The DRAM crisis: Navigating volatility as a channel partner

Dicker Data shows what tech partners can do right now to shore up their order books and avoid running low on memory.

The world’s memory supply is in upheaval.

AI infrastructure demand is driving the global shortage of DRAM (Dynamic RAM)¹ as hyperscalers consume an estimated 40% of production.

Analysts including IDC are among industry watchers who confirm that AI data centres account for most incremental DRAM demand, which is projected to hit 70% by 2030.

This raises forward buying and budget risk for decision-makers in the foreseeable future.

The risks to your business extend beyond just device availability. Are you prepared for the conversation with a long-standing customer that their device price has changed on the day of shipment, and have you considered the flow-on effects to managed services agreements when customers feel disgruntled or burnt, despite all these factors being beyond your control?

Why is this now a problem?

Nine out of 10 memory chips come from just three vendors — Samsung Electronics, SK Hynix, and Micron Technology — which concentrates supply and price risk. For instance, Micron shuttered its Crucial end-user device chipmaking business and Australian operations last December to divert fabrication towards high-bandwidth memory (HBM) relied on by AI hyperscalers for high-performance compute. This is part of a trend seen in the GPU market as vendors divert memory away from end-user devices.

Constrained supply drives price volatility and uncertain availability of low-power mobile DRAM (e.g. LPDDR5X), which raises costs and limits production of laptops and other end-user devices.

Original equipment maker (OEM) device prices rose 20% since October, with some configurations doubling and even tripling after a five-fold surge in memory module prices, we observe.

Gartner analyst Shrish Pant told Australian IT media that DRAM prices will stay “crazy” while HPE CEO Antonio Neri confirmed, “elevated prices to persist well into” next year. And, we believe, possibly beyond.

What are the risks to my partner business from DRAM volatility?

While you may have seen hints of this deepening turmoil, we have shielded the channel from its full brunt but we expect our buffer to exhaust around mid-year. Prices are set to spiral while the channel — and end-customers — are largely unprepared.

You may face disruption on up to four fronts:

1. Misaligned customer buying cycles demand contract flexibility to absorb price and supply shocks:
   1. Small to mid-sized businesses (SMB) tend to buy as needed aligned with other internal pressures and priorities.
   2. Education is locked into annual cycles unresponsive to volatile price signals. Pulling forward a purchase may mean allocating funds that won’t be known and released until the next school year.
   3. Government agencies have multi-year and tender arrangements that may leave tech partners on the hook when prices unexpectedly rise.
2. Margin compression may wipe out entry-level devices while slashing SKU choice as vendors prioritise premium device production. And there is a moderate-to-high degree of confidence such arrangements will outlast the immediate memory price crunch.
3. Outstanding quotes and tenders must be repriced (possibly up to when devices land in customer hands) while long-standing supply arrangements must flex to contend with fluctuations.
4. Value-added services are at risk as fewer devices in customers’ hands — through higher prices eating into fixed budgets and/or stock unavailability — cuts into managed services revenue. The ‘long tail’ of cybersecurity, cloud and support services (many times the device’s price and profit margin) only attach to in-field devices. Managed services providers take heed: That money is gone forever.

OK, prices are going up along with everything else. What can I do about it?

We hear you. The world is a confusing and uncertain place right now. It is easy for something as abstract as memory to fly under a decision-maker’s radar.

But small nudges, made now, deliver outsized rewards (and less risk) down the line.

When was the last time you contacted your top accounts about the memory crisis we’re experiencing? Consider sharing this resource to alert them to the disruption, and as an invitation to shore up their supply of devices while there is still time.

To inform such a conversation, we used a ‘3 Horizons’ model to visualise risk-response in your business. This simulates possible outcomes based on varying assumptions as to the severity of chip shortages and price rises. These three horizons are:

Horizon 1 – Soft landing: Prioritise stock based on pipeline forecasts; leverage Dicker Data's tools (e.g. Device Age Insights) to identify customer devices for priority refresh; bundle offers to fatten margins and cover price-rise-induced shortfalls; register bids early and share target prices.

Horizon 2 – Cyclical upswing: Buy ahead, and use our 3PL services to warehouse, stage and ship stock as and when it's required; start discussions with Dicker Data's credit team to ensure capacity meets expected demand at future prices; implement automation and integration with Dicker Data's systems so you can access current prices, stock-on-hand, and streamline ordering through APIs or EDI to cut your costs.

Horizon 3 – Supply shock: All of the above at greater magnitude and speed to lock in savings and availability before the upswing; increase lines of credit and funding caps to ease cashflow before the upswing.

What can I do right now to soften the blow?

You may not be aware but Dicker Data has a range of services that can help you navigate this volatility. From finance, to configuration, and even our third-party logistics and fulfilment to lock in the best prices for you. Your Dicker Data rep is best to guide you through your options.

You may also consider shifting your recommendations to Intel’s Core Ultra 200V ‘Lunar Lake’ with on-chip 16GB and 32GB memory. Check that the intended user persona fits the chip’s sweet spot in terms of battery life, performance, software compatibility and other factors but we’re confident it will meet satisfy many users. The good news is that Intel built up stock of DRAM before this crisis, so Lunar Lake is ‘firewalled’ from discrete memory price hikes.

On the operating system and software front, Microsoft A/NZ Device Partner Lead Andy Malakooti confirmed that, for the typical three-year lifespan of a corporate PC, the software vendor’s platforms will support both these memory configurations.

Pitching a 32GB Lunar Lake device suited to knowledge workers can elicit $25,000–$40,000 savings on a 50-seat fleet, based on our modelling.

With its neural processor (NPU) and on-chip ‘Pluton’ security architecture, Lunar Lake is a compelling price-performance package.

Where do I learn more? 

This is just the start.

We will help you thrive in this fluid environment. Our best advice is to speak to your Dicker rep early and often. Lean on us.

We can see the cliff.

Now you, too, see how close we are to the edge — and what we can do together before we reach it.

¹ DRAM (Dynamic Random-Access Memory) is the primary working memory in computers, smartphones, servers, and most connected devices — used when an application runs or a file opens to store and access active data. Unlike storage, which retains data permanently, DRAM holds information only while the device is powered, acting as a high-speed bridge between the processor and long-term storage.

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