Chip industry cautions the US against interfering in the memory market.

      The shortage of memory has become a political issue in Washington. The chip industry now has a message for the Trump administration: allow the market to function freely, or the situation will worsen.

      This warning was conveyed in a letter from SEMI, a semiconductor industry association, to high-ranking US officials. The group stated that any efforts to address the shortage by manipulating prices or production would exacerbate the problem, as reported by Bloomberg.

      The shortage originates from the surge in AI demand, which is consuming memory chips faster than manufacturers can keep up with production.

      SEMI’s position is clear. They assert, “Interventions that distort pricing or capacity decisions risk prolonging the demand downturn,” as indicated in a copy reviewed by Bloomberg. They advocate for the opposite approach: allowing companies to continue forming long-term supply agreements and extending tax incentives to increase US production.

      The stakes are significant for SEMI’s members, which include the three major memory manufacturers: Micron in Idaho, along with South Korea’s SK Hynix and Samsung. Their stock prices have risen sharply as AI demand exceeds supply.

      The changing political landscape is noteworthy because the shortage is now impacting everyday consumers. Memory is essential for various products, from cars to laptops, leading to rising prices across the board. Even long-established memory standards have seen price increases. Apple and Microsoft have both raised prices for their popular devices, which concerns politicians who are mindful of voters' finances.

      SEMI has a potential solution for this issue as well. Instead of capping prices, it is advocating for Congress to alleviate the impact through consumer tax breaks on phones and laptops. The organization has made a point of thanking the administration for its support of the semiconductor sector.

      The letter comes amidst a larger debate. Apple is also lobbying the same officials for approval to purchase memory from two Chinese companies that are on a Pentagon blacklist. While SEMI’s letter does not mention any Chinese suppliers, it was directed at the very officials Apple has been contacting: the Treasury, Defense, Commerce, and State secretaries.

      Not everyone in Washington is advocating for a hands-off approach. Republican Senator Bernie Moreno of Ohio has urged the Commerce Secretary to prioritize American buyers, warning of potential repercussions for the car industry similar to those experienced during the pandemic.

      The harsh reality is that it will take time to resolve the issue. SEMI estimates that memory capacity will grow approximately 19 percent per year, yet AI demand will continue to outstrip this growth. Building new factories takes years, and until they are operational, the imbalance will keep driving prices higher. For European consumers, this warning resonates with a previous caution issued in Britain, as Currys anticipates that prices for phones, laptops, and TVs will rise later this year. The industry's message to politicians is straightforward: it is not possible to regulate more chips into existence.