A growing memory-chip shortage is creating market uncertainty, with suppliers prioritizing AI demand and warning of tighter supplies for tech firms in 2026.
Lenovo Group Ltd. has surpassed market expectations, posting stronger-than-anticipated quarterly revenue driven by soaring global demand for AI servers and a recovering PC market.
On November 20, 2025, the company reported revenue of $20.5 billion for the quarter ended September 30, representing an approximately 15% year-over-year increase, surpassing estimates of around $20.1 billion.
However, the company’s profit attributable to shareholders fell by around 5 % to $340 million, underscoring margin pressures amid its AI investment push.
Lenovo reports impressive earnings despite facing challenges
Regarding Lenovo’s accomplishment, sources familiar with the situation noted that a rise in memory chip prices is significantly impacting the operations of several firms and may lower the profits of PC manufacturers, despite this success.
Additionally, shares of Lenovo and Dell decreased this week after Morgan Stanley analysts reduced their ratings on these tech firms. When reporters asked them why they adopted such a sudden decision, the analysts highlighted cost hikes on memory chips as the reason behind their move. Notably, these memory chips are important for smartphones, PCs, and servers.
Apart from these challenges, reports indicate that the Chinese multinational company also faced hardships due to a slowing economy and low consumer spending at home. Still, these sources acknowledged that the surging demand for AI servers is likely to continue boosting growth for Lenovo.
In a report before the earnings were made public, analysts Steven Tseng and Sean Chen commented that, “While traditional enterprise IT spending remains weak and could slightly hinder desktop PC and data center hardware sales, increasing sales to cloud providers might help offset challenges from other customers.”
Meanwhile, reports dated November 14 highlighted that Semiconductor Manufacturing International Corp. (SMIC) had cautioned that a shortage of memory chips might limit the production of cars and consumer electronics, such as mobile phones, in 2026. This warning comes as major chipmakers shift their focus towards doing business with Nvidia Corp., a key player in AI accelerators.
Concerning this matter, it is worth noting that Lenovo has been actively involved in the mobile phone market since the tech firm makes and sells smartphones primarily via Motorola Mobility, its subsidiary. For cars, sources mentioned that the tech company does not manufacture them but provides IT infrastructure and high-performance computing, which are crucial for car development and in-car functionality.
Uncertainties surrounding the supply of memory chips spark tension in the market
Analysts have found that Chinese-based firms are cautious about placing orders with SMIC for the early part of next year. This prompted them to conduct research and discover that these companies had made this decision due to the uncertainty surrounding the supply of memory chips for their products. These findings were cited from a statement made by Co-Chief Executive Officer Zhao Haijun.
The analysts also noted that some of this uncertainty is due to predictions of rising memory prices, driven by strong demand from AI-related uses.
To take responsibility as the situation intensified, as the leading chipmaker in China for large tech companies like Huawei Technologies Co., SMIC joined Kioxia Holdings Corp. to warn individuals about a potential gap between demand and supply next year.
According to sources, the surge in demand for data centers has increased the need for advanced memory chips used in AI accelerators, resulting in a shortage of lower-end chips, as top companies like SK Hynix Inc. and Samsung Electronics Co. prioritize supplying parts to Nvidia Corp.
“Whether it’s car manufacturers, smartphone makers, or consumer electronics, all users of memory chips will face challenges from rising prices and limited supplies next year,” Zhao told analysts during a post-earnings call.
He added that their clients are hesitant to place significant orders in the first quarter because they are unsure of how many memory chips they will be able to acquire.
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