Micron CEO Sanjay Mehrotra stated that aggressive pricing pressure from customers in recent years left the memory chip industry underinvested just as artificial intelligence (AI) demand began to surge, resulting in the current supply shortages affecting the chip market [1]. Mehrotra explained that customers drove pricing down significantly, with memory chip prices in 2023 falling to one-third of their previous levels, which pushed Micron and other suppliers into negative gross margins and limited their ability to invest in new manufacturing capacity [1]. Specifically, Micron's gross margin dropped to negative 7.3% in fiscal 2023, which ended in August of that year, and the company's capital expenditures fell to $7.7 billion from $12.1 billion the prior year [1].
Despite the downturn, Micron continued to invest in manufacturing and technology, albeit at reduced levels, which Mehrotra said has positioned the company to benefit from the ongoing AI boom [1]. The CEO noted that AI-driven demand for memory chips has increased steadily since the 2023 pricing collapse, with the acceleration becoming more pronounced in 2026. This surge has made Micron one of the stock market's biggest winners, with the company's stock climbing more than 240% in the second quarter and adding over $920 billion in market value, bringing Micron's market capitalization to approximately $1.3 trillion [1].
Mehrotra indicated that the supply crunch is likely to persist well beyond 2027, as building new semiconductor fabrication plants takes years and next-generation memory manufacturing has become more complex [1]. To address the supply-demand gap, Micron is investing roughly $200 billion in manufacturing and R&D, including new memory fabrication facilities in Boise, Idaho, and Syracuse, New York. The Boise project is the most advanced, with the first chips expected to be produced in the middle of next year and output increasing thereafter [1].
The CEO emphasized that both industry pricing dynamics and the rapid rise in AI demand have contributed to the current market conditions, and that Micron's continued investment strategy aims to position the company for long-term growth as the supply shortage persists [1].
CONCLUSION
Micron's CEO directly links the current memory chip shortage to years of aggressive customer pricing and underinvestment, compounded by a surge in AI-driven demand. The company's substantial investments and recent market performance highlight its strategic positioning for continued growth, even as supply constraints are expected to last beyond 2027.