Memory has grown to nearly two-thirds of AI chip component costs

2026-05-24 | original

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Why This Matters

The rising cost share of memory in AI chips highlights a significant shift in the industry’s component economics, with memory now constituting nearly two-thirds of total component costs. This trend underscores the increasing importance and expense of high-bandwidth memory (HBM) in AI hardware development, influencing both manufacturing strategies and pricing. As AI chip demand surges, understanding these cost dynamics is crucial for industry players and consumers alike, impacting future product design and affordability.

Key Takeaways

Memory costs now account for nearly two-thirds of AI chip component expenses.
Total AI chip component spending is projected to more than double from 2024 to 2025.
High-bandwidth memory (HBM) is driving a significant portion of the cost increase in AI hardware.

For each AI chip designed by Nvidia, AMD, Google, and Amazon, we estimate the per-chip cost of four component categories: memory (HBM), logic dies, advanced packaging (CoWoS), and auxiliary components. We then multiply those per-chip costs by estimated quarterly production volumes to get total component spending in each category, and compute each category’s share of total component spending per quarter from Q1 2024 to Q4 2025.

We find that memory’s share rose from 52% to 63% over this period, while packaging fell from 19% to 15% and auxiliary components from 15% to 9%. Logic die share stayed roughly constant near 13–14%. Total component spend on AI chips grew from approximately $22 billion in 2024 to $52 billion in 2025, with HBM spending alone accounting for roughly $20 billion of that increase.

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