Memory chip makers surged in morning trading on Thursday after a gangbuster earnings report from Micron Technology , in which executives stressed continuing supply constraints for parts and components. Micron CEO Sanjay Mehrotra told investors Wednesday that the company does “not have line of sight as to when” memory supplies will be able to meet demand. He predicted tight markets beyond 2027. That shortage has given Micron huge pricing power in tech value chains and has exploded its gross margins and other profitability measures. Micron reported third-quarter non-GAAP gross margins of 84.9% on Wednesday. While that’s great news for Micron and other memory suppliers, the profit margin expansion has implications for technology value chains, and equals higher costs for the sector’s customers. Consumer electronics makers are fast raising prices to protect their own profit margins, risking that won’t take a bite out of demand. Higher Apple prices Apple on Thursday raised prices on its MacBook and iPad products – by as much as $300 in some cases. The MacBook Pro 1T is going to $1999 from $1699, and the iPad Pro Wifi 256GB is going to $1199 from $999. “The consumer electronics industry is facing an unprecedented challenge,” Apple said Thursday. “The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage. We have never seen a component price increase this much, this quickly.” Some analysts are warning of knock-on effects at component buyers, notably the hyperscalers building data centers, and raising concern about consumer inflation and aggregate demand. “While tech is enjoying a big relief rally this morning, the memory mania has some dark sides, including pressuring the free cash flow at hyperscalers and driving inflation higher throughout the economy (AI might eventually be disinflationary by fueling productivity, but for now, it’s pushing prices higher),” Adam Crisafulli wrote in his Vital Knowledge newsletter on…
