AI is Driving a Memory Shortage & Detroit Wants to Revive the Sedan

0:00Neal Freyman:Oh, could this vintage store be any cuter?

0:03Toby Henn:Right? And the best part? They accept Discover. Accept Discover? In a little place like this?

0:08Neal Freyman:I don't think so, Jennifer. Oh, yeah, huh. Discover's accepted where I like to shop. Come on, baby, get with the times. Right, so we shouldn't get the parachute pants? These are making a comeback. I think.

0:23Toby Henn:Discover is accepted at 99 % of places that take credit cards nationwide. based on the February 2025 Nielsen Report. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the world is facing a memory shortage, and I don't remember what I was going to say next.

0:41Neal Freyman:Then we'll explain looks maxing, mogging, and who clavicular is so you don't have to ask your teenage cousin. It's Tuesday, February 17th. Let's ride.

0:55Toby Henn:Maybe you've heard about the sports equinox, which are those rare days where all major sports leagues are in action. But today I'm dubbing the holiday equinox because billions of people all over the world will be celebrating a holiday this Tuesday. Down in New Orleans, the throw in beads for Mardi Gras while in Brazil, Carnival began on Saturday. For Muslims, tonight is the beginning of Ramadan, the holiest month of the Islamic calendar. And in Asian cultures, today is the start of Lunar New Year, ushering in the year of the fire horse.

1:23Neal Freyman:And speaking of Lunar New Year, have you seen who's being embraced as sort of a mascot this year? It's Draco Malfoy. His face is everywhere in houses, on sites that are selling Lunar New Year decor. And it's because, according to the BBC, the Chinese translation of his name Malfoy is Ma Er Fu, which contains the words for horse and fortune, which is seen as especially auspicious in the upcoming year of the horse. Harry Potter is furious right now. And now a word from our sponsor, FlavCity. Neil, I don't care what people say. It is easy being green. You finally started recycling? No, of course not.

2:00Neal Freyman:I'm talking about FlavCity's new pepperminty shamrock all-in-one protein smoothies. I'm talking 25 grams of protein, 10 grams of collagen, and functional mushrooms in just one scoop.

2:10Toby Henn:Huge relief. These protein smoothies provide quick nutrition on the go. Just add milk or water, shake for 20 seconds, and you're all set. No blender required.

2:18Neal Freyman:The limited edition Shamrock flavor is fantastic, but they've also got banana bread, brownie batter, vanilla, and more. Seriously, they taste as good as any milkshake.

2:27Toby Henn:Head to go.shopflavcity.com slash MBDS to try any of their delicious flavors. That's go.shopflavcity.com slash MBDS. The world is facing a memory crisis. and no, I'm not talking about forgetting where you left your keys. Memory, one of technology's fundamental building blocks, is facing an unprecedented shortage that could jack up the price of your next gaming console, smartphone, or computer if they get released at all. Already, Sony is considering delaying its next PlayStation launch to 2028 or 2029, while Dell has hiked prices on some of its commercial laptops by up to 30%. Rumor has it Nintendo could raise the cost of its Switch 2 this year for the same reason.

3:07Toby Henn:We have been warned, so far in 2026, A parade of tech execs like Tim Cook and Elon Musk have predicted that the historic shortfall in memory is going to shake up product launches, squeeze margins, and raise prices for consumers in a supply chain crisis that may well last years. Musk admitted the shortage is so dire that Tesla's going to have to make its own memory plant. We've got two choices, he said. Hit the chip wall or make a fab. Wait, why are we running into a wall again is a question you might ask. Here is the quick answer. AI. It all comes back to AI. Big tech companies like Microsoft, Meta, Amazon, and Google are building galaxies of AI data centers, all that require loads of memory to run.

3:46Toby Henn:And to capitalize, companies that make memory chips, such as Micron and Samsung, have diverted their production lines to make memory specifically for data centers, leaving the consumer gadget makers like smartphone and PC companies fighting for the scraps. Toby, welcome to Ramageddon.

