Micron CEO says low-price push by customers fueled the memory shortage

Sanjay Mehrotra said the industry suffered from low prices, leaving companies with insufficient funds to expand production.

If you’ve been in the market for a new smartphone or computer, you might have noticed higher prices than before. Smartphones and computers are becoming more expensive due to a severe shortage of memory and RAM. While most people blame massive demand from AI companies, Micron CEO Sanjay Mehrotra says price pressure from certain customers over the past few years has also significantly contributed to the shortage.

In an interview with CNBC, Mehrotra said some customers pushed for lower prices over the past few years, which negatively impacted memory manufacturers' revenues. As a result, these companies were losing money and could not afford to invest in new production capacity.

“Certain customers drove pricing significantly down in our industry. In 2023, our prices came down to one-third of what they were,” Mehrotra told CNBC.

Mehrotra also said the memory shortage could last into 2027 and beyond because fabrication plants take years to build, and the next generation of memory is even more complex to manufacture. Micron is now investing up to $200 billion in manufacturing and R&D, including new memory fabs in Boise, Idaho, and Syracuse, New York.

In an interview with The Wall Street Journal last week, Micron Chief Business Officer Sumit Sadana echoed a similar view, saying some customers had taken advantage of the situation and demanded lower prices. “We told a couple of the customers who were being very aggressive with pricing at that time that this is not constructive,” Sadana said. “A lot of the industry investments got shut down in 2023 because of really poor pricing and really poor margins.”

Cuts in memory manufacturers' investments to expand production capacity coincided with a sharp surge in demand from AI companies, which required more memory chips for their data centers. The resulting supply-demand imbalance has led to the current increase in smartphone and PC prices for consumers.

Last week, Apple raised the prices of its Mac and iPad models by up to $200 after CEO Tim Cook said price hikes were unavoidable. iPhones have not yet been affected, but the iPhone 18 series, which is due to launch this September, is also expected to see a price increase.

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Posted Thursday 2 July 2026 at 8:18 am AEST (my time).

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