Multiple U.S. industry associations have jointly issued a warning that a global shortage of memory chips, driven by the explosive growth of artificial intelligence (AI), is posing an increasingly severe supply chain risk to manufacturing sectors including automotive and medical devices. These groups are urging the Trump administration to take action to expand chip supply.

In an open letter sent on Wednesday to U.S. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lunic, nine industry groups representing sectors such as automotive, medical, and retail stated that the memory chip shortage will disrupt critical supply chains and drive up consumer goods prices in the short term. The letter noted that the rapid expansion of AI data centers is consuming an excessive share of memory chip production capacity, leading to "unprecedented, sharp increases in memory chip prices and a continued reduction in chip supply for manufacturing and consumer-facing industries."

Signatories to the letter included the Alliance for Automotive Innovation, the Medical Device Manufacturers Association, and the National Retail Federation. These associations indicated that not only are prices for consumer electronics rising, but the costs for internet and telecommunications infrastructure are also climbing. Production of automobiles, medical devices, and other finished goods may face stock-out risks. Federal contractors, particularly small and medium-sized enterprises, are also encountering difficulties in fulfilling procurement contracts.

As AI creates unprecedented demand for memory chips once considered commodities, a long-term state of supply shortage has persisted. Chip design firms like NVIDIA Corp (NVDA.US) and Advanced Micro Devices, Inc. (AMD.US) are purchasing high-bandwidth memory (HBM) at high prices to build AI hardware, causing memory chip manufacturers to prioritize these customers. Industries requiring other types of memory chips, such as automotive and consumer electronics, are facing increasingly severe supply constraints.

The surge in AI demand has already driven share prices for memory chip companies sharply higher. Micron Technology, Inc. (MU.US) and SK Hynix saw their market capitalizations surpass the $1 trillion mark last month. Idaho-based Micron's stock has risen over 278% year-to-date, making it the second-best performing component in the S&P 500 index.

The industry associations' letter urged the Trump administration to collaborate with memory chip manufacturers and purchasers to expand production capacity within the United States and among its allies. They also recommended leveraging trade agreement mechanisms or programs under the CHIPS Act to secure the supply chain, with a focus on ensuring supply for all market segments, including consumer and manufacturing sectors.

Micron Technology, Inc. (MU.US) is expanding its capacity in New York and Idaho, but most of the new production will take several years to come online. Meanwhile, Commerce Secretary Lunic is pressuring two South Korean memory chip giants—SK Hynix and Samsung Electronics—to establish production bases in the United States. Samsung is building a logic chip fab in Austin, and SK Hynix plans a packaging facility in Indiana, but currently, only Micron produces memory wafers domestically in the U.S.

This joint industry letter is the latest in a series of recent warnings to Secretary Lunic about the memory shortage impacting the automotive sector. In April of this year, Ohio Republican Senator Bernie Moreno had already urged the Commerce Department to prioritize domestic memory component needs to ensure sufficient supply for the U.S. auto industry, warning that prices could double this year.