EMS & The Economist: How AI Data Centers Are Reshaping Memory Prices And Supply with Shawn DuBravac

AI is changing the electronics economy faster than most supply chains can adapt. We sit down with Shawn DeBravac, Chief Economist of the Global Electronics Association, to unpack the “memory squeeze” and why AI data centers are pulling scarce resources toward high-margin infrastructure, driving memory price pressure even when outright availability doesn’t look dire on the surface. If you build, buy, or plan around semiconductors, memory, EMS, or PCB demand, this conversation helps you separate headline noise from what manufacturers are actually experiencing.

From there, we zoom out to the risks that don’t show up on a BOM until it’s too late: concentrated semiconductor capacity, regional dependencies, and the real-world costs of geopolitics. We talk through the Iran war and the Strait of Hormuz, why energy prices can stay elevated for longer than markets hope, and how higher oil, shipping, and insurance costs can be broadly inflationary. The twist is the split performance inside electronics manufacturing: AI and defense remain strong while consumer electronics faces tougher headwinds as households cut discretionary spending.

We also dig into the long-run rewrite of global trade and supply chains. Once companies start moving production to navigate tariffs and uncertainty, that momentum tends to keep going. Automotive and EV policy in Europe becomes a clear example of competing goals, and Sean explains how data like sentiment and book-to-bill can guide decisions in a more expensive, more volatile environment. Subscribe for more conversations on the semiconductor supply chain, global electronics trends, and manufacturing strategy, then share this episode and leave a review with your biggest takeaway.

EMS@C-Level is hosted by global inspection leaders Koh Young (https://www.kohyoung.com) and Global Electronics Association (https://www.electronics.org)

You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.

Transcript

Welcome And Economic Snapshot

Philip Stoten, Journalist and Podcast Host 0:02

Hello, I'm Philip Stoten. Welcome to EMS and the Economist with Sean DeBravac, Chief Economist of the Global Electronics Association. Sean, great to see you. Thanks for taking the time today.

The Memory Squeeze Explained

Shawn DuBravac, Chief Economist, Global Electronics Association 0:13

Yeah, glad to be with you, Phil. There's obviously a lot happening in the economy right now.

Philip Stoten, Journalist and Podcast Host 0:18

Yeah, so much happening and so much happening that's having different impacts. One of the things that popped up on my radar recently was your report uh that you refer to as the memory squeeze and what's going on there with AI kind of sucking all the oxygen out of the um the uh semiconductor supply chain. Just give me an overview of the findings of that report.

Concentration Risk In Semiconductors

Shawn DuBravac, Chief Economist, Global Electronics Association 0:40

Yeah, we took a look at what's happening in the in the memory market. We also took a look at uh how our members are perceiving the memory market, what they're seeing, and uh, you know, consistent with what you see in many of the the headlines, their price pressures are up. Um you know, we're not seeing necessarily as much pressure on availability as we might have expected, but uh definitely you do see uh price pressures up. And then if you just look at data from the last month, you you see really strong uh production in the electronics industry globally, uh much of it being fueled by AI. So AI is is definitely sucking up the oxygen in the room. They're definitely uh you know getting the uh scarce resources, memory being one of those, and taking advantage of it. So that the uh thirst for data centers, the thirst for AI uh capabilities continues to dominate a lot of the global themes in electronics.

Philip Stoten, Journalist and Podcast Host 1:50

Yeah, when we look at that, it's that supply side of the global electronics supply chain that is when you get back to semiconductor, it's tied down to a very small number of companies and a very fixed amount of capacity that can't easily be changed. It's a big challenge, isn't it, that that that we face structurally in the industry and that global geopolitics can add another layer of concern to that.

Shawn DuBravac, Chief Economist, Global Electronics Association 2:18

Definitely, yeah. I mean, there's obviously lots happening in the in the global economy and a lot of uncertainties which are putting pressures on manufacturers everywhere in the in the world. And and I would add that it isn't just a couple of uh you know large companies that are controlling many of the themes, but it is also uh you you even see it playing out in you know what's happening in countries. So there's uh obviously if you look at, for example, Taiwan's uh export data from the from the last month, they had very, very strong exports, especially when it comes to to tech. The bulk of their exports now, unsurprising to to anybody listening to this, is is uh electronics. And so you you do see you know significant concentration in certain regions of the the world, which is just one more factor that manufacturers everywhere need to be cognizant of and and watchful of.

