Cisco Systems The company’s shares closed down 12% on Thursday as rising memory prices put pressure on the networking company’s profit margins. It was the stock’s worst day since 2022.

strong demand AI The chip caused global shortage memory, causing the cost of this component to skyrocket. Huge orders for data center memory have limited production capacity for other devices, including smartphones.

This has created uncertainty for many technology companies, including consumer electronics manufacturers apple and Dell and chip manufacturers, etc. Qualcommwhich cited shortages in posting weak guide February 4th. Now, Cisco is feeling the heat.

Cisco CEO Chuck Robbins addressed rising memory prices across the market during the company’s earnings call Wednesday. Robbins said Cisco will raise prices, modify contracts and negotiate terms to respond to changing component prices.

“As far as memory goes, we’re going to control what we can control,” Cisco Finance Chief Mark Patterson said on the call.

Company performance is better than expected quarterly results Wednesday, but as Cisco released a mediocre forecast.

Product gross margin for the quarter was 66.4%, down 130 basis points from the same period last year, which Patterson said was “primarily due to the negative impact of rising hybrid and memory costs.”