AI Chip Demand Is Making Your Car's Cheap Memory Chips Expensive

NOR Flash and SLC NAND, the unglamorous chips that store boot code in your car, router and thermostat, are running short because factories would rather make chips for AI data centers. Prices for both have already doubled this year, and TrendForce says the worst is still coming.

Your thermostat doesn't need a fast chip. It needs a cheap, reliable one that remembers how to boot up every time you walk past it in the hallway. That chip is called NOR Flash. Nobody outside a hardware engineering team had much reason to think about it, until now. It's at the center of a supply squeeze that TrendForce, in a September 18 report picked up by Tom's Hardware, calls "severe undersupply."

The numbers are stark. NOR Flash and SLC NAND contract prices already surged more than 100% in the first half of 2026, according to TrendForce. That's before the second half even gets started. High-capacity NOR Flash products face another 90% to 110% increase in the second half of the year. Morgan Stanley expects NOR Flash to stay undersupplied through the rest of 2026. JPMorgan has gone further, warning that even its own forecasts might understate how bad the SLC NAND crunch could get.

The cause isn't a factory fire or a natural disaster. It's math. According to Tom's Hardware's reporting, a 12-inch wafer used to make mainstream NAND for AI servers earns a chipmaker roughly $20,000. The same wafer, if run for SLC NAND instead, earns somewhere between $6,000 and $8,000. Micron, Kioxia and SK Hynix are not villains here. They're running a business, and the business says: make the $20,000 product.

SK Hynix posted an operating margin north of 75% on its memory business this year as HBM demand from AI data centers went vertical. That's the kind of margin that changes priorities. Samsung and SK Hynix have both been cutting NAND wafer starts to protect those margins rather than flood the market with mainstream product. Kioxia told customers back in January that its entire 2026 NAND output was already spoken for, with some hyperscale buyers locking in supply agreements that stretch into 2027 and 2028. None of that capacity is coming back to NOR Flash or SLC NAND anytime soon.

Smaller Chinese and Taiwanese suppliers would normally step into a gap like this. They can't. Equipment lead times for the tools needed to build or expand a fab now stretch 12 to 15 months, and in some cases longer, as Applied Materials, ASML, Lam Research and other toolmakers get buried under orders from the same AI boom that caused the shortage in the first place. You can't build your way out of a shortage when the machines to build with are backordered into 2027.

Who actually gets hurt

This isn't a story about your next phone costing more. It's a story about the boring stuff nobody budgets for. NOR Flash stores boot and firmware code in routers, industrial controllers and increasingly in cars, where advanced driver assistance and smart cockpit systems keep adding more firmware that needs somewhere reliable to live. SLC NAND shows up in enterprise servers as boot drives and write buffers. It's effectively irreplaceable in medical imaging equipment, defense electronics and aerospace systems, where a chip failing after a few thousand write cycles is not an acceptable trade for a lower price tag.

Carmakers are the ones with the least room to maneuver. There's no shortcut. A car maker can't simply swap in a faster, more expensive NAND chip and call it done. Automotive components go through years of qualification and testing before they're approved for a vehicle platform. Swapping a memory chip mid-production run means re-certifying it, which can take months a company facing a supply crunch doesn't have.

Frankly, this is the part of the AI boom nobody put in a slide deck. Executives talk about GPUs and HBM stacks and data center buildouts. All of that is real. But the same capacity fight is quietly starving the parts bin for everything that isn't an AI server, and it's happening to companies that never asked to compete with Nvidia and Microsoft for wafer allocation.

TrendForce's own base case has no relief scheduled. New wafer fab capacity being built now mostly won't hit mass production until the second half of 2027 at the earliest. SK Hynix's CEO has already told investors he expects 2027 to be the tightest supply year in the memory industry's history. If that holds, the chip inside your next car's dashboard could be pricier, not because it got better, but because a data center in another country outbid it for the same factory.

Also read: Microsoft Slashes Copilot Prices for Its Biggest Buyers as a Super App Looms • Altera Files Confidentially for a US IPO That Could Raise $2 Billion • Qualcomm's New Snapdragon Chip Runs a 30 Billion Parameter AI With No Cloud

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