Analysts at Wells Fargo, one of Wall Street’s leading research firms, released a note stating that automakers could face renewed cost pressures and potential supply interruptions as a widening global memory-chip shortage intensifies, spurred by surging demand from data centers and AI workloads.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
The firm noted that the top 10 automotive Tier 1 suppliers consumed about 54% of total DRAM (Dynamic Random Access Memory) in 2025, led by giants like BYD (BYDDF), Tesla (TSLA), and Aptiv (APTV). Yet autos account for under 10% of the global DRAM market, leaving the sector at a disadvantage as chipmakers prioritize higher-margin clients in cloud computing and AI.
Tight Parts Supply Could Raise Auto Prices
DRAM is widely used for vehicle infotainment, advanced driver-assistance systems (ADAS), and centralized electronic architectures. Its prices have skyrocketed lately, stripping carmakers of bargaining leverage. Wells Fargo noted that DDR5 spot prices have surged over eight times and DDR4 more than sixteen times above 2024 averages.
Analysts estimate current DRAM content at $50 to $110 per vehicle, cautioning that these hikes could deliver a hefty cost hit to the auto sector in 2026. They noted that global DRAM demand is expected to climb by about 26% next year, outpacing supply growth of roughly 21%.
Micron (MU) remains the largest supplier to the auto sector, along with Samsung (SSNLF) and SK Hynix. These chipmakers are allocating greater time and resources to build the faster growing and more profitable data center markets than the auto sector.
Consequently, automakers and suppliers may face steeper prices to secure supply, a risk Wells Fargo warns could squeeze margins and disrupt production schedules. Analysts added that premium vehicle segments and EV makers appear most vulnerable due to their elevated memory usage per vehicle.
Wells Fargo already sees emerging signs of panic buying similar to that of the 2021 chip crisis, warning that failure to absorb higher costs could trigger production halts.
Tesla or BYD: Which Is the Better Auto Stock?
A tightening memory market could raise auto costs and pressure margins, particularly for memory-heavy EVs like Tesla and BYD.
We used the TipRanks Stock Comparison Tool to determine which stock between Tesla and BYD is currently favored by analysts. Notably, BYDDF stock has a “Strong Buy,” while Tesla has a “Hold” consensus, suggesting analysts remain highly optimistic about BYD’s long-term prospects.
