies (CXMT) has emerged as the world’s fourth-largest DRAM maker despite US technology sanctions, carving out a 4% share of the global DRAM market in 2025 according to Omdia data. The company’s new DDR5 synchronous DRAM, designed for AI servers, signals its ambition to compete with Samsung and SK Hynix in advanced memory products.

CXMT’s parent company aims to raise 29.5 billion yuan (US$4.2 billion) through an IPO on Shanghai’s Star Market to fund technology upgrades. However, analysts see gaps between Chinese memory chip firms and global leaders in both technology abilities and scale of investment.

Bank of America Securities estimates that Chinese memory chip firms’ target fundraising of approximately US$6 billion represents “only a single digit percentage of global memory CAPEX,” suggesting China’s domestic industry cannot yet meaningfully offset potential supply disruptions from US tariff policies affecting Samsung and SK Hynix.

Companies operating in the region must navigate not only US-China technology restrictions but also questions about the performance, reliability, and long-term viability of Chinese memory products for mission-important applications.

Micron’s US expansion and the domestic production push

Lutnick’s tariff ultimatum came during the groundbreaking for Micron’s massive US manufacturing expansion, which includes a new Idaho plant and fabrication facility complex in New York designed to bring full-scale HBM manufacturing to American soil. The timing underscores the Trump administration’s determination to use trade policy to reshape global semiconductor production patterns.

The administration’s approach reflects an important tension in US semiconductor strategy: demanding domestic production while maintaining American chipmakers’ global market access and competitiveness. The tension has created the policy whiplash evident in recent decisions – approving Nvidia H200 exports to China one day, then imposing 25% tariffs on AI chip imports the next.

The choice between building in America or paying 100% tariffs represents a dilemma with no easy resolution for South Korean manufacturers. US facilities would require massive capital investment, years of construction, and potentially higher operating costs compared to established Asian manufacturing bases.

Yet a refusal risks excludes one from the world’s largest technology market and loses ground to competitors willing to make those investments.

Planning for volatility in APAC technology supply chains

The convergence of natural market dynamics and aggressive US trade policy creates a challenging environment for APAC enterprises planning technology infrastructure investments over the next 18-24 months.

Several factors warrant consideration in enterprise planning:

Memory-intensive AI infrastructure projects face cost uncertainty. Enterprises should model multiple price scenarios and consider phased deployment approaches that provide flexibility to adjust based on supply and cost developments.

Supply chain diversification becomes more important but also more complex. While Chinese manufacturers like CXMT offer potential alternatives to South Korean suppliers, technology gaps and geopolitical considerations limit their viability for many applications.

Enterprises may need to qualify multiple suppliers and maintain relationships in different technology tiers. Long-term supply agreements with memory manufacturers may provide some cost and availability protection, but manufacturers’ use in current tight market conditions limits potential benefits.

Enterprises with volume requirements should explore structured agreements while recognising that manufacturers will prioritise their largest, most customers.

The tariff threat’s ultimate resolution remains uncertain. If Lutnick follows through with 100% duties, memory costs could spike beyond current projections. If Samsung and SK Hynix commit to major US manufacturing investments, supply dynamics may eventually improve – but not for several years. Enterprises must plan for sustained volatility.

Regional policy responses may also shape supply dynamics. South Korea, Taiwan, and other APAC governments concerned about US trade coercion may implement their own industrial policies to support domestic semiconductor industries or strengthen regional supply chain cooperation.

The memory chip shortage and tariff threat illustrate how US-China technology competition and American industrial policy ambitions create tangible business challenges for enterprises in the Asia-Pacific region. What began as a natural supply-demand imbalance driven by AI infrastructure investment is now being compounded by trade policy decisions that prioritise US domestic manufacturing goals over global supply chain stability.

The near-term outlook for APAC organisations involves navigating higher costs, supply uncertainty, and rapid policy shifts that can fundamentally alter market conditions with little warning.

This memory chip crisis serves as a reminder that technology infrastructure planning must now account for geopolitical volatility as a permanent feature of the semiconductor landscape.

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