Micron CEO: Customers driving hard bargain on price contributed to memory shortage
Micron CEO Sanjay Mehrotra said years of aggressive pricing pressure left the memory industry underinvested, contributing to today's supply shortages.
The current supply shortage in memory chips, which has been building over an extended period, is now acutely felt by major customers.
This highlights the inherent volatility and cyclicality of the memory market, where customer demand for lower prices can paradoxically lead to future supply constraints and increased costs.
The explicit acknowledgment from a leading memory manufacturer about underinvestment due to aggressive pricing pressure suggests a potential recalibration in customer-supplier dynamics and pricing expectations.
- · Memory manufacturers (e.g., Micron)
- · Hyperscalers prioritizing supply over lowest price
- · Customers seeking aggressive price reductions
- · Tier 2/3 customers with less purchasing power
Memory prices will likely stabilize or increase in the near term due to supply-demand imbalance.
Customers may begin to internalize the cost of supply chain resilience by accepting higher base prices or signing longer-term, higher-volume contracts.
This dynamic could contribute to a broader trend of vertical integration or closer strategic partnerships between large tech companies and leading chip manufacturers to secure critical components.
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Read at CNBC — Technology