AI memory chip shortage raises GM's costs by $1.5-2 billion; BYD increases driver assistance prices 20%

The memory chip shortage that has plagued PC builders, enthusiasts, and gamers is now extending into the automotive sector, with major automakers warning of significant price increases.

General Motors said it expects new vehicle prices to increase by 0.3% this year, reversing its previous projection that vehicle costs would remain flat or decline. On the other side of the world, Chinese automotive giant BYD has raised the prices of driver assistance features by 20%, which it sells separately from its vehicles. South Korea's Hyundai has also called on domestic chip manufacturers to strengthen the local supply chain.

GM Chief Financial Officer Paul Jacobson revealed during the carmaker's earnings call that the company expects costs to increase by $1.5 to $2 billion, primarily driven by rising prices of vehicle components, particularly DRAM. The increasing complexity of modern vehicles means that engineers and designers must now incorporate substantially more memory than in past models to support the features buyers expect.

Memory requirements in vehicles are growing exponentially. Micron projected in 2023 that the average vehicle used 90GB of combined DRAM and NAND, with this requirement expected to jump to 278GB by 2026, and high-end models potentially requiring up to 2TB. A British OEM provided detailed breakdowns: infotainment systems require 4GB to 16GB, ADAS and safety systems need 8GB to 32GB, while centralized systems require a minimum of 16GB and can reach 64GB or more. As AI assistants become standard in vehicles, these systems will require at least 256GB of memory. Micron predicts that cars with level 4 autonomy will need at least 300GB of RAM, as they effectively function as supercomputers on wheels.

Automotive memory presents an additional challenge: these are not standard high-end chips. They are specialized components that require months or years of validation for vehicle use, since they must withstand extreme environmental stresses including temperature fluctuations, constant road vibrations, and harsh weather conditions.

The current shortage will have a disproportionate impact on the automotive industry, pushing prices even higher at a time when consumers are already facing record vehicle costs. If shortages persist, the industry may experience delivery delays and supply constraints worse than those experienced in 2021 during pandemic-related port disruptions.