In the years before the AI boom, Micron was viewed as nothing more than a commodity memory manufacturer, but times have witnessed a monumental change, and the company has now joined the trillion-dollar valuation club. The reason for this dramatic shift in Micron’s position is highlighted by CEO Sanjay Mehrotra, who takes a subtle jab at Apple, claiming that “certain customers” brought pricing down, which destroyed the memory maker’s ability to make new investments, not to mention its gross margins nosediving.
In 2023, Sanjay Mehrotra says memory prices were one-third because customers were influencing the industry
Sitting with Mad Money’s Jim Cramer, Sanjay expressed a ton of excitement for the future of Micron, as the AI boom has enabled the company to reach new heights. However, the situation wasn’t always this positive, especially a couple of years ago. Micron’s Chief Executive hasn’t shied away from blaming Apple for the ongoing crisis, saying that the iPhone maker took advantage of the slower cycle to pay for rock-bottom prices.
Even now, during the interview, Sanjay doesn’t explicitly mention Apple’s name, but says that “customers drove these prices to unproductive levels,” with Micron being forced to sell its clients memory at one-third of the original price. Due to these setbacks, the manufacturer’s gross margins suffered deleterious effects, not to mention harming its ability to make smart investments.
Fortunately, Sanjay mentions to Cramer that even during this grim period, Micron invested $10 billion as it possessed the vision, leading to where it is today. Presently, it’s estimated that Apple is paying $145 for a 12GB LPDDR5X RAM module, plus an additional $51 for a 256GB NAND, up from a measly $39 and $13, respectively. By paying a whopping 292 percent premium for just storage and memory, the Cupertino giant was forced to raise the prices of various products, including Macs.
Micron doesn’t appear to be too bothered when storage and RAM prices eventually stabilize, because the CEO states that he’s already made strategic agreements, ensuring that the firm maintains its growth and margins. As for the rest of the industry, they’ll have to weather the storm for quite a while because it doesn’t look like this shortage will be a thing of the past anytime soon.
News Source: CNBC
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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