Micron Suggests Apple Helped Cause Memory Price Crisis

[Smartuser]

Apple asks Trump admin to approve Chinese RAM after product price increases - 9to5Mac

The Financial Times reports that Apple is seeking clearance from the Trump administration to purchase memory chips from a banned...

9to5mac.com

There’s more than one way of skinning a cat.

We also don’t know if paying suppliers more would have led to them expanding capacity (why would they if they didn’t think there was a demand for it?). My guess is that Micron is also looking for someone to deflect the blame.

I think the Apple price increases have pushed this situation a little bit more into the mainstream. There was even a small size link from the NYTimes index page.

This in turn makes it a political issue (I'll leave it at that, don't want this post to be deleted for politics.)

And of course people want to deflect blame. These companies are seen as price gouging opportunists holding an entire industry hostage, comparable only to landlords, arms dealers and oil companies. (Check GamersNexus or discussions of the Steam Machine anywhere, it's not just Apple Fans.)

Good for Apple to work on finding alternative sources, but I think they should really spend money to make this problem go away permanently.

 

[BradMacPro]

Micron's chief business officer has hinted, without calling it out by name, that Apple's tough supplier negotiations contributed to the conditions behind the global memory shortage.

In remarks given to The Wall Street Journal on Wednesday, Sumit Sadana explained that Micron was unable to fund capacity expansion during the industry's previous slump, a period when its margins turned negative partly because some buyers pushed relentlessly for lower prices.



Micron is one of Apple's memory suppliers, providing some of the DRAM and NAND flash chips that go into iPhones, Macs, and iPads. Apple has a reputation for getting favorable terms from suppliers like Micron through long-term purchasing contracts.

Sadana's comments came just hours after Apple unveiled a sweeping round of price hikes that touched nearly every part of its hardware lineup. Products across the Mac, iPad, Apple TV, HomePod, and Vision Pro lines all went up in price, with only the iPhone, Apple Watch, and AirPods left untouched. Apple's stock closed down 6% the same day, its worst single-day performance in more than a year, wiping out roughly $265 billion in market value.

Apple CEO Tim Cook forewarned about this outcome more than a week earlier in comments to the same publication, warning that price increases had become unavoidable given how the company was being squeezed on memory and storage costs. Cook said Apple had been trying to shield customers from the worst of it but had reached a breaking point, describing the shortage as a "hundred-year flood" unlike anything he had seen in more than four decades. He pointed to the surge in demand for high-bandwidth memory used in AI servers, arguing that consumer products were now competing for a shrinking pool of supply and that pricing needed to come back down to earth before Apple's own prices could follow.

Article Link: Micron Suggests Apple Helped Cause Memory Price Crisis

Makes no sense. First off the crisis comes from Micron selling out to huge contracts to AI server farm companies. But take a look at Apple’s dies they use in iPhones and Macs. The unified memory is right there next to the GPU and CPU cores. They don’t buy RAM modules or chips from Micron any more. Now NAND storage chips - that’s another story.

 

[sevoneone]

Makes no sense. First off the crisis comes from Micron selling out to huge contracts to AI server farm companies. But take a look at Apple’s dies they use in iPhones and Macs. The unified memory is right there next to the GPU and CPU cores. They don’t buy RAM modules or chips from Micron any more. Now NAND storage chips - that’s another story.

Where do you think the unified memory comes from? It's normal LPDDR5/LPDDR5X chips. Its not manufactured with the SOC die. Apple buys the bare RAM chips from Micron, Samsung or SK Hynix and solders it onto the package.

 

[goodcow]

Sure and then we must also cap Apple’s profit margins.

Apple’s margins aren’t 85%, and aren’t a critical component for daily modern life. This is a false comparison.

 

[bgillander]

Meh, others (including me) disagree. Either way, micron is saying things that largely isn't very surprising to anyone

But you asked him to remember.

I expect Micron would just be selling any additional production to the AI customers for as much money as they could get, anyway, because that is just the way capitalism works, just like Apple trying to pay as little as possible.

And it doesn’t exactly sound like the memory suppliers are above strong arming customers, themselves:

Valve Says RAM Shortages Crushed Steam Machine Price and Performance

Valve has revealed how RAM shortages increased the Steam Machine price and forced hardware changes that impacted the console's performance.

www.vice.com

 

[bgillander]

So why is it our job to subsidize Apple’s huge margins?

It isn’t your job, unless you buy and make it your job. Then you’re a volunteer.

Apple is not forcing you to buy their products.

Seriously, has everyone given up on free will and simply believe that things just happen to them?

