Elon Musk: Micron's Memory Pricing is Reasonable, Other Vendors are Extorting
Tesla CEO Elon Musk stated that Micron's future memory pricing is reasonable, while other vendors are engaging in extortionate pricing. Today's customers will not forget this, and Micron's approach is beneficial for long-term customer loyalty.
Musk pointed out that Micron's attitude towards future memory pricing is reasonable, whereas the pricing from other suppliers is extortionate. He believes this difference will make current customers remember for a long time and considers Micron's choice of reasonable pricing a wise move to gain long-term customer loyalty.
Previously, during Tesla's Q2 2026 earnings call, Musk publicly thanked Micron for providing a "very significant memory allocation" at "reasonable terms," while describing current memory pricing as "quite crazy." He also mentioned in SpaceX-related occasions that memory production is increasing by about 20% annually, but demand could rise by 200% or more, leading to continuous price increases.
The memory supply is currently under significant strain, with Micron CEO Sanjay Mehrotra stating that supply in 2027 and 2028 will be tighter than in 2026. The company has signed 26 strategic customer agreements, covering about 35% of revenue until 2030, most of which include price floors and ceilings. Micron's revenue for Q4 FY2026 reached $54.2 billion, a substantial year-on-year increase, with gross margins remaining high.
To cope with supply constraints, Tesla has adjusted its AI chip memory configurations, including downgrading some designs from higher capacities to secure sufficient production for projects like Optimus. Apple CEO Tim Cook has also publicly mentioned that memory suppliers are significantly passing on price increases.
Buyers include AI and automotive clients needing stable memory supplies, such as Tesla, SpaceX-related projects, and hyperscale data centers; sellers include a few DRAM/HBM suppliers like Micron, SK Hynix, and Samsung. The flow of funds is shifting from short-term high-price acquisition to long-term allocation and pricing relationships, benefiting suppliers willing to accept relatively reasonable terms and lock in long-term supplies, while putting pressure on customers reliant on spot purchases or forced to accept high prices.
Micron has pre-sold most of its HBM production for 2027, with prices significantly higher than in 2026, and the industry overall lacks a fourth major supplier.
Source: Public Information
ABAB AI Insight
Elon Musk has long been sensitive to memory supply through Tesla and SpaceX's large-scale AI computing and robotics projects. He has publicly commented multiple times on memory shortages in 2026, including thanking Micron for providing significant allocations at reasonable terms during Tesla's earnings call, and quantifying the supply-demand imbalance in SpaceX: production is increasing by about 20% annually while demand could increase by 200%. Micron, as one of the major DRAM and HBM suppliers in the U.S., along with SK Hynix and Samsung, forms a highly concentrated supply landscape.
In terms of capital flow, Musk's public statements position Micron as a relatively cooperative supplier while describing other vendors as engaging in extortionate pricing. The motivation is to strengthen long-term relationships with suppliers willing to provide reasonable terms to ensure memory allocations for Tesla and related projects. Resources are shifting from purely spot purchases to publicly influencing long-term allocation and pricing reputations.
Historically, during semiconductor cycles, customers publicly name or criticize suppliers during shortages to secure priority allocations, or the automotive industry prefers long-term agreements with specific suppliers during chip shortages. The current memory industry is in a structurally short phase driven by AI, with HBM and high-end DRAM capacity highly concentrated, and pricing power concentrated in the hands of a few suppliers.
This essentially represents a transfer of pricing power: in an environment where supply is rigidly increasing while demand is rapidly expanding, pricing power shifts from maximizing short-term profits to prioritizing long-term customer relationships and allocation. The mechanism is that when customers have the capacity for sustained large-scale purchases, publicly comparing reasonable and extortionate pricing can influence future allocation decisions; if suppliers excessively pursue short-term high prices, they may face market share loss in the next round of capacity expansion or customer diversification.
ABAB News · Cognitive Law
- Reasonable pricing during shortages = Long-term allocation priority
- Customer memory lasts longer than contract terms
- Under concentrated supply, reputation equals pricing power.