Micron Technology's CEO, Sanjay Mehrotra, stated on Tuesday that the current supply-demand imbalance, which has recently driven up prices for smartphones, computers, and other consumer electronics, is not solely the fault of memory chip manufacturers.
Mehrotra believes that aggressive price pressure from some clients during negotiations in recent years is also a factor behind insufficient industry capacity investment. This has left the sector unable to prepare in advance for the surge in demand driven by the artificial intelligence industry.
"Certain clients drove down the prices in our industry significantly," Mehrotra said in an interview on Tuesday. "By 2023, our prices had fallen to one-third of what they were before."
He explained that the price collapse pushed Micron Technology and other memory suppliers into negative gross margins, depriving the entire industry of the financial flexibility needed to invest in new capacity just as AI-driven demand began to accelerate. According to FactSet data, Micron's gross margin fell to -7.3% in its 2023 fiscal year, which ended in August.
"Companies were losing money; they simply couldn't afford it," he said. "This severely impacted the industry's ability to invest."
Mehrotra noted that Micron Technology continued to invest during this downturn. "Of course, these investments were significantly reduced compared to the previous year." Micron's capital expenditures dropped to $7.7 billion in fiscal 2023, down from $12.1 billion the year before.
Since the price decline in 2023, AI-driven demand for memory chips has grown steadily. Last year, this growth momentum became more pronounced, boosting Micron Technology's financial performance. By 2026, growth reached new heights, making Micron one of the biggest winners in the stock market. In the second quarter of this year, Micron's stock price surged over 240%, adding more than $920 billion in market value to reach approximately $1.3 trillion.
Mehrotra indicated that supply shortages are likely to persist beyond 2027, as building new semiconductor fabrication plants takes years and the manufacturing processes for next-generation memory have become more complex. To address this gap, Mehrotra said Micron Technology is investing around $200 billion in manufacturing and research and development, including new memory fabrication plants in Boise, Idaho, and Syracuse, New York. The CEO stated that the Boise project is progressing fastest, with the first chips expected to be available "by the middle of next year," followed by a gradual production ramp-up. The Boise site is ultimately planned to house two fabrication plants.
The impact of this shortage is also being felt beyond the semiconductor industry. Last week, Apple increased prices for several Mac and iPad models. Previously, Apple CEO Tim Cook stated that soaring memory and storage costs were "inevitable," highlighting how AI-driven demand is pushing up component costs for consumer electronics.
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