A Hidden Threat for Micron? Apple Is Eyeing a Fix for AI Memory Demands
Apple is exploring a partnership with AI startup PrismML to reduce on-device memory demands by 15x, potentially mitigating rising chip costs. This development poses a threat to Micron Technology's high profit margins, as increased memory efficiency could lower demand for physical chips. However, Micron remains optimistic due to surging overall market demand driven by AI data centers, autonomous vehicles, and robotics, suggesting that long-term growth opportunities persist despite potential margin pressures.
Apple (AAPL +0.26%) recently raised prices on many of its devices to offset rising memory prices, but it may have found a fix for soaring costs. A recent CNBC report said the company is in talks with an AI start-up that reduces on-device memory demands by 15x.
Squeezing vastly more memory processing capabilities from the same amount of memory could be bad news for Micron Technology (MU +0.04%). Here's what both Apple and Micron investors should know.
Image source: The Motley Fool.
Apple is trying to fix a stubborn problem
Apple recently increased the prices of many of its devices to keep pace with soaring memory costs. Demand for memory chips has risen sharply as tech giants continue their massive build-out of AI data centers.
Apple wants to keep the high margins it commands on its products. To maintain them amid rising memory chip costs, it raised its computer prices by $200 or more. And it could increase iPhone prices for the same reason later this year.
It's no wonder, then, that Apple is on the hunt for a fix for its memory problems. And it may have found it in an AI start-up called PrismML. The company says its technology reduces memory usage for AI models by up to 15x while delivering responses up to 8x faster.
There's no concrete deal or partnership between Apple and PrismML right now. Still, if Apple ends up using the technology, or something similar, it could help the company deliver advanced on-device Siri AI features without adding more expensive memory.
NASDAQ: AAPL
Key Data Points
Tech companies are very motivated to reduce memory costs
Micron has enjoyed a surge in demand for memory for AI data centers, causing a shortage of memory processors. That shortage, in turn, has allowed Micron to charge more for its memory chips.
The result has been soaring profits for Micron, with non-GAAP (generally accepted accounting principles) earnings per share skyrocketing more than 1,200% to $25.11 per share in the third quarter of 2026.
If PrismML and Apple (or another company) eventually implement technology across tech devices that increased efficiency and reduces memory demand, it could threaten Micron's profit margins, which are currently at an enviable 74%.
Still, it's probably too early for investors to worry. For one, the technology would have to be implemented across a wide range of devices from many different tech companies for it to impact Micron's business.
What's more, and potentially most importantly, even if Apple and others implement more memory efficiencies, memory demand could still rise. The memory processor market is estimated to increase to more than $1 trillion next year, up from $230 billion in 2025.
Micron's management believes that autonomous vehicles and robotics will drive a new wave of demand for memory. In short, even if more efficient memory processing is around the corner, there are already growing tech markets that could keep demand high.
NASDAQ: MU
Key Data Points
Apple and Micron investors should watch this space
I suspect we'll see a lot more technology in the next few years aimed at addressing memory demands. Apple has received a lot of attention for raising product prices, but all tech giants are feeling the effects of rising memory costs right now and are looking for a fix.
It's unlikely that Apple will want to continue making big price hikes for its devices. So, it'll either need to figure out how to make memory work more efficiently or absorb the rising costs. My money is on the former.
For Micron investors, the latest news is a good reminder that some of the impressive earnings growth the company has enjoyed likely won't last forever. I still think Micron has many long-term growth opportunities, but it's unrealistic to assume profit growth can maintain its rapidly accelerating pace.