 

[Smartuser]

And it doesn’t exactly sound like the memory suppliers are above strong arming customers, themselves:

Valve Says RAM Shortages Crushed Steam Machine Price and Performance

Valve has revealed how RAM shortages increased the Steam Machine price and forced hardware changes that impacted the console's performance.

www.vice.com

Valve had to run a lottery to select the people who were able to to pre-order. They didn't release how manySteam Machines they were able to make, but it must have been a pretty low number. And people were already filtered out by the pricing.

The performance thing is a little esoteric, it just means that due to what they were able to buy, some Steam Machines will have 2x8 GB sticks and some 1x16 GB.

I love this part of the story:

In an interview with Gamers Nexus, a Valve employee revealed that purchasing RAM had become nearly “impossible.” Even more disturbing, the developer explained that manufacturers actually threatened them over purchase orders. “The memory companies give us a price and what we can buy, and if we say no they will never work with us again.” As many have pointed out, these companies sound more like the RAM Mafia than manufacturers.

There's always a considerable amount of seething Apple hatred on this forum, but if you feel that, what do you make of this Valve situation? They're not a major hardware maker, they've never strong-armed these giants, and yet they're being treated this way.

 

[progx]

Yes... and they shut down Crucial, but I guess that could be Apple's fault too. Claiming that it's a money loser (while insulting consumers). Their rumored price lock on their components until 2030, dragging out this price increase (and potential for more) until that time. Micron is enjoying their position of power right now, so they'll put out some more red meat to blame regular consumers over their new AI pimps.

 

[seek3r]

Ah yes, *Apple* is the company that caused Micron to completely kill their consumer brand (Crucial) and focus on HBM. 🙄

 

[dwaite]

They ran into major manufacturing problems where they could not reliably produce enough high-quality sapphire. Yield rates were poor. Costs were much higher than expected. The new furnaces didn't scale as planned. They missed almost every major milestone outlined in their agreement with Apple. Even the SEC alleged that GTAT and its former CEO misled investors about the company's prospects.

Apple from what I understand is also much more aggressive about negotiating parts with paper-thin margins and instead having production/deliverable bonuses. If you are missing deliverables it can become hard to survive.

 

[Fallforward]

"We told a couple of the customers who were being very aggressive with pricing at that time that this is not constructive. A lot of the industry investments got shut down in 2023 because of really poor pricing and really poor margins."

What utter BS. If Micron saw the AI wave coming, they had funding options....
- the two years prior to 2023 Micron dividends and stock buybacks were over $4 billion. In 2023 $929 million. In 2024 another $813 million - for a sum total of $6.451 BILLION....and/or...
- Micron could have raised funds via debt (2021-22 at ~2% and 2023 at ~4%) ....and/or....
- Micron could have been wiser in using pricing negotiations to create a long term relationship.

Now with the shoe on the other foot, Micron has an opporunity to reduce the boom-bust cycle by negotiating a lower price for Apple as part of a long term view and get them through the inevitable downturn. What are the odds?

 

[bgillander]

Apple from what I understand is also much more aggressive about negotiating parts with paper-thin margins and instead having production/deliverable bonuses. If you are missing deliverables it can become hard to survive.

If you are missing deliverables it can become hard to survive even if your margins are huge.

 

[maxoakland]

It isn’t your job, unless you buy and make it your job. Then you’re a volunteer.

Apple is not forcing you to buy their products.

This isn’t a good argument. From Apple’s on purpose lockin to not being able to export your data from apps like notes, Apple works hard to make it as difficult as they can get away with to switch to other companies

Why are you doing their PR for them, for free?

Seriously, has everyone given up on free will and simply believe that things just happen to them?

Oh please

 

[TheLastDogcow]

Apple from what I understand is also much more aggressive about negotiating parts with paper-thin margins and instead having production/deliverable bonuses. If you are missing deliverables it can become hard to survive.

I agree, but I did a deep dive into GTAT back when it was in the news cycle and based on court documents and other things I pulled up, it was clear that they misrepresented their ability to deliver which was why I called out GTAT and a bad example.

It’s important to know that, prior to the Apple deal, GTAT was a manufacturer of the furnaces and equipment used to create the sapphire but had never manufactured it themselves. Accounts from employees working for GTAT at the time suggested gross mismanagement, a lack of manufacturing experience, and countless other issues were the clear reason why they couldn’t meet the milestones.

Edit: Relevant link, sorry it’s paywalled but could quickly find an archived link - https://www.wsj.com/articles/inside-apples-broken-sapphire-factory-1416436043

 

[maxoakland]

Apple’s margins aren’t 85%, and aren’t a critical component for daily modern life. This is a false comparison.

So where’s the cutoff? If ram companies changed their margins to 84% we wouldn’t need to regulate them?

You don’t think computers and phones are a critical component for daily modern life?

 

[whitby]

I am sorry, but I am going to have to say this: This is one the most ridiculous excuses for the huge increases in memory and storages prices I have ever heard. How come Micron are making so much money out of these price rises? If they were in trouble they would be losing money hand over fist, squeezed by the evil Apples of this world who force them to sell their products are very low prices. Good heavens, the world has gone mad.

