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Micron CEO Sanjay Mehrotra said Tuesday that memory chipmakers aren't the only ones to blame for the current supply-and-demand imbalance, which has recently led to price hikes for smartphones, computers and other consumer electronics.
Customers who drove a hard bargain in pricing in recent years also contributed to the squeeze, Mehrotra argued, suggesting that left the industry underinvested for the artificial intelligence boom.
"Certain customers drove pricing significantly down in our industry," Mehrotra told Jim Cramer on CNBC's "Mad Money" on Tuesday. "In 2023, our prices came down to one-third of what they were."
The collapse in pricing, Mehrotra said, pushed Micron and other memory suppliers into negative gross margins, leaving much of the industry without the financial flexibility to invest in new manufacturing capacity just as artificial intelligence-driven demand began accelerating. Micron's gross margin fell to negative 7.3% in its fiscal 2023, which ended in August of that year, according to FactSet.
"Companies were losing money. They couldn't afford it," he said. "That really impacted the investment capability of the industry."
Micron continued investing through the downturn, the CEO said. "Of course, those investments were significantly cut back from the year prior." Micron's capital expenditures fell to $7.7 billion in fiscal 2023, down from $12.1 billion in the prior year.
AI-driven demand for memory chips has steadily increased since that 2023 downturn in pricing. The acceleration became more apparent last year, boosting Micron's financial performance. But it has gone to another level in 2026, propelling Micron into one of the stock market's biggest winners. The stock climbed more than 240% in the second quarter and added more than $920 billion in market value, putting Micron's market capitalization at roughly $1.3 trillion.
Mehrotra said that the supply crunch is likely to persist well beyond 2027 because new semiconductor fabrication plants take years to build and next-generation memory has become significantly more complex to manufacture. To help close the gap, Mehrotra said Micron is investing roughly $200 billion in manufacturing and R&D, including new memory fabs in Boise, Idaho and Syracuse, New York. The Boise project is furthest along, the CEO said, with the first chips due out "in the middle of next year" and increasing from there. The Boise site is slated to eventually include two fabs.
The shortage is already being felt beyond the semiconductor industry. Last week, Apple raised prices on several Mac and iPad models after CEO Tim Cook said soaring memory and storage costs had become "unavoidable," underscoring how AI-driven demand is pushing higher component costs into consumer electronics.
