AI-driven memory chip shortage fuels core PCE
The guest argued that the AI build-out is driving a structural, persistent supply shortage in consumer memory chips, which could add up to 0.5 percentage points to core PCE this year.
The argument
Unlike transitory oil shocks, memory chip prices have surged 100% to 200% as producers like Micron divert capacity to AI data centers. The guest noted that because computer software and accessories have a much larger weight in core PCE than in CPI, this pass-through represents a highly durable inflationary force.
The thesis, stress-tested
✓ What validates it
- ✓Memory chip prices continue to rise or sustain their 100-200% increase
- ✓Core PCE computer software and accessories category shows continued monthly increases of 5% or more
▸ Risks discussed
- ▸Slowing demand for AI data centers could alleviate the chip shortage
- ▸Alternative marginal producers could bring supply online faster than expected
Hear it yourself
"And so what we are seeing in the CPI tickers for computer accessories is that so far, they have increased by about 20%, but the actual memory chips increases 100 to 200%."
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