The UK-based tech firm Raspberry Pi is facing supply chain uncertainty as the booming artificial intelligence (AI) sector strains global memory chip availability. While the company reported stronger-than-expected profits for the past year, its stock price dipped following the disclosure of ongoing DRAM (dynamic random access memory) shortages.
The AI-Driven Memory Crunch
Raspberry Pi relies on DRAM hardware for its microcomputers, but demand for these chips has spiked sharply in recent months. This is because memory manufacturers are prioritizing AI data centers, which require massive amounts of high-density DRAM to power their operations. The shift in focus leaves other tech companies—like Raspberry Pi—struggling to secure sufficient supply.
The core issue isn’t a total shortage, but rather a misallocation of resources. Manufacturers now prioritize the more lucrative AI market, leaving Raspberry Pi and similar businesses with limited options. This is a classic example of how rapid growth in one sector can create bottlenecks in another.
Raspberry Pi’s Response
To mitigate the issue, Raspberry Pi has taken several steps:
- Diversifying Suppliers: The company is qualifying additional DRAM vendors to reduce reliance on single sources.
- Product Adjustments: Some models will be designed with reduced memory capacity to conserve chips.
- Price Increases: Higher costs are being passed on to consumers to protect profitability.
Despite these measures, the company admits there’s “significant uncertainty” about when memory pricing and availability will normalize. Visibility beyond the first half of 2026 remains limited.
Financial Performance Remains Strong
Despite the supply chain pressures, Raspberry Pi is confident in its financial outlook. Adjusted earnings for 2025 are expected to exceed market forecasts, with a minimum of $45 million (£33.3 million) guaranteed. The company shipped four million units in the second half of the year, driven by strong OEM (original equipment manufacturer) demand.
CEO Eben Upton highlighted the company’s resilience, stating that Raspberry Pi’s business model and growing adoption in volume markets have enabled it to thrive despite the challenging memory environment.
“Our supply chain discipline has enabled us to meet expanding customer demand.” — Eben Upton, CEO of Raspberry Pi
What This Means
The Raspberry Pi situation is a microcosm of broader trends in the tech industry. The AI boom is reshaping supply chains, forcing companies to adapt or risk disruption. While Raspberry Pi appears well-positioned to weather the storm through proactive measures, the long-term effects of this memory crunch remain uncertain. The issue raises questions about the sustainability of current growth models and the potential need for more diversified manufacturing strategies.
