Memory-makers’ shares are down. Don't blame Google

The high cost of memory has sideswiped the technology industry, causing server vendors to admit their quotes are guesstimates and depressing sales of PCs and smartphones. Nobody is immune: Microsoft used the RAM panic as cover for fixing Windows 11's memory gluttony, and Sony suspended orders for compact flash and SD cards because it can't buy the chips to build them.

Demand for artificial intelligence infrastructure created the situations described above by giving memory-makers incentive to production of high-bandwidth and high-margin memory GPUs require. Reduced supply for other memory sent prices soaring. Yet over the last week, the price of consumer-grade memory has reportedly eased at some online vendors. Memory-makers' share prices slipped sharply.

The value of Micron Technology's scrip has slumped in the dozen days since it announced enormous growth in revenue and profits. Western Digital's share price fell 8.5 percent on Monday alone and is down 20.5 percent since March 19th. SanDisk slid seven percent on Monday, and the company has lost a fifth of its value in a fortnight. Those falls are steeper than those recorded by major stock market indices, as investors try to understand the impact of war in the Middle East.

Given the AI boom continues largely unabated, why are investors worried? Some have linked the change in market sentiment to a technology Google revealed last week called TurboQuant that the company's researchers describe as "a compression algorithm that optimally addresses the challenge of memory overhead in vector quantization" – one of the most memory-hungry parts of AI workloads – and by doing so speeds up applications and "lowers memory costs."

Google's announcement also claims TurboQuant can reduce the amount of memory needed in key-value cache - "by a factor of at least 6x". Some have concluded that TurboQuant means demand for memory will fall and linked Google's announcement of the tech to share market moves.

Analyst firm TrendForce, which specializes in the memory market, disagrees. In a report published last week, TrendForce predicts TurboQuant will lower the cost of AI infrastructure, and by doing so "spark massive long-sequence application demand, comprehensively driving structural growth and specification upgrades for high-bandwidth, main, and flash memory across cloud and edge platforms."

The firm thinks that TurboQuant can reduce the cost of running inferencing workloads, and suggests that this "is likely to drive substantial demand for long-context and multi-agent architectures, further accelerating the migration of AI workloads to the edge."

Or in other words, more efficient AI will create demand for more AI, and more memory. The war in the Persian Gulf means it will be hard to meet that demand, because the conflict has damaged the supply chain for helium – a vital component in semiconductor production that could mean chipmakers can't make all the RAM they assumed would inflate their revenue and profits.

Share prices reflect investors' opinions of a business's future prospects. And helium shortages are an obvious indicator of reduced future production and sales.

The memory market's current volatility reflects multiple converging factors. While consumer RAM prices have shown some easing at online retailers, the broader picture remains complex. The AI boom continues to drive demand for specialized high-bandwidth memory used in data centers, while consumer and mobile markets face different dynamics.

Western Digital's 8.5 percent single-day drop and SanDisk's 7 percent decline signal investor concerns about near-term production capabilities rather than long-term demand destruction. These companies' share prices have fallen more steeply than broader market indices, suggesting sector-specific worries rather than general market malaise.

Google's TurboQuant technology represents an interesting development in AI efficiency, but its market impact appears misunderstood by some investors. The compression algorithm addresses memory overhead in vector quantization, potentially reducing memory requirements for specific AI workloads by up to 6x. However, TrendForce's analysis suggests this efficiency gain may actually expand the market by making AI more economically viable at scale.

The helium shortage presents a more immediate constraint on memory production. Semiconductor manufacturing requires helium for cooling and other processes, and supply chain disruptions in the Persian Gulf region could limit chipmakers' ability to meet projected demand. This production bottleneck, rather than efficiency improvements, likely explains much of the current market uncertainty.

For technology buyers, the easing of consumer RAM prices at some retailers may provide temporary relief, though the market remains volatile. Enterprise customers should expect continued pressure on specialized memory types used in AI infrastructure, as demand from cloud providers and AI companies remains strong.

The memory market's trajectory will depend on how quickly production can recover from supply chain constraints, how effectively efficiency technologies like TurboQuant expand rather than contract the market, and whether geopolitical tensions in resource-rich regions ease. For now, the sector appears caught between efficiency gains that could expand demand and production constraints that could limit supply.