3:59Neal Freyman:So we do a little memory lesson because I feel like when people hear memory, their minds might go a little bit blank. So I'm going to break down the types of memory that we're talking about. First, there's DRAM. You're going to hear that word a lot. DRAM is sort of like walking into a library. You want to access an information. You want to access a book from a shelf. You walk to the shelf. You grab a book. You walk back. You repeat. It's very easy to do. It's good for a lot of normal tasks. It's not that fast compared to different types of memory, but it's cheap. Like a library card is cheap. You can access a lot of information that way.

4:34Toby Henn:The way I remember DRAM is the Daft Punk album, Random Access Memories, because it stands for Dynamic Random Access Memories. Yeah, I didn't even say what it's for.

4:42Neal Freyman:So thank you, Daft Punk. And thank you, Neil. And then there's HBM, which is High Bandwidth Memory. And that is what a lot of companies are moving into because instead of walking to the shelf every single time, it's just like piling a lot of books right next to you on a table. It's much quicker. It's much more powerful. You can access information more quickly. It's literally built in a stack. And that is what a lot of AI chips need in order to perform their functions. And it's what a lot of memory makers are shifting production towards because they get a little better margin on that compared to something like DRAM.

5:13Neal Freyman:So there's a shortage of all types of memory right now, mainly because of allocation of resources from memory makers.

5:20Toby Henn:And these companies are getting whacked. Have you looked at Nintendo's stock charts recently? Can't say I have, actually. OK, well, it's it's it's disgusting to look at. Nintendo stock is down at 45 percent over the last six months. And it's all because of memory. They just had their earnings call earlier in February. They said that the memory shortage is going to squeeze margins of the switch, too. And their stock promptly lost 11 percent. We also saw this happen with Apple. Apple had an amazing earnings, right? They were like, we just had the best quarter we've ever had. they're selling 23 % more iPhones, but the only thing investors paid attention to was the rising prices of memory that Tim Cook talked about and their stock fell, which was very perplexing given how good of a quarter they had.

6:01Toby Henn:So it's just wrecking companies, these consumer gadget companies left and right.

6:04Neal Freyman:And it is tough because you know who's going to bear the costs of this memory shortage is probably consumers because prices are going to have to rise on this thing. I mean, the fact that the PlayStation is going to become more expensive or even delayed, the fact that smartphones are going to get more expensive. These are things that are going to hurt your wallet as AI is kind of just wanting all of this demand because hyperscalers right now, you know, like the metas of the world, the people who are bringing on these big data centers, they are first in line. Everybody else, including you, me, and people who just want normal consumer electronics are back to the line.

6:39Toby Henn:So we didn't even talk about the prices, right? This is why Nintendo and Apple are getting crushed because they're saying, well, we are paying so much more for memory. So here's what we're talking about. We're talking like this price chart is the opposite of Nintendo's stock chart. The cost of one type of DRAM was up 75 % from December to January. In the span of one month, the cost of this type of memory jumped 75%. And then you have contract prices for DRAM and another kind of memory, NAND flash. They're up 600 % over the last 12 months. That's a sevenfold increase. So if you're a company and you need memory to go into one of your products, you either are going to raise the cost of your product, or you're just not going to sell it altogether.

7:19Toby Henn:And you see Dell and you see other PC and smartphone makers like Xiaomi in China saying, well, I'm not even going to offer this particular product with this type of memory because I just can't make it profitably.

7:30Neal Freyman:A very funny sub point to the fact that RAM is so expensive now is that resales of old consumer electronics are spiking. So computer overhauls, which sells computers in New York City, say they sold 16 gigabytes of DRAM, which is not a lot for$160 before. They were like, we couldn't sell that for any money right now. Big Data Supply, which is a California recycler of electronics said their revenue in January was up 300 % because driven entirely by secondhand memory demand. So maybe go through if you have an old PC sitting in your garage. I don't know who actually does that, but if you do have one, go check to see if it has a memory card in there because you could probably fetch a pretty penny for it.

