Memory for AI is cannibalizing mobile chips and MediaTek is the first major affected
The rise of artificial intelligence is generating an unexpected consequence that threatens to directly hit the smartphone market. The high demand for high-bandwidth memory, what we know as HBM, is causing a supply crisis in another type of vital memory: LPDDR5x, which is what most mobile processors use.
This situation is already causing tangible delays in the supply chain. According to the latest reports, the delivery period for LPDDR5x memory has skyrocketed, now standing between 26 and 39 weeks. In practice, this means that orders for key mobile components placed now will not be delivered until well into mid-2026.
A double impact on manufacturing
The problem faced by processor (SoC) manufacturers, such as MediaTek, is twofold. On the one hand, the high demand for HBM is cannibalizing the production capacity that was previously allocated to DDR5 memory. Memory manufacturers are prioritizing HBM, which currently offers higher profit margins, leaving orders for smartphones on the back burner.
On the other hand, HBM memory is also straining the overall capacity of silicon wafer foundries. The reason is physical: the chip (die) of an HBM memory is 35% to 45% larger than that of a comparable DRAM. Taking up more space on the wafer reduces the capacity available to manufacture other components, including mobile processors.
The point is that MediaTek seems to be the company that is in a more delicate position. It is expected that your gross profit margin be seriously affected by this dynamic, with pressures that could begin to be felt as early as the fourth quarter of 2025.
This cost increase comes at the worst time for the company, which is in the midst of transitioning to TSMC’s 2 nanometer node. The price of a single 2nm wafer is reportedly as high as $30,000. In the face of this cost storm, MediaTek likely has no choice but raise prices of its popular processors.
Its main rival, Qualcomm, could be in a better position to weather the storm, given that its products are already in a higher price range and operate on different margins. Neither company is expected to be able to turn to Samsung Foundry as an alternative in the short term, as their 2026 chip designs are already finalized. The jump to Samsung would not materialize until at least 2027. At the end of the chain, there is the consumer, who will see how the prices of the devices increase using the high demand for HBM as an excuse.
