How HP is Securing its AI-Era Supply Chain

As AI adoption accelerates, HP is navigating memory chip shortages, price volatility and cybersecurity threats through strategic procurement decisions that challenge conventional supply chain wisdom.

While many organisations continue to diversify away from Chinese suppliers, the technology company is exploring opportunities in the region to secure critical components.

The shift reflects changing market dynamics as Chinese manufacturers gain capacity in memory chip production amid global supply constraints.

The memory chip shortage challenge

HP designs technology products with a focus on responsible sourcing across climate action, human rights and digital equity. The company recognises that technological innovation can drive meaningful progress and that strong ideas can emerge from anywhere in its supply base.

The company is now diversifying its memory chip sourcing to include Chinese firms, after years of relying on suppliers from America, South Korea and Taiwan. HP is among four companies actively considering this switch during a period of significant global shortage.

The surge in AI usage has driven data centres to consume memory chips at unprecedented rates, depleting stock from American corporations like Nvidia. Samsung, Micron and SK Hynix, which hold 90% of the dynamic random-access memory (DRAM) market, have shifted their capacity towards developing high-bandwidth memory (HBM) for AI data centres.

This overconsumption from data centres has triggered substantial price spikes.

One type of DRAM rose 75% from December 2024 to January 2025, with growing numbers of retailers increasing their product prices. Consumer electronics companies like HP and Samsung have been working to mitigate the fallout from dwindling supplies.

"We stand at the cusp of something that is bigger than anything we've faced before," says Tim Archer, Chief Executive Officer at Lam Research.

"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."

Qualifying new supply sources

HP has begun qualifying DRAM chips from ChangXin Memory Technologies (CXMT). This involves testing various components to ensure they meet the performance and quality standards the company requires. 

The market shift towards China – particularly when many companies are moving sourcing away from the country – demonstrates where emerging capacity lies. China's leading memory-chip manufacturer, CXMT, made a US$4bn share offering in January 2025 following major technological advancements.

Although going through the qualification process does not automatically mean HP will use CXMT, this company could act as a potential source for PC makers. If the market remains constrained with elevated prices, HP might see benefits in CXMT for non-US markets.

This shortage has allowed Chinese electronics contract manufacturers to gain more important roles in the supply chain, as some brands have asked partners to expand sources.

Between 2022 and 2024, Acer has increasingly relied on Chinese contract manufacturers to lower costs, with openness to using Chinese-made memory chips.

Strengthening cybersecurity defences

Beyond protecting its supply chain from shortages, HP has been making moves to renew its cybersecurity integrity, having renewed its multi-year agreement with Karamba Security. Through this, it will continue to utilise XGuard cybersecurity software across its printer products.

This covers networked and cloud-connected printers which include firmware that can be targeted by cyberattacks. In 2024, cyberattacks became a major threat to brands globally, partly due to rising digitisation and increased AI use.

This increase and overreliance on digital firmware made companies vulnerable to attacks, with a range of global supply chains being hit during 2024.

The XGuard software provides runtime protection for printer firmware, detecting and preventing malicious code execution before it can compromise device security. This embedded security approach ensures that HP printers maintain protection even when operating in vulnerable network environments or when traditional security measures fail.

By renewing its agreement and diversifying its sourcing strategy, HP is working to build supply chain resilience, led by its procurement teams. By paying attention to market trends, HP could be limiting its vulnerability to shortages and price rises, instead acting to investigate potential new suppliers.