The memory-chip squeeze created by AI data centers is now showing up in what automakers pay for parts, and one of the industry's main suppliers expects it to get worse. Micron Technology said Sept. 30 that it expects memory and storage supply-demand conditions to be "much tighter in calendar 2027 and 2028 than they were in 2026."
Micron's Automotive and Embedded Business Unit posted record revenue of $6.8 billion in the company's fiscal fourth quarter, up 47% from the previous quarter, "driven by higher pricing and higher bit shipments." The unit's gross margin rose to 84%. Across the company, DRAM prices rose by a high-teens percentage in the quarter, and total revenue reached $54.2 billion, up 379% from a year earlier.
Micron expects industry DRAM bit shipments to grow in the low-20s percentage range in both 2027 and 2028, with the industry supply constrained in both years, and high-bandwidth memory, or HBM, the type paired with AI processors, to grow faster than conventional DRAM through 2028. It has already completed agreements for the vast majority of its 2027 HBM supply "with significant price increases year over year," and it described its inventory and supply as "extremely tight." Carscoops reported in July that Samsung, SK Hynix and Micron control nearly 90% of global DRAM production and, citing consulting firm Kearney, that DRAM spot prices jumped about 450% between September 2025 and January 2026.
Detroit locks in supply
General Motors and Ford moved early this summer to secure their share. On July 1, Micron and GM announced a strategic customer agreement covering LPDRAM, NOR and UFS NAND products, along with joint work on memory for GM's future vehicle architectures. Ford signed a long-term supply agreement with Micron on July 6. Both deals draw on Micron's $2 billion modernization of its DRAM plant in Manassas, Virginia, which began production earlier this year.
"Delivering next-generation vehicles at scale requires a resilient and closely aligned supply chain." — Mary Barra, chair and CEO, General Motors
"Producing the high-volume vehicles of the future in the U.S. will require a resilient supply chain," Ford CEO Jim Farley said. Supply assurance comes at a price. Micron said it has signed 26 such agreements, which it estimates account for more than 35% of its revenue through 2030, backed by $32 billion in customer commitments, most of them cash deposits. New agreements that involve pricing, it said, are being negotiated at higher prices based on current market conditions.
Barra told analysts on July 21 that GM also has a long-term supply relationship with Samsung, and that both date to 2022, when GM worked to build direct relationships with chipmakers after the pandemic-era semiconductor shortage. "We haven't disclosed specific pricing," she said. Chief financial officer Paul Jacobson said the expanded Micron collaboration reinforces "supply availability for the long term." Micron, for its part, says its Manassas investment is meant to provide the supply longevity and predictability that long automotive product lifecycles require.
What it costs
GM is the clearest about the bill. Jacobson told analysts on the same call that GM expects commodity inflation, logistics and higher DRAM costs to be a $1.5 billion to $2 billion headwind this year, according to a transcript published by Investing.com. GM did not say how much of that is memory. Ford put its 2026 commodity headwinds at just over $2 billion on its July 28 call, where supply problems at aluminum supplier Novelis drew most of the attention; its earnings release did not break out memory costs.
Automakers have little leverage in that market. "Demand from AI applications is absorbing significant volumes of memory chips, which places automotive suppliers and OEMs, especially those with smaller volumes, at the back of the queue," Andrei Quinn-Barabanov, supply chain industry practice lead at Moody's Analytics, told Supply Chain Dive in July.
Why cars need more of it
GM says its Micron agreement covers memory for next-generation vehicle architectures, and the need grows with every step toward automation. Micron says Level 4 and higher autonomous vehicles typically carry more than 200GB of memory and multiple terabytes of storage, each more than an order of magnitude more than today's Level 2+ and Level 3 semi-autonomous vehicles. It called autonomous vehicles the first major deployment of physical AI.
So far the strain has shown up mainly in costs. In July, Carscoops reported that Stellantis was buying more memory but had not adjusted production because of shortages, and that BMW had detected no supply shortfalls. Stellantis said then that it saw potential disruptions in 2026 and 2027, with improvement expected by 2028, a timeline that Micron's latest outlook now puts in doubt. With Micron forecasting tighter supply for two more years, the questions for automakers' third-quarter reports are how much memory is adding to vehicle costs and how much of it will reach sticker prices.