The automotive industry accounts for roughly 10 percent of global DRAM use. GM expects material input prices to rise by $1.5 billion to $2 billion this year. BYD was recently forced to increase prices for its driver-assistance systems by 20%. Every time you ask ChatGPT for a recipe or Gemini to write a love letter to your significant other, you nudge demand for artificial intelligence up a fraction. Multiply that by a few billion people and you get the picture. Chip prices are going through the roof because of AI, and the bill will eventually land on your next new car. DRAM chips, the ones handling temporary data storage, cost six times what they did a year ago. Cars have grown steadily more dependent on them, with everything from advanced driver-assistance systems to basic cabin functions drawing on the same silicon. Read: AI Is Eating All The Chips Your Next Car Needs Speaking to Nikkei Asia, GM chief financial officer Paul Jacobson said the automaker expects material input costs to rise by $1.5 billion to $2 billion this year. He didn’t break out how much of that comes down to chips, and the figure excludes tariffs. Jacobson added that the squeeze should get worse in the second half. AlixPartners puts the auto industry at roughly 10 percent of global DRAM consumption. AI takes 32 percent, making it the largest single consumer by a wide margin, ahead of smartphones, computers, and every other category of consumer goods. The consulting firm expects that share to reach 48 percent by 2028, and warns that once AI and data centers are swallowing half the world’s DRAM output, everyone else, automakers included, will pay for it. Not only has heightened demand for these chips pushed up prices, but there are also widespread supply shortages as manufacturers can’t keep up. What Are Carmakers Doing About It? According to Nikkei Asia this is forcing car manufacturers to plan ahead. Both GM and Ford, as well as seven important automotive parts manufacturers, including Denso and Astemo, recently signed long-term supply deals with Micron. Automakers are also trying to secure DRAM supplies ahead of anticipated inventory shortages beginning next year. GM has already revised its North American pricing outlook, and now expects average new vehicle prices to rise 0.3 percent this year instead of holding flat or dipping 0.3 percent. “Chipflation,” as GM calls it, is part of the reason. Chinese companies are feeling the effects more than most as advanced new-energy vehicles from the country are increasingly reliant on advanced technologies, requiring more chips than many Western alternatives. Huayuan Securities pegged memory costs in Chinese-built cars at more than $70 per vehicle as of November 2025, against roughly $30 for Japanese ones. BYD raised prices on its optional driver-assistance systems by 20 percent a couple of months back, and others will almost certainly follow. BYD’s explanation: “Due to the significant rise in memory prices worldwide, we are implementing price increases to guarantee high quality.”
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