Shares of memory chip maker Seagate slipped more than 8% Monday, leading a group-wide sell-off, after comments from CEO Dave Mosley raised concerns that it won’t be able to meet the soaring demand fueled by the artificial intelligence buildout.
Mosley was asked at a JPMorgan conference on Monday what it would take to add unit or floor capacity to produce more chips in Seagate’s factories.
“If we took the teams off and started building new factories or bringing up new machines, that would just take too long. You would end up with more capacity, but then you’d slow the rate of growth on that technology,” Mosely said.
Micron shares were down 5%, with both SanDisk and Western Digital Corp. trading roughly 7% lower.
Stock chart comparing the prices for Seagate, Micron, Western Digital and SanDisk over a five-day period.
Memory chip stocks have soared in recent months as a flood of AI investing has sent demand soaring, with the chips a key part of the AI buildout in data centers.
Chip production cycles stretch over many quarters for a single unit, and investors are increasingly wary of how long the leading memory makers can capture demand. CME Group is launching a new futures market for semiconductors, enabling more traders to lock in prices and hedge against the rising prices of computing power.
At Monday’s conference, Mosely also addressed the “very long lead times” and maintaining predictability with its clients.
“We know what’s coming out a year from now,” he said. “And we’ve basically gone to the customers and said, ‘Look, if you want to plan this really well, which it should be for your data centers, we know what’s coming out. You can buy this stuff up to a certain period.’ And so we want to keep that four or five quarters of visibility very, very solid for what’s being built. But the demand is significantly higher than that.”
