In an interview with The Wall Street Journal following a blockbuster earnings report, Micron Chief Business Officer Sumit Sadana implied that Apple played a role in the current memory crunch. Here are the details.
After the bell yesterday, Micron Technology reported a blockbuster fiscal third quarter, with revenue up 346% and its gross margin approaching 85%. The company also forecast Q4 revenue above the market’s 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 intense volatility.
Earlier today, Apple announced significant price increases across its MacBook and iPad lineups, as well as several other products. The move came just over a week after Tim Cook told The Wall Street Journal that the ongoing RAM shortage would force the company to raise prices.
When speaking to the Journal, Cook said:
“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” said Cook. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”
As one of Apple’s suppliers, however, Micron sees the situation differently. Speaking to the Journal and without naming names, Micron CBO Sumit Sadana implied that Apple is partly to blame for the current situation.
From the WSJ:
In an interview Wednesday night, Micron Chief Business Officer Sumit Sadana said the company couldn’t make investments during the memory market’s last downturn, when Micron’s gross profits went negative, in part because certain customers took advantage to pay rock-bottom prices.
“We told a couple of the customers who were being very aggressive with pricing at that time that this is not constructive,” he said, without naming Apple, adding that low prices discouraged capital investments. “A lot of the industry investments got shut down in 2023 because of really poor pricing and really poor margins.”
Apple is known for driving hard bargains with suppliers, and its long-term purchasing agreements have repeatedly been cited in recent months as one reason the company was better insulated from rising memory prices than its competitors.
And although those deals allowed Apple to lock in lower prices for longer periods and hold out on price increases for longer, the Micron exec suggests that this also contributed to an unsustainable pricing environment that discouraged investment in additional capacity.
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