Micron Technology
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Turns out China’s CXMT playing hardball on DRAM prices is actually good news for Samsung, SK Hynix (and by extension Micron) – not the threat people expected.Apple was eyeing CXMT as a cheap alternative source for mobile DRAM like LPDDR5X to cut costs on the next iPhones and gadgets.
But CXMT flat-out refused further discounts and is sticking to prices the same as or higher than Samsung and SK. Apple, usually the big buyer that can force prices down, just got stonewalled.Why? Chinese giants like Huawei and Xiaomi have already snapped up most of CXMT’s output with expensive long-term deals.
They’re pushing hard for domestic supply because of the ongoing US sanctions, so CXMT doesn’t need Apple’s business at a cut-price rate.That old Apple trick of dangling cheap Chinese parts to squeeze better deals out of the big suppliers has stopped working.
At the same time the major memory makers have shifted loads of capacity over to high-value AI stuff like HBM. Commodity DRAM (DDR5, LPDDR5X) is tighter, prices are climbing, and the usual cheap workaround has vanished.CXMT soaking up the China-side commodity demand means Samsung and SK are off the hook for flooding the market with low-margin chips. They’re free to pour everything into premium AI memory – HBM4, LPCAMM2, enterprise SSDs and the rest.
With commodity prices held up by CXMT and the Big Three owning the high-end, their pricing power and margins look set to get even stronger in the second half.
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I don't see Apple sacrificing much-more likely the consumer takes the brunt if they want the new model, maybe even the old model.
See below. Think about that. 34% of the flagship iPhone cost is 'memory' and expected to be 42% next year. Crazy.
What is happening is Wafers are being allocated to HBM and DC memory types leaving commodity DRAM scarce also.
Musk said over the weekend that supply of memory will increase 20-30% in 2027 but demand will increase 200%. It doesn't matter if that is a gross exaggeration. Demand outstripping supply = prices stay up.
In other news CXMT turned out to be the Emperors new clothes. After hanging an 'open for business' sign out front it turns out the shop is empty. They have no memory to sell to the West, not that any sales would have been approved. But it bolstered their stock price. They are now telling the market they'll build more fabs. Nice story, we will see what they achieve in about 4 years-that is how long it takes. And given they are currently on the 1Z node (a dinosaur), I think this 'threat' has been put to bed-
showKeybanc fireside chat with Micron today. I''ll be ears
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I think the sector will remain volatile and range bound until we get some concrete info from senior management. The bears won't capitulate without a fight-no doubts, why, because many are paid to generate FUD. As we have said before, the thesis is not based on ever increasing price rises. 25% bit growth is a given and that'll do imo. I don't see prices dropping-basic economic theory says so.
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Micron gave a fireside chat today at Keybancs Tech conference, where senior executives spoke about what is happening. Brilliant commentary.
This is far more bullish than the market appears to appreciate.
The latest management comments from Micron are, in my view, exceptionally bullish and point to a significant rerating of the shares.
The key message is that demand is not merely strong — it is running substantially ahead of supply, and the imbalance is getting worse. Management indicated that Micron cannot currently meet even half of customer requirements, versus the previously stated 50–67%. That is an extraordinary statement given the scale of capacity investment already underway.More importantly, management said demand has increased since the last earnings report and that supply will be tighter in 2027 than in 2026. That completely undermines the conventional argument that additional industry capacity will soon normalise the market.
Customers are also demonstrating how seriously they view the shortage. Some are signing supply commitments extending all the way through 2030, while management says customers remain largely insensitive to memory pricing. That combination is hugely significant: customers are effectively prioritising guaranteed supply over price.
And this is already translating into extraordinary economics. Micron achieved an 86% gross margin last quarter, with management describing financial performance as being at “extraordinary levels” and robust (meaning they are probably rising further).This is no longer simply a cyclical memory recovery story. It increasingly looks like a structurally constrained market in which AI demand is overwhelming available supply, customers are locking up capacity years ahead, and Micron has substantial pricing power.
At these levels, the market is still valuing Micron too much like a traditional cyclical memory company.
If these trends persist, MU needs to rerate to reflect structurally higher earnings, margins and visibility. -
you can't see what you don't want to see
Shipping 'now'
The guide was $50B revenue this quarter. I think their gross margin will be $50B
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The US government has urged Apple to refrain from purchasing memory chips from Chinese suppliers. Commerce Secretary Howard Lutnick stated that the Trump administration is not in favour of American companies using Chinese memory, particularly from firms such as CXMT and YMTC, which appear on the Pentagon’s blacklist over alleged military links.
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That’s good news..
Trump love him or hate puts his country first …
I don’t think our shower of shi.. would do the same -
I think it's somewhat moot what is decided at the Govt level as the Chinese vendors don't have any product to sell, and based on the evidence are asking a premium. Plus, the over supply argument has been put to bed, regardless of what certain vested interest will continue to promote.
We will have severe shortages for at least 5 years and possibly much more. A very very long time in this game-trying to predict markets in 5 years is pointless so ignore that too.
If anything the infection of physical AI is a matter of when not if. Cars will get to level 4 soon, robots will proliferate. Both will need material memory to allow real time (zero shot) inference. It's obvious, well at least to some.
We will discuss this in due course but the next phase in the memory road map is custom silicon where companies like SK/Micron are working with customers to produce bespoke silicon. We know they are working with Anthropic and Nvidia. Why it's a big deal. It makes their products not just commoditised, it means these co-designs are deeply embedded in their AI architecture which effectively locks out competitors.
