During an interview on CNBC's 'Mad Money,' Micron CEO Sanjay Mehrotra explained that the memory chip industry's supply-demand imbalance is influenced by customers who previously negotiated lower prices, which resulted in significant price drops and negative gross margins for memory suppliers.
In fiscal 2023, Micron's gross margin fell to negative 7.3%, forcing the company to reduce capital expenditures from $12.1 billion to $7.7 billion. Despite these challenges, demand for memory chips, particularly driven by artificial intelligence, has surged, leading to a remarkable recovery in Micron's stock, which rose over 240% in the second quarter of 2026.
Mehrotra anticipates that the supply crunch will continue past 2027 due to the lengthy construction time for new semiconductor plants and the increasing complexity of next-generation memory production.
To address this, Micron plans to invest approximately $200 billion in manufacturing and R&D, including new facilities in Boise, Idaho, and Syracuse, New York, with the Boise site expected to produce its first chips by mid-2027. The impact of rising memory costs is already being felt in the consumer electronics sector, as evidenced by Apple's recent price increases on Mac and iPad models