The next thing that could hurt global vehicle production

We’ve lived through the semiconductor shortage that stifled car production after the COVID-19 pandemic, and we might be about to go through something similar in the not-too-distant future.

Artificial intelligence (AI) companies are driving a spike in the price of dynamic random access memory (DRAM) chips as they build out data centres for their power- and processing-hungry applications. According to The Register consumer prices for the most common memory capacities jumped up 63 per cent in Europe during the final quarter of 2025.

Analysts from S&P Global and UBS say this will have a knock-on effect to the automotive sector as chip-makers are likely to prioritise high-margin data centre customers over automakers and automotive suppliers.

Matthew Beecham from S&P Global predicts prices for automotive-grade DRAM could jump 70 to 100 per cent, which will likely cause “panic buying and production disruptions across the industry”.

UBS believes automakers who prioritise autonomous driving systems, such as Tesla and Rivian, are more at risk than legacy manufacturers such as Ford and General Motors. The investment bank believes disruption to automotive supply chains could start as soon as the second quarter of this year.

Time will tell if this potential chip shortage is as disruptive to the automotive industry as the one experienced by the sector post-COVID.

At the start of the COVID-19 pandemic in 2020 many automakers slashed their forward orders for computer chips in anticipation of a recession and a prolonged slump in demand.

When economies across the world bounced back faster than expected, automakers found themselves at the back of the queue for semiconductors, forcing them to wind back production.

Faced with long waiting lists, some car manufacturers prioritised producing more expensive models and variants in order to maximise profitability. Long waiting lists forced many would-be new-car buyers onto the used-car market, pushing up prices there as well.