A Micron executive suggests that Apple’s aggressive acquisition tactics are contributing to the memory shortage

in an interview with The Wall Street Journal After the blockbuster earnings report, Micron Chief Business Officer Sumit Sadana said Apple played a role in the current memory crisis. Here are the details.

Micron says low prices have deterred investment

Micron Technology after the call yesterday informed It had a blockbuster third fiscal quarter with revenue up 346% and gross margin approaching 85%. The company is also forecasting 4Q revenue above market estimates.

The results sent the company’s shares up 15% in after-hours trading, and the stock held on to those gains today, even as the broader chip sector saw strong volatility.

Early today, Apple announced A significant price increase in the MacBook and iPad series, as well as a number of other products. The move comes a week after Tim Cook he said The Wall Street Journal that the ongoing RAM shortage will force the company to raise prices.

when talking to MagazineCook said:

“At a time when consumers want devices and memory is going through big price increases, supply is tight,” Cook said. “We absolutely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”

As one of Apple’s suppliers, Micron sees the situation differently. talking to Magazine and, without naming names, Micron CBO Sumit Sadan hinted that Apple was partly to blame for the current situation.

From WSJ:

In an interview Wednesday evening, Micron Chief Business Officer Sumit Sadana said the company was unable to make investments during the recent memory market downturn when Micron’s gross profit was negative, in part because certain customers benefited from paying rock-bottom prices.

“We told a couple of customers who were very aggressive with pricing at the time that it wasn’t constructive,” he said, not naming Apple, adding that low prices have hampered capital investment. “In 2023, a lot of industry investment has been shut down because of really weak prices and really weak margins.”

Apple is known for driving hard deals with suppliers, and its long-term procurement contracts have been repeatedly cited in recent months as one of the reasons the company is better insulated from rising memory prices than its rivals.

While these deals allow Apple to keep prices lower for longer and price increases longer, a Micron executive suggests that this also contributes to an unsustainable pricing environment that prevents it from investing in additional capacity.

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