Micron CEO: AI Has Totally Changed the Boom-and-Bust Memory Industry

Micron CEO: AI has 'totally changed' the equation for the boom-and-bust memory industry

* Micron CEO Sanjay Mehrotra said on Thursday that AI has dramatically changed the memory business. * "Today there is no AI without memory. AI systems need more memory. They need higher performance memory. They need lower power memory," Mehrotra said on CNBC's "Mad Money." "So, the value of memory, that equation has totally changed." In this article * MU * SNDK Follow your favorite stocksCREATE FREE ACCOUNT Micron CEO Sanjay Mehrotra said on Thursday artificial intelligence has fundamentally changed the memory business, an industry prone to boom-and-bust cycles. "Today there is no AI without memory. AI systems need more memory. They need higher performance memory. They need lower power memory," Mehrotra told Jim Cramer on "Mad Money." "So, the value of memory, that equation has totally changed." His comments came in the shadow of a massive semiconductor fabrication site under construction near Micron's headquarters in Boise, Idaho, part of the company's planned $250 billion investment in U.S. manufacturing and research. The Boise site alone will eventually include two fabs, each roughly the size of 10 football fields; a single fab will have enough steel rebar to circle Earth twice, according to Mehrotra. The first Boise fab is expected to begin producing wafers in mid-2027. The scale of that investment reflects how dramatically Mehrotra thinks AI has altered the outlook for memory. Memory has historically been a cyclical business, with periods of strong demand encouraging manufacturers to add capacity, only for excess supply to eventually drive down prices. However, Mehrotra -- an engineer by trade who's worked in the chip industry for over 40 years and previously co-founded SanDisk -- said AI is creating a more durable source of demand. The opportunity extends beyond data centers, he said. Mehrotra said he expects autonomous vehicles, robots, and AI-enabled consumer devices to require increasingly large amounts of memory in the years ahead. "Memory today is essential," Mehrotra said. "That's why I call it the strategic infrastructure of the AI era." That demand is also changing the value customers place on memory, according to Mehrotra. Instead of customers simply soliciting bids and buying from whichever supplier offers the lowest price, he said memory must increasingly be designed alongside the processors and systems in which it will operate. Mehrotra said that makes memory essential to the performance of the broader system rather than simply another component. "We are working closely with them earlier and earlier in their development cycle," he said. "Our customers recognize the value of memory, because memory is what is enabling them to design products that are driving growth engines for them." He said Micron still can't produce enough to satisfy that demand. "All our customers across our end markets will buy everything that we make," Mehrotra said, adding that data-center customers currently want roughly 50% more supply than Micron is able to commit. The memory maker is gaining greater visibility into that demand through long-term customer agreements, another important shift for a business historically exposed to swings in the spot market. During the company's most recent earnings call in late June, Micron announced that it had signed five-year strategic agreements with 16 customers. Mehrotra said the company has since inked additional deals. "They have committed to taking the supply," Mehrotra said. "So, this gives us assurance of demand." Jim Cramer's Guide to Investing Click here to read Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest smarter Sign up now for the CNBC Investing Club to follow Jim Cramer's every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer's world? Hit him up! Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram Questions, comments, suggestions for the "Mad Money" website? [email protected] Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

What's Going On With Micron Technology Stock Friday? - Micron Technology (NASDAQ:MU)

'No AI Without Memory': Micron CEO Says the Chip Industry's Old Boom-Bust Playbook Is Breaking Micron Technology, Inc (NASDAQ:MU) believes the memory market's violent boom-and-bust cycle is over -- thanks to artificial intelligence. CEO Sanjay Mehrotra says memory has officially shifted from a commodity to the "strategic infrastructure of the AI era," with data-center clients currently demanding 50% more supply than the chipmaker can produce. To lock in long-term demand, Micron is expanding its U.S. manufacturing footprint while securing binding multi-year customer agreements. Mehrotra Says AI Has Changed Memory Demand Mehrotra told Jim Cramer on "Mad Money" that artificial intelligence has fundamentally changed the value of memory because AI systems require larger amounts of faster and more power-efficient memory. "Today there is no AI without memory. AI systems need more memory. They need higher performance memory. They need lower power memory," Mehrotra said. Trending Get a 1% Match on Your First Deposit of $1,000+ He expects demand to spread beyond data centers into autonomous vehicles, robotics and AI-enabled consumer devices. Mehrotra described memory as the "strategic infrastructure of the AI era." Micron Expands U.S. Manufacturing Micron plans to invest $250 billion in U.S. manufacturing and research. Its Boise, Idaho, development will eventually include two semiconductor fabrication plants, with the first expected to begin wafer production in mid-2027. The scale of the investment reflects Mehrotra's view that AI has created a more durable demand environment for memory. Mehrotra said Micron currently cannot produce enough memory to meet customer demand. He said customers across end markets would purchase everything the company can manufacture, while data-center customers are seeking roughly 50% more supply than Micron can currently commit. He also sees memory becoming more integrated into customers' product-development processes. Rather than treating memory as a commodity purchased primarily on price, customers increasingly work with Micron earlier to optimize memory alongside processors and complete systems. Long-Term Agreements Improve Demand Visibility Micron announced five-year strategic supply agreements with 16 customers during its June earnings call, and Mehrotra said the company has signed additional agreements since then. He believes those commitments give Micron greater visibility into future demand and reduce its exposure to the short-term swings that historically shaped the memory market. Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $1525.00. Recent analyst moves include: * New Street Research: Upgraded to Buy (Forecast $1250.00) (Aug. 14) * Citigroup: Buy (Lowers Forecast to $1150.00) (Aug. 7) * Keybanc: Overweight (Raises Forecast to $1750.00) (July 14) Top ETF Exposure * iShares Semiconductor ETF (NASDAQ:SOXX): 7.98% Weight * Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ): 8.91% Weight * State Street SPDR NYSE Technology ETF (NYSE:XNTK): 8.14% Weight Significance: Because MU carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock. Price Action MU Stock Price Activity: Micron Technology shares were up 0.58% at $979.94 during premarket trading on Friday, according to Benzinga Pro data. Image via Shutterstock Tech Broadcom's AI Competition Fears Look Overblown: Analyst JPMorgan reiterates Overweight on Broadcom (AVGO), citing intact Google TPU roadmap, surging network demand, and projected $56B+ AI revenue. 2 min read Read this article Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.