IBM's Memory Chip Woes: A Supply Chain Headache Hits the Bottom Line

IBM's woes have been well-documented, but it may not be entirely due to the company's own missteps. A global shortage of memory chips has driven up DRAM prices by 100-116% in the first quarter of 2026, forcing enterprise customers to prioritize hardware over software and services.

The impact on IBM is stark: mainframe sales plummeted 42% in Q2, with CFO James Kavanaugh estimating a drag on overall growth of more than five percentage points. The company has since trimmed its 2026 outlook, guiding for currency-adjusted revenue growth of 4-5%, down from a previous target of above 5%.

Despite this, IBM's software division continues to perform strongly, with segment revenue rising 5.1% to $7.76 billion and Red Hat posting an impressive 11% gain.