 

[goodcow]

So where’s the cutoff? If ram companies changed their margins to 84% we wouldn’t need to regulate them?

You don’t think computers and phones are a critical component for daily modern life?

You can choose other companies for phones and computers. But they all use memory which is clearly being gouged right now at 85% margins.

The memory shortage shaking Apple and Microsoft is 'existential crisis' for smaller players

While Apple and Microsoft raise prices on key devices to help cover the soaring costs of memory, smaller consumer electronics companies are in dire straits.

www.cnbc.com

 

[1d1otic]

It must be fun to see the world only through the filter of these cartel companies. Serves Apple right that now because AI companies build data centers everyone suffers!


Yes, I'm also unaffected, so everyone else in the world can just pound sand. I can't post here what I think of that kind of attitude.

Long before AI, Apple already gauging the price with memory chips according to three companies including Micron. Truth hurts, huh?

 

[High IQ Person]

"We told a couple of the customers who were being very aggressive with pricing at that time that this is not constructive. A lot of the industry investments got shut down in 2023 because of really poor pricing and really poor margins."

What utter BS. If Micron saw the AI wave coming, they had funding options....
- the two years prior to 2023 Micron dividends and stock buybacks were over $4 billion. In 2023 $929 million. In 2024 another $813 million - for a sum total of $6.451 BILLION....and/or...
- Micron could have raised funds via debt (2021-22 at ~2% and 2023 at ~4%) ....and/or....
- Micron could have been wiser in using pricing negotiations to create a long term relationship.

Now with the shoe on the other foot, Micron has an opporunity to reduce the boom-bust cycle by negotiating a lower price for Apple as part of a long term view and get them through the inevitable downturn. What are the odds?

Micron posted a loss of $5-6B in 2023 and a small profit of under $1B in 2024.

There is no way they had the cash flow to build a fab with a mere profit of $1B, let alone $6B in losses. These fabs cost $10-20B.

Also, the argument about 85% margins is weak because memory margins turn negative in certain years due to its commodity status. It doesn’t make sense to want them to have unlimited downside while also having capped upside. It’s a nonsense argument.

You people need to stop defending Apple. Micron is correct in this dispute.

 

[High IQ Person]

You can choose other companies for phones and computers. But they all use memory which is clearly being gouged right now at 85% margins.

The memory shortage shaking Apple and Microsoft is 'existential crisis' for smaller players

While Apple and Microsoft raise prices on key devices to help cover the soaring costs of memory, smaller consumer electronics companies are in dire straits.

www.cnbc.com

And when they had negative margins back in 2023-2024? They were posting $6B in losses. I didn’t see anyone come to the defense of memory makers back then.

You guys have such a bizarre view of the world. You think memory makers should have unlimited downside and capped upside? Apple brought this on themselves. You just can’t admit it.

Oh, and the request to use Chinese memory is borderline traitorous as we’re currently in an AI race with China with the winner controlling the entire world. Apple is willing to let China usurp the US position just to get cheaper memory. If Apple really had the best interest of America in mind, they would eat the cost of higher RAM to prevent China from scaling in memory tech.

Micron is a far more important company to America than some fruit company that sells fancy iToys. Every American should boycott this scum company.

 

[Unregistered 4U]

Apple: Hey, Micron! If you'll just accept a slightly lower price on your product and give us first dibs, we'll keep you in business for the next several decades!
Micron: Huh. Slightly lower margins, but solid long-term stability? Sounds reasonable. Sign me up!

AI Firms: Hey, Micron! I'll pay you double what Apple's paying, if you'll give us first dibs instead!
Micron: HECK YEAH! LET'S GOOOOOOOOOOO!

Apple: Well, it looks like we may have to raise prices, due to the AI Firms.
(Note that Apple did not blame Micron... but the entire industry knows the game, so all eyes turn towards Micron.)

Micron: What? What are y'all looking at me, for!? Apple Errr, ummm.... certain companies played hardball! If they hadn't demanded such low prices, this wouldn't be an issue in the first place!

Right, anyone can demand low prices. It’s part of the process. It’s Micron that accepted the deal.

 

[High IQ Person]

Right, anyone can demand low prices. It’s part of the process. It’s Micron that accepted the deal.

Micron warned them that the lowballing was putting them at negative margins and is not conducive to a good partnership.

Apple did not care. You cannot expand fabs using 1a/b/c nodes while posting $6B in losses. Just one fab costs $20B.

I have no doubt that Micron and other memory makers were wanting for a LTA with a decent 20-30% margin but were shot down. You can’t blame them for extracting as much profit as possible when just a few years ago, customers were putting them into as large of a loss as possible.

