A UK chip supplier is passing memory price rises straight to retailers as AI hammers the memory market
Key Points
- Frontier Smart Technologies, the Science Group business that supplies radio and audio semiconductors, pushed higher memory costs into its distribution channel in the first half of 2026 and recorded a fall in unit volumes as a result.
- Frontier revenue came in at £6.8 million against £7.1 million a year earlier, with adjusted operating profit flat at £0.9 million.
- Higher selling prices and a richer product mix absorbed almost all of the volume decline.
- DRAM contract prices climbed roughly 90% to 95% quarter-on-quarter in Q1 2026 and a further 58% to 63% in Q2, with analysts projecting a slower 13% to 18% rise in Q3.
- Science Group first flagged the pressure at its May AGM update, citing memory chip cost inflation and soft consumer demand.
Frontier Smart Technologies passed the cost of surging memory chip prices to its distribution channel during the first half of 2026, and unit volumes fell as a result.
The business, one of two Systems units inside AIM-listed Science Group, designs and supplies the radio and audio semiconductors and modules that sit inside DAB+ digital radios and connected audio products.
Science Group set out the effect in its interim results for the six months to 30 June 2026, published on 27 July.
Frontier reported revenue of £6.8 million, down from £7.1 million in the same period last year, and held adjusted operating profit at £0.9 million.
Stripping out a currency headwind and a one-off benefit in the prior year, Science Group described Frontier revenue as effectively flat.
The company attributed the volume decline directly to the increase in DRAM costs running through the consumer electronics industry, and said it had moved those costs into the distribution channel rather than absorbing them.
Higher selling prices and a shift towards higher-value end products then offset the shortfall. Frontier still recorded an operating loss of £106,000 after £990,000 of amortisation on acquisition-related intangibles, an improvement on the £242,000 loss a year earlier.
What is driving the cost?
Samsung, SK Hynix and Micron between them account for more than 95% of global DRAM output, and all three have redirected fab capacity towards high-bandwidth memory and other AI-optimised products, tightening supply of commodity memory for the rest of the electronics value chain.
Global DRAM contract prices rose an estimated 90% to 95% quarter-on-quarter in the first quarter of 2026, followed by a projected 58% to 63% increase in the second.
The rate of increase is now easing, though prices continue to climb. Projections show conventional DRAM contract prices to rise 13% to 18% quarter-on-quarter in Q3 2026 and NAND Flash contract prices to rise 10% to 15%, a marked slowdown from the roughly 60% jumps recorded in the second quarter, driven by consumer electronics manufacturers’ unwillingness and inability to absorb further increases.
Science Group signalled the exposure two months before the interim results. At its AGM trading update on 20 May, the board described core DAB+ and SmartRadio revenue as stable but struck a cautious outlook on memory chip cost inflation and weak consumer demand.
Shipments of Auria, Frontier’s new connected audio product, began in April, and branded products carrying it have now launched. Science Group expenses all Auria research and development rather than capitalising it.
Frontier accounts for a small share of the wider group. Science Group reported total revenue of £47.2 million for the half, down from £57.2 million, with adjusted operating profit up to £11.5 million from £11.3 million and margin widening to 24.3% from 19.7%, a shift the group attributes to its managed exit from low-margin pass-through defence work.
