So the memory shortage saga has a fascinating new wrinkle, and it points a finger right back at Apple. Let me explain.
Micron just dropped a genuinely massive earnings report, and in an interview with The Wall Street Journal straight after, Chief Business Officer Sumit Sadana basically suggested that Apple played a part in the mess we’re all paying for right now. Here’s the situation.
First, the numbers, because they’re wild. After the bell yesterday Micron reported a blockbuster fiscal third quarter, revenue up a frankly ridiculous 346%, and gross margin pushing close to 85%. They also forecast Q4 revenue above what the market was expecting. The result? Shares jumped 15% in after hours trading, and the stock held onto those gains today even while the rest of the chip sector was bouncing all over the place.
Now here’s where it gets interesting. Earlier today Apple announced some pretty significant price increases across the MacBook and iPad lineups, plus a few other products. And that came just over a week after Tim Cook told The Wall Street Journal that the ongoing RAM shortage was going to force the company’s hand. In his words:
“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.”
So that’s Apple’s take. Memory’s expensive, supply is tight, prices have to go up. Fair enough on the surface. But Micron, who happens to be one of Apple’s own suppliers, sees this whole thing a bit differently.
Speaking to the Journal without naming any names, Sadana implied that Apple is partly to blame for where we’ve ended up. Here’s the relevant bit:
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.”
And honestly, this connects some dots. Apple’s famous for driving an absolutely brutal bargain with its suppliers, and those long term purchasing deals have been cited again and again recently as the reason Apple was better protected from rising memory prices than basically all of its rivals.
But here’s the twist. Those same deals that let Apple lock in cheap prices for years and hold off on raising costs longer than anyone else? The Micron exec is suggesting that exact behaviour helped create an unsustainable pricing environment in the first place, the kind that scared the industry off investing in extra capacity. Which is a big part of why supply is so tight today.
So depending on who you ask, Apple is either a victim of the shortage or one of the reasons it exists. Funny how that works.
