Micron's record profits draw antitrust scrutiny amid chip shortage
A massive AI-driven shortage is pushing memory chip prices to unprecedented levels, delivering historic profits for Micron and its peers but attracting fierce regulatory and legal pushback from squeezed customers.
An acute shortage of memory chips needed for artificial intelligence servers has delivered unprecedented pricing power to the global DRAM market. Micron Technology, SK Hynix and Samsung Electronics now effectively control all high-bandwidth memory and 90 percent of the broader DRAM market. "The shortage we’re seeing in the market right now is unprecedented," said Bernstein analyst Mark Newman. "Memory prices are just going up extremely quickly."
The financial windfall for the trio is staggering. Micron’s average DRAM prices nearly quadrupled in the March-to-May quarter compared to a year earlier. Analysts estimate the company will generate $83 billion in net profit in fiscal 2026, exceeding its cumulative earnings over the previous three and a half decades. Operating margins have hit 80 percent, the highest among large tech companies, pushing the valuations of each of the three manufacturers past $1 trillion.
However, this extreme profitability is triggering a severe backlash from customers across the economy. Memory is poised to account for over a third of capital expenditure bills for major hyperscalers, while consumer electronics makers are forced to absorb the costs. Apple blamed memory components for a roughly 20 percent price hike on iPads and Macs. For smaller hardware makers like GoPro, the surging input costs have raised explicit doubts about the company's ability to continue as a going concern.
The pricing dynamic has already sparked legal and political friction. A putative class-action lawsuit was filed last month in the US accusing the three manufacturers of coordinating to restrict supply and inflate prices. Non-AI customers are actively lobbying Washington to ensure data centres do not consume all available DRAM. This creates a delicate political situation for Micron, which is poised to receive $6.4 billion in US government subsidies alongside a 35 percent investment tax credit even as it projects net profits exceeding $175 billion next fiscal year.
Supply constraints are expected to persist until around 2028 given the time required to build new fabrication plants. In the interim, manufacturers are locking in their revenues by pushing customers like Ford and General Motors into multi-year allocation contracts. Meanwhile, Western policymakers face a geopolitical balancing act: Apple is seeking US permission to buy chips from blacklisted Chinese suppliers like CXMT for its domestic market, while the incumbent oligopoly warns that future Chinese capacity could eventually crash global prices.
