Seagate leads memory sell-off as CEO says it would 'take too long' to build new factories

Seagate Technology's shares plummeted by over 8% on Monday, spearheading a wider downturn in the memory chip sector. This decline follows comments from CEO Dave Mosley, who expressed apprehensions about the company's ability to keep pace with the surging demand driven by advancements in artificial intelligence. During a conference hosted by JPMorgan, Mosley was posed a question regarding the potential to enhance production capacity at Seagate's facilities. He responded with caution, stating, "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." The ripple effect was felt across the industry, with Micron's stock dropping by 5%, while both SanDisk and Western Digital Corporation saw declines of approximately 7%. In recent months, memory chip stocks have surged due to increased investments in AI, as these chips play a pivotal role in the infrastructure supporting AI developments in data centers. Investors are growing increasingly concerned about the lengthy production cycles associated with chip manufacturing, which can span several quarters for a single unit. Additionally, CME Group is set to introduce a new futures market for semiconductors, providing traders with a platform to secure prices and hedge against the escalating costs associated with computing power. At the same conference, Mosley highlighted the challenge of "very long lead times" while emphasizing the importance of predictability for their clients. "We know what's coming out a year from now," he noted. Mosley further reassured customers by stating, "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." Despite these assurances, the demand for memory chips continues to outstrip supply significantly.