8:14Neal Freyman:Moving on, last week, a video of Tom Cruise fighting Brad Pitt on a cinematic rooftop was going viral across social media. But outside the 1994 gothic horror film interview with the vampire, the two megastars have actually never shared the big screen together. So where did this clearly Hollywood-level fight scene come from? A new AI video model called Seadance 2.0 that once again has the movie industry shaking in its boots. Seadance comes from ByteDance, the company behind TikTok, and is currently only on offer to Chinese users. but will soon be available globally on its CapCut app. You can use it to create scenes with a single line of text, much like OpenAI's model Sora.

8:52Neal Freyman:And like Sora before it, C-Dance's capabilities have the industry talking. In response to that Tom Cruise Brad Pitt video, which was created using a two-line prompt in C-Dance, according to the user who posted it, Deadpool screenwriter Rhett Reese responded, I hate to say it, but it's likely over for us. But this is Hollywood we're talking about. They're not going down without a legal fight. The Motion Picture Association said the model was violating copyright on a quote, massive scale, Disney sent a cease and desist letter saying that ByteDance was hijacking Disney's characters and Paramount followed suit with a letter of its own.

9:25Neal Freyman:Neil, we saw a very similar freakout happen when OpenAI debuted Sora, but by many accounts, C-Dance is more capable and it comes from a Chinese parent company, meaning the freakout is all the bigger.

9:35Toby Henn:Is this just the marketing playbook now for a video generator? You come out with an AI video generator, whether you're OpenAI or MidJourney or Google or ByteDance and you just let the users rip copyright and you get all this press because everyone's saying, oh, look at what Mickey Mouse and Goofy are doing. And then you get Disney sending a cease and desist letter. I feel like we've repeated this a million times, but it does drum up a lot of excitement for these particular products. And then, you know, the companies that make them kind of go back with a tail between their legs saying, oh, you know, this is so sad.

10:06Toby Henn:We're going to crack down on this copyright infringement. But in the end of the day, you know, they're still exist and a lot of people know about them. So I wonder if ByteDance looked at what happened with these other video generators and said, let's just do the same thing.

10:17Neal Freyman:I do just want to shout out ByteDance because it's been a little bit of a forgotten name, at least for American AI users, but apparently it's flagship AI model is approaching the same level of usage as Google and open AI, at least based on token consumption. They're actually, their monthly active users are still lower around 250 million, um, according to Quest Mobile, which is far below the 800 million that both Google and OpenAI are sitting around. But that being said, a lot of people in the AI industry are saying that maybe ByteDance is not going to be able to compete on chatbots because, one, most chatbots function using English as a first language.

10:57Neal Freyman:They're a little behind in terms of training. It's very hard for them to spin up the data centers needed to train these models because of export controls. So maybe they're looking elsewhere and say, where else can we win? That is photo editing. That is video editing. That is text to video generation. These models, they can have a wedge into. They're not as finicky or as heavy to train as large language models. And so maybe look out for the video tools that are coming out of ByteDance in China.

11:25Toby Henn:Yeah. Is this actually a step forward? Should Hollywood be freaking out? And some of the community is divided. Some are saying we're cooked. Some are saying this is trash. But it does seem like this is a step forward in the sense that it's better at storyboarding. That was one area of these existing AI video generators where it was kind of lacking. Like they could create a amazing 15 second clip of something like Tom Cruise and Brad Pitt fighting, but they just didn't have this narrative arc to it. And that maybe was one of the biggest gaps between what a human could create and an AI could create.

11:58Toby Henn:This Sea Dance seems like it's pretty good at storyboarding and creating a compelling story. So that's why maybe more and more people in Hollywood are saying, Well, yeah, this industry employs hundreds of thousands of jobs, and those could be soon wiped out. Moving on, in the biggest coming-out-of-retirement surprise since Gronk, the sedan is ready for its comeback. As the Wall Street Journal writes, Detroit's big three automakers are once again entertaining the option of making smaller cars, just years after sending them to the farm upstate. The president of General Motors, which made its last Chevy Malibu in 2024, said recently, I would kill to have a hybrid electric sedan.

