Micron Technology shares bounced back early Thursday after Intel’s CEO talked about rising memory prices, highlighting Micron’s strong profit outlook.
The stock climbed 5.4% in early trading, returning to levels seen before worries about a possible slowdown in AI development affected the sector.
Intel CEO Lip-Bu Tan said at an industry conference this week that he does not see any slowdown in the broader AI buildout or in demand for memory chips. He pointed out that memory prices have increased five to seven times compared to recent levels. Last year, he warned that memory would become a major bottleneck, and that prediction has come true. He added that things could get even tougher next year, especially since memory can make up 70% to 80% of a company’s total costs.
These comments have mixed effects for Micron. A bigger memory supply shortage means higher profits for the company. However, some customers, especially those making lower-end smartphones and other non-AI devices, are already having to reduce product features or pass higher costs on to buyers.
Investors are also paying attention to Intel’s renewed interest in the memory chip market, which it left years ago. Reuters reported this week that Intel might team up with SK Hynix to make memory chips in the U.S., but SK Hynix said no deal has been made yet. Intel is also supporting Kepler Compute, a startup developing a new chip design to shake up the memory market. SK Hynix’s American depositary receipts also jumped on Thursday.
Although Intel’s renewed focus on memory could bring more competition in the future, its main message for now is clear for Micron investors: the current memory boom is not slowing down.
