Intel's CEO says memory prices rose 'six, seven times' as Micron books an 87% margin

The number on the bill

Memory prices have gone up "six, seven times," Intel▼−4.19% — Intel, down 4.19 percent today chief executive Lip-Bu Tan said on November 13, and "even that you willing to pay, you may not get it ¹." Next year, he added, "going to be even worse" ¹. That is the bill behind Intel's October 29 warning, which blamed high memory prices for weak PC demand and knocked 28.6% off the stock in a day, 37.6% in a month ². Tan had just put $9.7 million into the shares at $64.73↗; on Friday morning they traded at $58.41 ¹².

One shortage, two income statements

Intel's PC chip business earned $8.1 billion in the September quarter↗, down 5% from a year earlier, and is guided down more than 20% this quarter↗ while the company plans around industry PC units falling about 10% in 2027 ³². Server chips ran the other way: $7.3 billion, up 78%, the fastest data center growth in 15 years, with demand still short of supply ³.

Micron earns the margin Intel pays

Micron▼−4.50% — Micron, down 4.50 percent today, the US memory maker on the other side of that market, booked $54.23 billion of September-quarter sales at an 87% adjusted gross margin, with $12.9 billion of customer prepayments and $32 billion of committed supply deals ⁴⁵. The link is physical: every 100 bits of HBM3E, the stacked memory inside AI accelerators, eats the fab capacity of roughly 300 bits of ordinary DRAM ⁶.

The flood that ends it is Chinese

SK hynix▼−5.27% — SK hynix, down 5.27 percent today, the Korean leader in that stacked memory, says its output is effectively sold out through 2029, and its finance chief expects supply to trail demand through 2030 ⁶. The dated end comes from China anyway: a report citing Charles Kau↗, the industry veteran known as the Godfather of DRAM, says CXMT▼−2.42% — CXMT, down 2.42 percent today, China's largest DRAM maker, is building up to ten more fabs to flood the market by 2028 ⁷.

CXMT held 9.5% of global DRAM revenue in the June quarter, fourth behind Samsung, SK hynix and Micron, and its high-bandwidth memory yields run near 20% to 30% against roughly 70% at SK hynix↗ ⁸⁹. US rules keep its chips out of American data centers, so the pressure arrives indirectly, through Europe ¹⁰.

Bernstein expects memory prices to stay strong into 2027, then normalize from late 2027 into 2028 ¹¹.

Two dates decide it

Nvidia▼−3.21% — Nvidia, down 3.21 percent today reports on November 17 under interim chief executive Colette Kress, after Jensen Huang resigned ¹³, and what it says about the custom x86 order behind its 214.8 million Intel shares, bought at $23.28 and now worth about $12.5 billion, sets the credibility of Intel's roadmap ¹². Intel's January quarter then shows how much of the memory bill passes through to PC buyers.

At 5.4 times sales, against 3.2 for the S&P 500, and with 2027 likely to carry no positive free cash flow, the stock trades on the far side of this shortage ². The hedge is architectural too: SK hynix's pooled memory racks, presented with Intel in Seoul on November 12, cut first-token latency in tests from 80.76 seconds to 15.45↗ ¹⁴.

Until the bill stops, Intel is paying Micron's margin out of its PC line, one quarter at a time.