Micron CEO Again "Subtly Criticizes" Apple: Previously Slashed Prices to One-Third, Crippling Industry's Ability to Expand Capacity

As the artificial intelligence boom reshapes the global semiconductor supply chain, the struggle for pricing power between memory chip manufacturers and downstream tech giants is becoming increasingly public.

In a recent media interview, Sanjay Mehrotra, CEO of Micron Tech, subtly criticized Apple, stating that "certain customers" had previously driven memory chip prices down to unreasonably low levels, reducing product selling prices to just one-third of their original value. This aggressive price-cutting strategy severely eroded the gross margins of memory manufacturers and directly undermined the entire industry's ability to expand capacity and make new investments.

The capacity gap resulting from stalled earlier investments has now translated into severe supply-demand imbalances and soaring costs in the market. It is estimated that Apple is currently facing a premium of up to 292% on memory and storage components, forcing the tech giant to implement its largest-scale price increases in recent years on multiple core hardware products globally to pass on the surging supply chain costs.

This supply chain friction occurs against the backdrop of Micron Tech achieving a historic performance turnaround driven by AI demand. With record revenue growth and profit margins, Micron has joined the club of companies valued at over $1 trillion, and its bargaining power within the industry is undergoing a fundamental shift.

Backfire of Price Cuts: Supply-Demand Reversal in the Memory Supply Chain

In an interview with Jim Cramer, host of CNBC's "Mad Money," Sanjay Mehrotra expressed optimism about Micron's future prospects in the AI era while also reflecting on the industry's previous trough.

He pointed out that during the industry's downturn cycle a few years ago, certain customers leveraged market conditions to significantly depress procurement prices.

Although Sanjay Mehrotra did not explicitly name Apple in the interview, he clearly stated that "customers drove prices down to unproductive levels." In 2023, Micron was forced to sell memory products to customers at one-third of the original price. This extreme pricing environment not only caused a cliff-like drop in Micron's gross margins but also severely damaged the company's ability to make strategic investments.

However, Sanjay Mehrotra emphasized that even during the industry's most difficult period, Micron persisted in investing $10 billion based on its judgment of market prospects, laying the foundation for the company's current market position.

Soaring Costs Force Apple to Launch Global Price Hikes

As the supply-demand relationship in the memory chip market reverses, the negative effects of previous price-cutting strategies are beginning to surface, with downstream terminal manufacturers facing heavy cost pressures.

According to relevant estimates, Apple's current cost for procuring 12GB LPDDR5X memory modules is approximately $145, and the cost for 256GB NAND storage is around $51. During the trough period, the prices for these two components were only $39 and $13, respectively.

The component premium of up to 292% has directly impacted Apple's hardware profit margins. As reported by Wall Street News, Apple had previously announced global price increases for Mac, iPad, and various other hardware products, with hikes reaching up to $300, marking the company's largest-scale global price adjustment in recent years.

Regarding the product price increases, Apple CEO Tim Cook publicly stated to the media that tight memory supply and significant price hikes by storage manufacturers were the direct reasons forcing Apple to raise product prices.

Micron's Performance Surge and Strategic Counterattack

The public dispute over responsibility for the current high memory chip prices is not limited to executive statements.

In response to Cook's remarks, Sumit Sadana, Micron Tech's Chief Business Officer, had previously responded, implicitly pointing out that Apple's past aggressive price-cutting procurement strategy was one of the important causes leading to the current shortage of capacity in the memory supply chain.

This shift in industry discourse is supported by Micron's strong financial data.

Micron Tech's third-quarter revenue surged 346% year-over-year, with gross margins approaching 85%. Its fourth-quarter revenue guidance also exceeded market expectations, driving the company's stock price to soar nearly 16% the following day. Before the AI boom, Micron was viewed by the market as an ordinary commodity memory manufacturer, but its market position has now changed dramatically.

Looking ahead, the tight supply of memory chips is unlikely to ease in the short term. Sanjay Mehrotra stated that Micron has reached strategic agreements with customers to ensure that the company can maintain growth and profit margins when memory and storage prices eventually stabilize. For the entire technology industry, this means that the pain of high memory costs and supply shortages will continue for a considerable period.