Micron’s chief business officer has insinuated that Apple’s tough negotiating stance with its suppliers contributed to the global memory shortage and ensuing massive price hikes.
On Wednesday, Sumit Sadana told The Wall Street Journal that Micron was unable to fund capacity expansion during the industry’s previous slump in the early 2020s, as its margins turned negative partly because “a couple of customers” were aggressive in pushing for lower prices.
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.
Considering that Micron is one of Apple’s memory suppliers, and Apple has a reputation of being cutthroat when it comes to getting favorable terms from its suppliers, it’s a good bet that Sadana was referring to Apple. Micron provide some of the DRAM and NAND flash chips used in iPhones, Macs, and iPads.
Sadana’s comments came on the heels of a sweeping round of stiff price hikes on Apple’s Macs, iPads, HomePods, Apple TVs, and Vision Pro headsets. Only the iPhone, Apple Watch, and AirPods remained at their original price levels.
The day of the price hikes, Apple’s stock closed down 6%, its worst single-day performance in more than a year.
Earlier in the week, current Apple CEO Tim Cook told The Wall Street Journal that Apple price increases are “unavoidable,” due to rising costs for components like SSD and memory costs.
Cook said Apple can no longer absorb the increased prices of memory and storage chips and would be forced to pass at least some of the cost on to consumers.
“Unfortunately, price increases are unavoidable,” said Cook. “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”
On Thursday, Apple fulfilled Cook’s prediction, raising some prices by quite a bit. The price hikes hit the three-year-old Apple TV, which jumped in price from $129 to $199, the M3 Ultra Mac Studio saw its price increase by $300, the iPad Air up $150, the iPad Pro up by $200, and the recently introduced MacBook Neo saw its base price jump by $100. The HomePod mini’s price increased the least, going up by $30.
