HP's Strategy to Adjust Sourcing Amid AI Memory Surge

Rising AI workloads in hyperscale data centres are reshaping the global memory market, prompting hardware manufacturers such as HP to rethink procurement and security strategies.

As operators deploy larger GPU clusters, demand for DRAM and high bandwidth memory has accelerated. 

Major suppliers including Samsung, Micron and SK Hynix (which together control around 90% of the DRAM market) have shifted significant capacity towards high bandwidth memory tailored for AI data centres.

The result has been tighter supply and sharp price increases across conventional memory products.

One type of DRAM rose 75% between December and January, increasing pressure on downstream manufacturers including PC and device makers.

“We stand at the cusp of something that is bigger than anything we’ve faced before,” says Tim Archer, CEO at Lam Research Corp.

“What is ahead of us between now and the end of this decade, in terms of demand, is bigger than anything we’ve seen in the past, and, in fact, will overwhelm all other sources of demand.”

Tim’s remarks underline how AI-driven data centre demand is outpacing traditional semiconductor consumption cycles.

Diversifying DRAM supply

In response to the constrained market, HP is qualifying DRAM chips from ChangXin Memory Technologies (CXMT), a leading Chinese memory manufacturer. This involves testing components to ensure they meet HP’s performance and quality standards.

For years, HP relied primarily on suppliers across the United States, South Korea and Taiwan. The current shortage, driven in part by AI data centre expansion, has prompted it to explore alternative sources.

Dell is also in the qualification phase with CXMT, while Acer and Asus have asked Chinese manufacturing partners to source locally produced memory.

Although qualification does not guarantee adoption, it provides optionality in a market characterised by price volatility and limited availability.

Chinese manufacturers have gained prominence as global brands seek to mitigate risk. CXMT recently completed a US$4bn share offering following technological advances, reinforcing its role in the evolving memory supply chain.

The knock on effect of memory shortages extends beyond device manufacturers to data centre operators. Higher DRAM prices can influence server build costs, total cost of ownership and procurement cycles, particularly where AI clusters require large volumes of memory per node.

Balancing geopolitics and resilience

While many multinational companies have diversified away from Chinese sourcing in recent years, the current market dynamics highlight the complexity of supply chain decisions in the AI era. For HP, diversification appears to be about resilience rather than concentration.

If pricing pressure persists, Chinese suppliers could provide cost relief for certain markets, particularly outside the US. At the same time, expanding the supplier base reduces dependence on a small number of dominant manufacturers.

As Chinese electronics contract manufacturers expand their role, they are becoming more influential in sourcing decisions. Some brands are requesting broader sourcing strategies from their partners to manage risk and cost exposure.

For the data centre ecosystem, this shift reflects a broader trend – procurement strategies are increasingly shaped by AI infrastructure demand rather than consumer device cycles alone.

Strengthening device security

Alongside supply chain adjustments, HP is reinforcing cybersecurity across its connected devices. The company has renewed its multi-year agreement with Karamba Security to continue deploying its XGuard cybersecurity software across printer products.

These printers, many of which are networked and cloud-connected, contain firmware that can be targeted by cyberattacks. As digitisation and AI adoption have expanded, firmware vulnerabilities have become a greater concern across global supply chains.

Throughout 2025, cyberattacks affected multiple industries, underscoring the importance of embedded security. By maintaining its partnership with Karamba, HP aims to protect connected devices that often sit within enterprise and data centre adjacent environments.

Together, diversified memory sourcing and reinforced firmware security illustrate how procurement and risk management are converging.

As AI-driven data centre demand continues to reshape semiconductor markets, companies such as HP are adjusting sourcing strategies while strengthening security controls across their hardware portfolios.