12:33Toby Henn:We're working on how to do that. The CEO of Ford, which terminated the Fusion five years ago, said last month the sedan market is very vibrant. Ford is setting up a new assembly line next year in Kentucky that could also make sedans should they want to flip that switch. Finally, Chrysler is planning a small car that will, quote, be beautiful and fun to drive and aspirational, according to its CEO. A sedan comeback would truly be unbelievable, given how hard they've crashed in the past decade and a half. As recently as 15 years ago, passenger cars accounted for about half of new vehicle sales in the United States.

13:03Toby Henn:last year that fell to just 18%. In the sedan's place, trucks and SUVs have captured American hearts, minds, and market share. They've proven popular with consumers and automakers because they're far more profitable to sell, but perhaps they've become a victim of their own success. Car buyers are getting sticker shock from SUVs that regularly cost more than$50 ,000 and are looking for more affordable alternatives. This could be the sedan's time to shine.

13:27Neal Freyman:Sedans are just so hard to make money on because all of these quotes coming from these auto exams are going, yeah, we would love to have one, But in the next breath they go, we just can't figure out how to make one a profitability. Even the Japanese automakers like Toyota said that we are struggling here. We make money on the Corolla, just not a lot. That is coming from Toyota statement. So it is just interesting that they're all in a rock and a hard place between a sedan and an SUV. And they just really would love to bring a sedan to the market. But it's just difficult to right now. And it's frustrating for these consumers of these brands because sedans are usually entry points into brands.

14:05Neal Freyman:Like if you want to become a Ford person, if you want to become a Toyota person, you want to have a starter car. You want a car that's below$25 ,000. So you're actually losing some of that brand loyalty from those initial buyers that maybe will pay off in a$50 ,000 plus SUV down the line. So that is why industry analysts are saying like you maybe need a loss leader in this point to just get people in the door and buying your brand.

14:30Toby Henn:And that may be the justification if I'm an automaker CEO and I'm saying, well, should I roll out a sedan or not? Maybe you could think of it as a loss leader and get people hooked on Ford Focuses or exports and then hope that their next car will be a$60 ,000 Explorer Expedition or F-Series truck. So that's one way you could think about it. what's happening now is reminding me a lot of what's happening at McDonald's because last week McDonald's reported an amazing quarter because of their insistence on value. They rolled out a McValue menu and that really led to booming sales because they were just dialed in on affordability.

15:06Toby Henn:And that's what automakers are trying to do or thinking about right now. It's not as easy to flip a switch and, you know, create a cheaper burger as it is to make a cheaper car. But what's happening both in the fast food and auto industries and honestly across the entire economy is companies want to meet consumers where they are, which is they need to make more affordable things. The cars are very expensive to make, and it's not as easy as just saying, let's build a sedan and sell a sedan because they can't make a lot of money on it. But it does seem to be that, you know, this is where the trend is going.

15:35Neal Freyman:It is very ironic that and very poetic that you mentioned that this new Kentucky assembly line that was meant to be made for$30 ,000 electric trucks for Ford is now being studied whether it could be converted to sedan. So it does feel like the auto industry is always one step behind what the consumer actually likes because they poured all these resources into electric vehicles. Now they're taking massive write downs on those. I wonder if we're going to see this big sedan push and then the consumer is going to go, actually, I do like my big car. I like staying above the traffic. Maybe I do just love minivans.

16:06Neal Freyman:Just invest in minivans. Everyone wants a minivan. All right, we're going to take a quick break and come back with Toby's Trends right after this. Imagine you wake up one day and a huge solar flare adds an extra hour to each day. Or maybe your team will double in size overnight. Or there'll be a global paperclip shortage. The truth is, no one knows what's around the corner.