The AI memory crisis just hit DDR2, a standard from 2003, with 60% price hikes

The AI-driven memory shortage has now reached the oldest DRAM standard still in production. DDR2 contract prices rose 55 to 60 percent in the second quarter of 2026, according to Taiwanese market intelligence firm TrendForce, with a further 35 to 40 percent increase forecast for the third quarter.

The price surge is being driven by hardware makers downgrading their memory specifications to secure supply. TrendForce says some manufacturers are replacing DDR4 designs with DDR3, while others are swapping DDR3 components for DDR2, a standard that first shipped in 2003. The downgrades are a response to continued shortages in mainstream DRAM and rapidly rising contract prices across every memory generation.

The Register, which first reported TrendForce’s findings, noted that it is difficult to imagine modern PC processors supporting memory types this old. The downgrades are more likely affecting embedded systems, industrial equipment, networking hardware, and other devices where older memory standards remain in use.

The root cause is the same one that has been reshaping the entire memory market since late 2025. Samsung, SK Hynix, and Micron have redirected wafer capacity from consumer and commodity DRAM to high-bandwidth memory for AI data centres, where margins run at 70 percent or higher. Every wafer allocated to an HBM stack for an Nvidia GPU is a wafer denied to a consumer laptop, a smartphone, or an industrial controller.

The shortage cascaded downward through memory generations. DDR5 and DDR4 prices rose first, and as those components became scarce, buyers turned to DDR3. Now that DDR3 supply is tightening, the pressure has reached DDR2, a product so old that most of the industry had written it off as a low-margin afterthought.

The supply picture for DDR2 is especially fragile because only a handful of companies still make it. Taiwan’s Winbond and ESMT are the key suppliers. Winbond is gradually winding down DDR2 production and reallocating its capacity toward higher-margin products including DDR3, DDR4, and LPDDR4, according to TrendForce.

ESMT is moving in the opposite direction. The company plans to maximise DDR2 production within its existing wafer allocation at foundry partner Powerchip Semiconductor Manufacturing Corporation, concentrating resources on the segment to capture the demand that Winbond is leaving behind. The divergence means Winbond is removing DDR2 supply faster than ESMT can replace it.

The consequences of the broader memory crisis are already visible across consumer electronics. GoPro issued a going-concern warning after memory prices rose 80 to 115 percent, and PC prices have climbed by double-digit percentages. IDC projects that smartphones, PCs, and tablets could see price increases of 10 to 20 percent by the end of 2026.

Some relief is being planned, but it will arrive slowly. SK Hynix aims to double its silicon wafer output capacity over the next five years, a timeline its chairman announced at Computex in June, while Micron expects what it calls meaningful new capacity at its Virginia fabrication plant in 2027 and 2028. Neither commitment addresses the immediate shortage.

Chinese manufacturer CXMT has begun supplying DDR5 to Western brands including Corsair, offering a potential alternative source for mainstream memory. But CXMT is also converting roughly 20 percent of its own capacity to HBM because the margins are too attractive to resist, limiting how much consumer relief it can provide.

The fact that 2003-era memory components are now experiencing 60 percent quarterly price jumps illustrates how deeply the AI reallocation has distorted the semiconductor supply chain. The shortage is not confined to cutting-edge products. It has reached the bottom of the technology stack, affecting components that most of the industry assumed would remain cheap and abundant indefinitely.