The Price Of Memory

 The title may sound poetic but the subject is prosaic :)

I was curious at the large earnings upside surprise announced by Micron Technologies a few days ago.  The company makes commonplace DRAM chips and other such storage products used in just about everything these days.  It’s basically an electronics commodity company, albeit sophisticated.

The price of memory has been coming down steadily for decades following Moore’s Law, see chart below.

With prices always dropping, the industry’s profitability was always under pressure. Stock prices suffered for years as companies tried to make up in volume what they couldn’t achieve in profit margins.

Until AI and data centers came along and created a large extra demand for common “low tech” commodity semiconductors. Prices doubled, even tripled, within just a year or two.  Since fabrication costs stayed the same, more or less, profits soared.

Share prices for the likes of Micron, Seagate and Intel exploded on the upside with gains of 200-300% in just a few months. Will it last?