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Micron Spent The Memory Shortage Signing Multiyear Contracts
Trefis • • business
Key Points:
- Micron Technology's stock surged about 707% over the past year, driven by industry-wide memory shortages and the company's strategic multiyear contracts that secured volume at high prices.
- In fiscal Q3 2026, Micron reported record DRAM revenue of $31.3 billion, a 67% sequential increase, with gross margins hitting a company record of 84.9%, primarily due to higher pricing and product mix improvements.
- The company signed 16 take-or-pay agreements covering around 20% of DRAM and a third of NAND volumes, with $100 billion in minimum contracted revenue providing a price floor and strong margin expectations.
- Micron is investing $27 billion in new fabrication plants in Idaho and New York to support future capacity, funded by $24.4 billion in net cash after retiring $4.4 billion in debt, positioning it well financially for growth.
- While contracts set a price floor, they also cap upside, with fiscal Q4 guidance showing moderated price increases and a potential plateau in revenue growth, reflecting a cyclical risk despite strong current performance.