Philip Stoten, Journalist and Podcast Host 3:21

Yeah, it's a it it it almost exposes a bit of a weak point, which we're seeing in various different places. One of the obviously the elephant in the room is the is the Iran War and the impact on the Strait of Hamuz. Um which is having multiple impacts, one of which is the rising cost of energy, which seems to be a real concern, particularly here in Europe where energy costs were already something that manufacturers were quoting as something that makes them less competitive. The fact that that's going up, the fact that it seems to be rising and a sustained rise seems to be um something that it's not easy to see a solution to. How do you see that playing out? Do you see it as something that is short-term around um around the situation we're in, or do you see it something that that is uh ecosystemically problematic that we need to actually address?

Electronics Output Stays Surprisingly Strong

Shawn DuBravac, Chief Economist, Global Electronics Association 4:20

I I actually think that um I I don't know that it's a structural problem, but the the impact from higher energy costs is not going to be a short-term problem. Uh obviously we saw uh significant spikes in oil pricing right after the uh the invasion when there was uh what I would call the the cloud of war, you know, made what was happening in the oil market and the in the broader energy market uncertain. There um well, some of that has settled, and you've seen the the price of oil decline from the peak. The expectation is that oil remains elevated through the remainder of the year and into 2027. So I I right now the futures market suggests we're at least ten dollars a barrel higher than where we were pre-pandemic. So the markets are telling us that the uncertainty around the global energy markets are going to remain intact for for some time. I I actually think that um there is some risk and there should be some concern that the impact will be much bigger and broader than a lot of people anticipate. Uh you know, as you see uh even in the in the news today, things have become exacerbated over the last 24 hours. And so the the markets seem to have they they want this you know kind of calming effect. They keep wanting to discount the the downside risks, and anytime there looks like there's some agreement around a ceasefire, then you see the markets rally. So the markets are are really wanting this to resolve quickly. I think they are um overestimating how quickly this will be resolved. I do not think it will be a uh uh a quick resolution. And and you see the residual impact in the energy market. What's most interesting to me is that the electronics market has largely been able to shrug this off. I mean, you've had still very strong uh output numbers in electronics over the last month. If you look at production in the the US, we're looking at, you know, depending upon the series that you're using, we're looking at all-time highs in some series. You've seen very strong uh exports, as I already noted, in many of the the uh Asian countries that have a high exposure to electronics. Obviously, uh part of this is AI, part of it is also defense, so uh all of the defense uh categories are doing well. And so I think we're gonna have this, you know, this dynamic over the the next at least eight months where the cost of doing business is higher, the uncertainty around business will be more acute, and yet it doesn't it doesn't appear evident that this will be a significant headwind for electronics, partly because a couple of key categories within electronics manufacturing are doing very well. Again, you know, AI, AI and defense. I think outside those categories, if you look at consumer electronics, the the headwind there will be stronger because the um higher energy costs end up impacting consumers' uh willingness to pay and consumers' willingness to buy. So so there's this unique dichotomy that's playing out right now.

Philip Stoten, Journalist and Podcast Host 7:45

Yeah, it feels like the it feels like the more negative pressures coming from the supply side and the the the demand side seems quite robust, but particularly robust, as you mentioned, uh in those in those sectors. Um Yeah, yeah.

GDP Growth Hit And Consumer Pullback

Shawn DuBravac, Chief Economist, Global Electronics Association 7:59

I mean, I I think manufacturers need to be ready for a higher cost of doing business. Uh shipping costs are higher, insurance costs are going to be higher, like that will spill over into markets that aren't even impacted by the Strait of Harmooth because uh it pulled things out of balance. And so there is a cost to that that manufacturers will incur. Obviously, the energy costs pass straight through, and so you're gonna see you know higher airfares, you're gonna see higher transportation costs, like all of that. The the costs of material will be higher. This is, I think, broadly inflationary, and I think that that the residual on that inflationary pressure will last much longer than a lot of people uh anticipate. Uh, and at the same time, if you're in the right categories, you you're doing still quite well and you and you'll be able to weather this storm, I think.

Philip Stoten, Journalist and Podcast Host 8:55

Yeah, absolutely. Um and where do you where do you see the impact in terms of the global economy as we as we look at you know global GDP growth with respect to what's going on in Iran? Do you see it as something that is slowing growth generally? And as you say, impacting more on the perhaps on the consumer side as prices rise?

