Apple Says It Will Keep Paying More for Memory Chips After December. That's Good News for Micron Stock.
If the iPhone maker keeps paying more for memory into next year, why did the memory chipmaker's stock just fall 6%?
On November 2, memory chipmaker Micron Technology's shares plummeted by roughly 6%, coinciding with a similar drop in shares of Kioxia Holdings, a Japanese flash memory company. Kioxia had reported October 30 results, predicting a modest revenue increase of around 1% in the December quarter, following a 40% surge between June and September quarters.
Later in the day, Apple announced on its earnings call that it anticipates memory prices to continue rising through the following year. Apple CEO John Ternus described the current memory pricing as "unprecedented." This statement carries significant weight for Micron, as most of Micron's sales are DRAM, not the type of chip Kioxia manufactures.
While Apple didn't specify its memory suppliers, this news serves as a signal for the broader market. Kioxia's guidance for the December quarter indicates flat shipments and only a slight price increase, mainly due to currency, timing, and sales mix shifts. However, Micron's revenue growth is expected to accelerate, with DRAM revenue hitting a record $39.8 billion in the last quarter, accounting for 73% of the company's total. The outlook for memory stocks hinges on whether these price increases continue.
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