Thought Leadership
Micron is generating more revenue than ever from memory for AI and data centers. For customers, that means prices will continue to rise, with no relief in sight.
Micron closed fiscal 2026 with record results while delivering a gloomy outlook for the memory market. According to CEO Sanjay Mehrotra, the shortage of memory will not ease over the next two years. Instead, it is expected to become even more severe. Micron currently cannot predict when supply and demand will return to balance, Mehrotra said.
Most of 2027 Production Already Allocated
Micron has already sold most of its production capacity for next year. According to Mehrotra, customers are paying significantly more for that capacity than they did in 2026. For both 2027 and 2028, Micron expects demand to exceed supply by an even wider margin than it does this year.
New production capacity will not provide immediate relief. While new facilities are scheduled to begin production in 2028, Micron plans to invest $25 billion in the first half of the new fiscal year alone. However, management tempered expectations, saying the new factories will not immediately improve availability or bring prices down.
“As we noted, in calendar 2027 as well as 2028, we see demand exceeding supply. In fact, we see greater tightness in the industry in 2027 and in 2028 versus 2026. Overall, supply-demand environment is only getting tighter.”
Micron CEO Sanjay Mehrotra
Margins of Up to 90 Percent
The impact of the shortage is clearly visible in Micron’s financial results. Revenue reached $54.23 billion in the fourth quarter, up from $11.3 billion in the same period a year earlier. For the full year, Micron generated $133.2 billion in revenue, compared with $37.4 billion the previous year. Net income reached $85 billion, an increase of 895 percent.
Micron’s Core Data Center business, which primarily sells DRAM, was the most profitable segment in the fourth quarter. Its gross margin increased from 41 percent to 90 percent. Cloud Memory, which focuses on HBM, improved from 59 percent to 83 percent. Data center SSDs generated nearly $10 billion in quarterly revenue, representing growth of more than 1,000 percent year over year.
AI Is Driving Demand for HBM
Mehrotra sees the strongest surge in demand for High Bandwidth Memory, which is used in AI hardware. Demand for HBM is growing faster than demand for DRAM used in servers. HBM currently generates lower margins than DRAM, but Micron says it is working to increase its profitability.
For the next generation, Micron is working with Nvidia. The two companies are jointly developing NV-HBM, which Mehrotra describes as the industry’s first customized implementation of HBM4E. The memory is intended for future GPU generations and NVLink Fusion platforms.
Micron also sees new opportunities in the NAND business. The company points to AI context memory, which can be used to offload KV caches, as well as the replacement of hard drives with SSDs. Both trends are expanding the market for SSDs.
(Editorial Team)