Shawn DuBravac, Chief Economist, Global Electronics Association 9:17

I think it definitely impacts the global the global economy uh simply through the impact at higher energy costs lower global uh GDP growth. And so, you know, there's this unique dynamic in the US right now where because we've become an X a net exporter of oil, while we face higher pricing. We don't have to face the same type of shortages that um we might have been impacted by in the past. That's not true for uh markets in Asia. That's generally not true for Europe. I think the the higher costs of energy will be more detrimental to them. Uh you're you're probably looking at maybe four tenths, five-tenths lower growth in the global economy as a result of the higher oil prices. And some of that depends on where the oil prices end up settling at uh you know, at $10 to $20 a barrel higher, you're probably looking at global growth that is two tenths, maybe three tenths lower as as oil prices kind of hover in that you know $90 range, then you're looking at global growth that's probably four tenths to five tenths lower. Yeah. And so it is detrimental and it does end up crowding out spending on other categories when you look at consumer spending. And so that that's where I think consumer electronics are are going to be most vulnerable. When you've got uh you know US consumers that are now spending an extra 40 to 80 dollars a month on on gasoline, then uh they're not spending that in other categories.

Trade Realignment And Supply Chain Inertia

Philip Stoten, Journalist and Podcast Host 11:04

Yeah, maybe not gonna upgrade their smartphone or whatever as a as a as a result of that, so a direct impact there. And we seem to be going through this stage of rewriting a little bit the uh the the playbook for global trade. And that just seems to be uh an underlying trend of the uh of the Trump presidency, the Trump era. Um, do you see that ongoing? Do you see that as something that is almost a legacy of this area era, or do you see that as something that is, you know, just during this term and quite temporary?

Shawn DuBravac, Chief Economist, Global Electronics Association 11:38

Uh no, I think it's ongoing because I think what ends up happening is once you start to move your supply chain relationships, then uh, you know, these are dynamics that have a lot of inertia. And so once you start to move things, then the momentum starts to pick up and it's just natural to kind of continuously reconfigure supply chains. Yeah. And and over just the last couple of years, you've obviously seen the the US exposure to China trade uh decline significantly. You've also seen the European dynamics there uh increase. So they're they're more reliant on China now as they've filled in some of that. You're definitely going to continue to see uh shifts take place. And um, I you know at first it was let's move some manufacturing uh capacities and capabilities quickly. And and really that was almost a reallocation or a resorting just to to work around the um the tariffs that were put in place in the U.S. And then because you've started that momentum, you start to think about okay, what does our lar our long-term footprint look like? Where does it make sense to manufacture? And so uh I think you'll you just simply will keep that momentum going. They're still they're still pushing the U.S. to build out more manufacturing capabilities and capacity. Now it it has come down from what we saw. We peaked in the kind of the August, September timeframe last year in terms of uh and new construction coming online and investment in in new construction uh at that has come down. But we're still you know 1.5, 1.7 times what we were pre-pandemic. So there's still a lot of momentum there. It has slowed, but uh still happening. And then I think globally companies are looking at how do I recalibrate my supply chains for a you know a new world order. And so I do think even without any further action, and there will be further action, but even if we didn't see further action on the tariff front or on the trade front, I think you'd continue to see things shifting because the the momentum has has started.

Europe’s EV Goals Versus Industry Protection

Philip Stoten, Journalist and Podcast Host 13:59

Yeah, no, I absolutely agree with you. I think people looked at the short-term solution, they managed that, and then they looked at the structural change and what they wanted to do long term. But they also looked structurally and thought, well, how do I build in more agility for the future? How do I build in more adaptability within that footprint? Uh and I've talked to a lot of EMS companies that have said very specifically, it's great that we have manufacturing in multiple locations, but now we've got to build the muscle that we can actually leverage that and move jobs from one to the other quickly and make sure there are lines qualified in more than one location, specifically for um, you know, certain market sectors. So yeah, I do see that as a long-term change. And as you say, politically, um, there's been a lot of changing relationship. You mentioned the relationship between the uh EU and China has changed because there has been a necessity to do that because of the changing relationship with um with the US. So yeah, it's it's a complicated dynamic, but it's not one that'll that'll just go back to normal very quickly.

