Elon Musk’s Tesla (TSLA) Pays Homage To Micron For It’s Amazing Chips
$Tesla Motors(TSLA)$
Elon Musk recently stated that Tesla had to cut the memory specifications on its upcoming robot chips because it was "the only way to get enough volume for Optimus production".
Key Comments on Micron and Memory
Cutting Optimus RAM: Musk explained that Tesla reduced memory on its chips (such as cutting the AI5 and AI6 chip memory allocations) to scale humanoid robot manufacturing. He noted this has a negligible effect on performance because memory bandwidth is a bigger constraint than total capacity.
Memory as an AI Bottleneck: Musk has highlighted that memory supply is currently AI and robotics's biggest bottleneck, noting that demand is growing at 200% annually compared to just 20% supply growth.
Public Thanks to Micron: Earlier during a quarterly earnings call, Musk publicly thanked Micron Technology for giving Tesla a "very significant allocation" of memory chips on "reasonable terms" amidst an industry-wide supply crunch and "insane" pricing.
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Micron Technology is stuck in a spiral amid concerns about Chinese competition and the artificial-intelligence trade in general. But shareholder returns could help it rebound, according to analysts.
Micron shares were down 4.4% at $873.70 in premarket trading. A slide that began at the start of the week on news that China's CXMT was developing a new memory chip has been compounded by fears about the wider AI trade.
South Korean memory companies Samsung Electronics and SK Hynix were even harder hit, dropping 9.5% and 11%, respectively, in local trading on Thursday.
But the worries are overblown, according to UBS analyst Nicolas Gaudois. He notes that CXMT's so-called 4F square design (4F2) is likely still just a sample product this year and it would take substantial development to maximize efficiency and performance.
"Memory stocks are now down 19% from the more recent peak in September, almost back to the July trough. We think this should push memory companies to get going on shareholder returns," Gaudois wrote in a research note Thursday.
Micron is currently restricted from carrying out big share buybacks or special dividends due to conditions of the Chips Act funding it received from the U.S. government back in 2024. But that limit should be lifted from Dec. 9 and the company recently approved an increase in its total share-repurchase authorization to more than $35 billion.
The long-term concern is that rising Chinese supply will undercut the skyhigh prices Micron and its peers can currently charge for memory. But even if CXMT can bring advanced chips to the market, it's unclear whether U.S. manufacturers would get government approval to buy CXMT-produced memory and, in any case, the Chinese company gives priority to domestic companies.
Nvidia (NVDA) and Micron (MU) are poised to throw their earnings weight around this reporting season.
The two companies are expected to account for more than one-third of earnings per share growth for the S&P 500 (^GSPC) for the third quarter, according to a ZeroHedge analysis. The platform assessed earnings estimates compiled by Goldman Sachs and FactSet.
What's more, the two semiconductor giants will generate more earnings growth than the bottom 490 S&P 500 companies combined. In total, the analysis found that AI infrastructure companies are expected to drive more than half of S&P 500 EPS growth for the third quarter.