Apple (AAPL) China Chip Fear is an Illusion?...Micron (MU)'s Real Growth Driver is 'This'

▲ Apple (AAPL), Micron (MU), Memory Chip/AI Generated Image

An analysis suggests that the possibility of Apple (AAPL) adopting Chinese-made memory chips has led to excessive fear regarding Micron Technology (MU). With the market for general-purpose memory for consumer devices and high-bandwidth memory (HBM) for artificial intelligence (AI) data centers diverging, Micron's core growth driver is on a different trajectory than Apple's procurement changes.

According to economic news outlet Benzinga on June 28 (local time), Milk Road AI analyst Melvin pointed out on X (formerly Twitter) that investors are looking at the wrong part of the memory market. He analyzed that while Apple's potential use of chips from China's ChangXin Memory Technologies (CXMT) could burden general-purpose DRAM suppliers, Micron has already shifted its focus to premium high-bandwidth memory (HBM) products that power AI data centers.

Melvin viewed CXMT as primarily remaining in the general-purpose product market, including DDR4, DDR5, and LPDDR, used in smartphones, PCs, and consumer devices. In contrast, he explained that CXMT is at least one generation behind in the HBM sector, making it difficult to become a significant competitor in the AI memory market. He argued that Apple's pursuit of lower memory input costs and Micron's strategy of increasing the proportion of high-value memory do not directly conflict.

Apple's price adjustments coincided with a trend where the shortage of memory and storage devices intensified due to increased AI infrastructure investment. Apple adjusted prices for various products, including MacBook Neo, MacBook Air, iPad Pro, iPad Air, HomePod, HomePod mini, and Apple TV, but kept iPhone prices unchanged. Benzinga reported that while Apple aims to lower memory costs, Micron is shifting its portfolio towards high-value product lines where supply shortages can support prices.

Micron's supply outlook also bolstered the bullish argument. Sanjay Mehrotra, Micron's CEO, stated during the fiscal third-quarter earnings announcement, "There is currently no clear visibility on when memory supply will catch up with increasing demand." He added, "We expect the tight supply-demand environment to persist beyond 2027."

Melvin explained that major DRAM manufacturers, including Micron, Samsung Electronics, and SK Hynix, have shifted over 70% of their DRAM production capacity towards HBM. In the process of expanding HBM production for AI accelerators, Micron secured approximately $22 billion in customer commitments through strategic contracts. Mehrotra emphasized that "memory has become a strategic asset" and that AI system performance "is structurally dependent on memory subsystem performance and capacity."

Regulatory variables were also cited as a limitation to the shift to Chinese-made memory. Melvin stated that the Donald Trump U.S. presidential administration is strengthening rather than easing export controls on Chinese semiconductor companies, and even if Apple receives a limited license, it is highly likely to face restrictions on scale, product type, and duration. Ultimately, he analyzed that even if Apple changes some of its consumer DRAM suppliers, it would be difficult to shake the HBM demand tied to Nvidia (NVDA) GPUs and large AI data centers.

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