Shawn DuBravac, Chief Economist, Global Electronics Association 15:04

No, and I think I think the easiest place to see that right now is around automotive. Like Europe has these competing goals around uh you know green uh objectives that would suggest they need more EVs and the demand for EVs remains high. It obviously has exploded in the US as some of the the policy tailwinds have have reversed. Uh it remains pretty strong in Europe. And and so on the surface, that would suggest we that Europe should open up uh more imports of Chinese produced EVs, right? Lower price points. Uh they're obviously being heavily subsidized by uh and through China, through manufacturing initiatives there, and so you can achieve your green objectives and and do so at a lower price point for consumers. But the challenge is you end up risking eroding the strength that you have in your domestic capabilities and your domestic production that that impacts places like Germany and Sweden and in an industry that was massively important. Yeah. So I I think if you just look at that single issue, uh it suggests that uh you know there isn't resolution yet in Europe, and that's something that will have to be sorted out.

Building A Global Electronics Data Hub

Philip Stoten, Journalist and Podcast Host 16:22

Yeah, there's definitely work to do there. And I spoke to Alison James, your senior director in Brussels, uh on that topic just a week ago, and there are definitely instruments coming in and things in place that will require a certain amount of those uh products to have systems and subsystems that are manufactured in Europe to have that kind of made in Europe stamp. So it is that complex dichotomy and um complex situation that these different dynamics are uh impacting on. Um huge data program that you're building out within the Global Electronics Association. We often talk about where you are with octabiles and where you are with um with respect to the sentiment reports. Give me a snapshot of where we are recently and just a quick overview of how Global Electronics Association is committed to kind of building on that Marcel and actually um furthering that uh insight that you provide.

Productivity Push And Workforce Declines

Shawn DuBravac, Chief Economist, Global Electronics Association 17:22

Yeah, and that uh on that point, the uh the association is definitely building out its its capabilities uh globally, and I think that's important. You see it broadly from the association as they've established uh you know offices in multiple n areas and regions of the world, and it really is you know, it it's very fitting of the rebranded association is the Global Electronics Association, and you you see that in the the membership uh figures and in the membership base. You also get a feel for that for where the offices are showing up and where the work is being done. And so uh and we're working to make sure that the data that we're capturing, the data that we're providing is indicative of that global nature. And so obviously, there were acquisitions uh of data programs in Europe and staff that have been added in Europe to uh to build out capabilities there. We're seeing it show up in other parts of the region, and there are more announcements to come here uh imminently about the the efforts we are making to build out uh the data availability to make sure that we are providing the insights that manufacturers need and that at the end of the day we can become a single source for truth in what's really happening in the global electronics industry. Um, you know, when you when you look at our monthly sentiment data, when you look at the book to bills that we publish for not just the US but for elsewhere, it again it aligns with this sentiment that I led with, which is despite a lot of the headwinds, you you do see a lot of resiliency uh in the market. You know, sentiment has not really deteriorated in a meaningful way. I think it goes back to if you're in a couple of these areas, if you're benefiting from the AI AI investment, if you're benefiting from uh defense, then you know things are are looking okay despite the fact that it's you're now operating in a more costly environment. There's more uncertainty, it's obviously a more difficult environment, uh, but you are are seeing strong throughput. And uh and and that also I think is reflected in what we're seeing with um the you know the respective book to bills, whether we're looking at PCB or or EMS, is that you you do see uh momentum there as it relates to demand. I think if you look underneath the surface, what's interesting is you know, despite some of the the strength, we we've seen a decline in manufacturing uh in the manufacturing workforce uh in the US broadly over the last year. And so uh there is this you know push towards higher productivity, higher output per employee. I think this is a a story that is playing out everywhere, uh, you know, as especially as you deal with higher costs, higher shipping costs, higher input costs, you you're looking at uh controlling costs else elsewhere in your uh your production.

Final Takeaways And Farewell

Philip Stoten, Journalist and Podcast Host 20:40

Yeah, yeah, I think it's fascinating. As I said earlier, I think that under underlying demand is robust. We see different industries peaking at different times uh and different industries struggling at different times, but the uh the the underlying trend seems seems to be strong. With respect to all the work you're doing in data, I think that's really exciting. And it just feels to me like the Global Electronics Association should be the place where all that data resides. And the more data there is in one place, the more we can interrogate that data collectively in a meaningful way for almost every individual member, which I think is where it gets really exciting, not just these very large, very complex and cumbersome reports, but to actually be able to look down into the data and say, hey, this is how it's impacting you and how it might impact your strategy or your approach to a certain market over the next 12 months. And that's that's that's where you go from data to insight and from insight to value for your your membership. And I think that's hugely powerful. Sean, always a huge pleasure to chat. Thanks so much for your time again. Um look forward to next time, but in the meantime, thanks so much. Thank you, Phil.