Micron CEO: Memory has become a strategic resource — AI has forever changed the industry's economics
The semiconductor memory market is undergoing a fundamental shift that is putting an end to the familiar "boom-bust" cycles. Micron CEO Sanjay Mehrotra, speaking at the construction site of a new plant in Boise, Idaho, called memory the strategic infrastructure of the artificial intelligence era.
Mehrotra emphasized that the explosive growth in demand from AI systems has radically changed the rules of the game. While memory used to be a commodity traded on exchanges, where buyers chose solely based on price, things are different now. Chips are tailored to specific processors and architectures, and the performance of an entire server critically depends on memory characteristics.
Why Memory Is the New Oil
"Today, it's impossible to imagine AI without memory. AI-based systems require more and more of it," Mehrotra stated. According to him, customers can no longer simply switch suppliers in pursuit of low prices—the deep integration of memory and compute blocks makes the choice strategic.
The numbers fully confirm this transformation. Micron's revenue for the third fiscal quarter soared to $41.46 billion—nearly 4.5 times more than the $9.30 billion a year earlier. Gross margin reached a phenomenal 84.6%, compared to 37.7% last year, and the company forecasts it will rise to 86% in the current quarter.
Production Can't Keep Up with Demand
The main headache right now is not sales, but production capacity. Mehrotra admitted that factories do not cover customer requests: data centers alone require about 50% more chips than Micron is capable of producing. In the coming years, demand will grow even stronger—driven by manufacturers of autonomous vehicles, robotics, and AI-powered home appliances.
However, not everyone shares this optimism. In June, a class-action lawsuit was filed against Micron, Samsung, and SK Hynix: the plaintiffs accuse the manufacturers of collusion and artificially inflating DRAM prices. Chinese companies like CXMT are actively ramping up output, which could bring back the price war—the very one that, according to Mehrotra, the industry left behind thanks to AI.
My take: Mehrotra's statements look convincing, but the memory market remains highly concentrated, and any signs of oversupply could quickly collapse margins. Investors should keep an eye not only on the AI boom but also on the actions of Chinese competitors and regulatory risks—these will determine how sustainable the industry's new economy turns out to be.