Key Highlights

• SEMI urged the US to avoid policy interventions that distort memory chip pricing or production capacity decisions
• The letter, dated July 1, was addressed to Treasury Secretary Scott Bessent and other senior officials
• Memory capacity expected to grow 19% per year, but AI demand will eclipse supply for years to come
• Apple is separately seeking approval to purchase memory from Chinese companies on the Pentagon blacklist

The global semiconductor industry has sent a clear message to Washington: hands off the memory market. In a letter dated July 1 and addressed to senior Trump administration officials, the SEMI industry association warned that government attempts to influence memory chip prices or production capacity would only deepen an unprecedented supply crisis fueled by the artificial intelligence boom.

SEMI's Warning to Washington

"While targeted policies can support accelerating domestic supply resilience, interventions that distort pricing or capacity decisions risk prolonging the demand downturn," SEMI stated in its letter, a copy of which was obtained by Bloomberg News.

The letter was directed to Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, Commerce Secretary Howard Lutnick, and Secretary of State Marco Rubio. Royal Kastens, SEMI's Vice President of Global Public Policy and Advocacy, emphasized that the group appreciates the administration's broader support for the chip industry while cautioning against market-distorting measures.

"SEMI and our members appreciate the Trump administration's proactive efforts to bolster memory capacity in support of advancing AI and data centre infrastructure in pursuit of US technology leadership," Kastens said in a statement.

The Memory Squeeze Explained

Industries from automotive to consumer electronics are grappling with an unprecedented squeeze on memory chip supply. High-end processors powering AI data centres are consuming record quantities of memory, leaving manufacturers of phones, laptops, cars, and household appliances scrambling for components.

The top three memory chipmakers — Idaho-based Micron Technology, South Korea's SK Hynix, and Samsung Electronics — are all members of the SEMI group. While all three have expansion plans in the pipeline, the build-out will take years, and a supply-demand mismatch is already driving price increases across the board.

SEMI noted in its letter that while memory capacity is expected to grow approximately 19% annually based on industry data, exploding demand from AI infrastructure will eclipse that growth, constraining availability across multiple sectors for the foreseeable future.

Apple's China Dilemma

The shortage has created political complications that extend far beyond industrial supply chains. Apple is now seeking the Trump administration's approval to purchase memory components from two Chinese companies that are currently on a Pentagon blacklist — a move that highlights the severity of the supply crunch.

Apple's outgoing CEO Tim Cook has been lobbying Secretary Bessent and other officials on the Chinese memory issue, underscoring how even the world's most valuable technology company is feeling the pinch.

Proposed Solutions: Tax Incentives Over Intervention

Rather than direct market intervention, SEMI offered a different path forward. The industry group recommended that the administration and Congress develop consumer-focused tax deductions or credits to offset the rising prices of phones, laptops, and other electronics — a solution that addresses voter concerns without distorting market dynamics.

Additionally, SEMI called on policymakers to support long-term purchase agreements between manufacturers and customers, and to continue extending tax breaks aimed at increasing domestic chip production capacity.

"Current market conditions are being addressed through investments in American manufacturing and an increasing focus on long-term purchase agreements," the organisation stated.

Political Pressure Mounting

The memory shortage is quickly becoming a political flashpoint in Washington. While investors have cheered the surging stock valuations of memory makers, policymakers are increasingly concerned about the impact on consumers — highlighted by recent decisions by Apple and Microsoft to raise prices on popular products.

Senator Bernie Moreno, an Ohio Republican, sent a separate letter to Commerce Secretary Lutnick in April warning that a memory chip shortfall could trigger supply disruptions and price hikes reminiscent of the COVID-19 pandemic. Moreno urged Lutnick to prioritise domestic demand for memory chip components — a measure that SEMI's letter implicitly cautioned against.

Industry Outlook

The memory chip market is entering a period of structural tension. On one side, the AI revolution is driving demand for high-bandwidth memory (HBM) and advanced DRAM at rates the industry has never seen. On the other, geopolitical tensions, export controls, and the sheer cost and time required to build new fabrication facilities are constraining supply growth.

SEMI's intervention signals that the semiconductor industry would prefer market-driven solutions — long-term contracts, tax incentives, and continued investment — over government mandates that could create unintended consequences. Whether Washington will heed that advice remains to be seen as the political pressure to act continues to build.

For consumers, the immediate outlook is clear: electronics prices are likely to remain elevated well into 2027 as the memory market works through what industry executives describe as a once-in-a-generation supply crunch.