micron CEO Sanjay Mehrotra said Thursday that artificial intelligence has fundamentally changed the boom-and-bust 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 told Jim Cramer on “Mad Money.” “So the value of memory, that equation has completely changed.”
His comments came in the shadow of a massive semiconductor manufacturing facility being built near Micron’s Boise, Idaho, headquarters as part of Micron’s planned $250 billion investment in U.S. manufacturing and research. Ultimately, the Boise site alone will include two fabs the size of approximately 10 soccer fields. Mehrotra said one factory has enough rebar to go around the world twice. The first plant in Boise is scheduled to begin producing wafers in mid-2027. The size of the investment reflects how dramatically Mehrotra believes AI has changed the memory landscape.
Memory has historically been a cyclical business, with periods of strong demand prompting manufacturers to add capacity, but eventually leading to oversupply and falling prices. But Mehrotra is an engineer by trade who has worked in the chip industry for over 40 years and was previously a co-founder. sandisk — Said that AI is creating a more permanent source of demand.
He said the opportunity extends beyond data centers. Mehrotra said he expects self-driving cars, robots and AI-enabled consumer devices to require increasingly large amounts of memory in the coming years.
“Remembering today is essential,” Mehrotra said. “That’s why I call this strategic infrastructure for the AI era.”
According to Mehrotra, this demand is also changing the values customers place in their memories. He said memory will increasingly need to be designed in parallel with the processors and systems it runs on, rather than customers simply soliciting bids and buying from the lowest-priced supplier. As a result, memory becomes more than just a component, it becomes essential to broader system performance, Mehrotra said.
“We work closely with them from early in their development cycle,” he said. “Our customers recognize the value of memory because it allows us to design products that are growth engines.”
He said Micron still can’t produce enough to meet that demand.
“All of our end-market customers will buy everything we make,” Mehrotra said, adding that data center customers currently want about 50% more supply than Micron can promise.
Memory manufacturers are gaining greater visibility into their demand through long-term customer contracts, another significant change for a business that has historically been exposed to spot market fluctuations. 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 signed additional contracts.
“They have promised to receive supplies,” Mehrotra said. “So this will ensure that there is demand.”