 

[BSDnostalgia]

In remarks given to The Wall Street Journal on Wednesday, Sumit Sadana explained that Micron was unable to fund capacity expansion during the industry's previous slump, a period when its margins turned negative partly because some buyers pushed relentlessly for lower prices.

Many companies in many industries operate at paper losses during slumps. Negative margins on paper are OK, as long as cash flow doesn't collapse, which it didn't, in part because they, admittedly, had long term contracts with Apple. That obviously kept the production lines flowing until conditions got better, which they did.

Apple has long been known to be a very demanding customer, and a very tough negotiator. Micron didn't have to do business with Apple, but, you can bet, they were happy "enough" with Apple's business when they needed the work volume.

You people need to stop defending Apple. Micron is correct in this dispute.

Micron and Apple are both engaging in PR. If you think Micron is a "victim" here, then, I guess Micron's PR is working better than Apple's.

--
Another issue that puzzle's me is what are all these memory-heavy servers going to be doing. Can anyone here point to the numbers showing how all these new data centers stack up wrt demand?

--

One thing that concerns me about all this is that we are now seeing the effects of AI-driven customer interaction. Where you have to interact with bots in order to do customer-ish things that require more complexity than a simple purchase. That costs (us) customers when we can't get problems resolved in a timely manner, and, a lot of low-level employees are either going to get laid off, or, if they move to new jobs, never getting replaced. Are we moving to a world with 50% unemployment or severe underemployment?

 

[High IQ Person]

Many companies in many industries operate at paper losses during slumps. Negative margins on paper are OK, as long as cash flow doesn't collapse, which it didn't, in part because they, admittedly, had long term contracts with Apple. That obviously kept the production lines flowing until conditions got better, which they did.

Apple has long been known to be a very demanding customer, and a very tough negotiator. Micron didn't have to do business with Apple, but, you can bet, they were happy "enough" with Apple's business when they needed the work volume.



Micron and Apple are both engaging in PR. If you think Micron is a "victim" here, then, I guess Micron's PR is working better than Apple's.

--
Another issue that puzzle's me is what are all these memory-heavy servers going to be doing. Can anyone here point to the numbers showing how all these new data centers stack up wrt demand?

--

One thing that concerns me about all this is that we are now seeing the effects of AI-driven customer interaction. Where you have to interact with bots in order to customer-ish things that require more complexity than a simple purchase. That costs (us) customers when we can't get problems resolved in a timely manner, and, a lot of low-level employees are either going to get laid off, or, if they move to new jobs, never getting replaced. Are we moving to a world with 50% unemployment or severe underemployment?

Apple’s PR is based on nothing but self-interest.

Micron’s is, of course, self-interest but it’s also based on fact and honesty.

How exactly are they supposed to come up with $20B for fab construction when they’re posting $6B in losses? Where is that money supposed to come from?

Capex is not reflected in net income. They would need to post $20B minimum in net profit to have enough for expansion.

As for your concerns about AI, it’s doing a fantastic job reducing programming jobs. Every major revolution starts out with wide skepticism before it gets wide acceptance. AI will continue to improve and memory will be the most important component of the AI revolution.

Many companies in many industries operate at paper losses during slumps. Negative margins on paper are OK, as long as cash flow doesn't collapse, which it didn't, in part because they, admittedly, had long term contracts with Apple.

But those memory companies weren’t the ones blaming anyone when prices were in the toilet.

Now that the tables have been reversed, Apple like a spoiled brat starts crying. It’s totally reprehensible behavior. And even worse, they’re requesting to use Chinese memory which could endanger our lead in the AI race. They’re willing to risk Chinese world domination just to get cheaper memory for their toys? How shameless can you be?

You don’t see any other American company complaining and pleading to use Chinese memory because they still have some loyalty to the US and understand winning the AI race is more important than cheaper memory. Apple is such a disgusting company. What they’re asking for is borderline treasonous.

Let’s also not forget the amount of tech Apple stole from companies all over the world and gave them to China, which gave China a lead in many critical tech.

At this point, having Samsung crush Apple into bankruptcy is probably more beneficial to America than having this pro-China traitorous snake masquerading as an American company.

 

[BSDnostalgia]

Apple’s PR is based on nothing but self-interest.

Micron’s is, of course, self-interest but it’s also based on fact and honesty.

How exactly are they supposed to come up with $20B for fab construction when they’re posting $6B in losses? Where is that money supposed to come from?

I guess we are looking at the same elephant, but, seeing different parts of it. I'm looking at Micron's FQ3 2026 financial statement, and what I see is a company that is making $28.86B profit on revenue of $41.46B, that has $32.2B "liquidity" (cash or cash-able), and $18.6B "free cash flow".

IOW, they could be buying a new fab every single quarter right now. Yes, I know it isn't that simple. But, it does answer the question of where the money is supposed to come from.