Micron Technology said it expects the memory chip shortage driven by artificial intelligence (AI) demand to worsen in 2028 compared with this year. The forecast pushes back squarely against market concerns that next year could be the peak for memory prices and profits. As grounds for a prolonged boom in memory chips, Micron cited "customers securing volumes in advance" and "limits to expanding production capacity." Counted alongside Samsung Electronics and SK hynix as one of the "big three" in memory semiconductors, Micron reports results earlier than peers and is called a "weathervane" for the industry. Its upbeat outlook that strength in prices for commodity DRAM and NAND flash and earnings growth could continue beyond next year is lifting profit expectations for domestic corporations as well.
On the 30th (local time), Micron CEO and chair Sanjay Mehrotra said on the fiscal year 2026 fourth-quarter (June–Aug.) earnings conference call, when asked about peak-cycle concerns for memory, "In 2027 and 2028, demand will exceed supply, and the balance will be even tighter than this year," adding, "It is hard to gauge when supply and demand will regain equilibrium."
Mehrotra also said the company has already committed to supply more than 75% of the fiscal year 2027 shipment volume to customers. "Most of our discussions with customers have moved on to 2028 volumes," he said.
Micron's fourth-quarter revenue came to $54.229 billion (about 73.59 trillion won). That beat the market consensus of $51.07 billion compiled by London Stock Exchange Group (LSEG) by about 6.2%, an earnings surprise. During the period, operating profit under U.S. generally accepted accounting principles (GAAP) was $43.751 billion (about 59.37 trillion won). Revenue rose 379.3% and operating profit 1,097.3% from a year earlier, both hitting record highs. The operating margin was 80.7%, up 48.4 percentage points (P) year over year.
Micron also posted record-high full-year results for fiscal year 2026 under GAAP. Revenue was $133.188 billion (about 180.75 trillion won) and operating profit was $99.34 billion (about 134.81 trillion won), up 256.3% and 916.8%, respectively, from the prior year.
Micron guided first-quarter fiscal year 2027 revenue at $60 billion to $63 billion (about 81.42 trillion to 85.5 trillion won). The midpoint of $61.5 billion (about 83.46 trillion won) is 7.9% above the market estimate of $57.02 billion (about 77.38 trillion won). Micron CFO Mark Murphy said, "We expect another record year in fiscal 2027 with sequential revenue growth each quarter."
◇ Results lifted more by price than volume… further profitability improvement flagged
Micron's fourth-quarter adjusted (non-GAAP) gross margin was 87.0%. The company guided the next quarter to 86.25%, suggesting profitability may edge down. However, the company did not view this as the start of a downturn.
Murphy, the CFO, said, "We expect the first quarter of fiscal 2027 to be the trough for gross margin," adding, "While the pace of price increases will moderate, we expect higher gross margins after the first quarter." He explained that higher fourth-quarter bonuses were reflected in inventory costs and then will be recognized as expense in the next quarter, among other effects.
Micron's fourth-quarter DRAM bit shipments (total memory capacity shipped) rose by the mid-single digits quarter over quarter, while average selling prices (ASP) climbed by the high teens. For NAND, shipments increased by about 10% while ASP jumped about 30%. DRAM revenue rose 27% quarter over quarter to $39.8 billion (about 54.01 trillion won), and NAND rose 42% to $14.1 billion (about 19.13 trillion won). With limited output sold at higher prices, both revenue and profit grew.
◇ The more HBM is made, the scarcer commodity DRAM becomes
Micron cited the production structure of high-bandwidth memory (HBM) as the backdrop for its forecast that the "memory chip shortage" will persist. Micron COO and president Manish Bhatia said on the post-earnings analyst conference call, "HBM is growing faster than commodity DRAM, and as we transition from HBM3E (5th generation) to HBM4 (6th generation) and HBM4E (7th generation), the trade ratio also increases."
The trade ratio refers to how many more wafers are required to produce HBM compared with the same-capacity commodity DRAM. As HBM's share rises and products become more complex, there is less production capacity available for commodity DRAM. The company added that the yield improvement per wafer from process shrinks has also narrowed compared with the past.
Accordingly, Micron expects global DRAM bit shipment growth to slow from the mid-20% range this year to the low-20% range in 2027 and 2028, respectively. For NAND, it expects mid-20% growth in both years, which still would struggle to meet demand.
Micron also flagged improved profitability for HBM itself. The company has finalized contracts for most of next year's HBM supply. While this year's HBM prices were negotiated last year and commodity DRAM prices surged, the new contract prices will feed into HBM profitability. For Samsung Electronics and SK hynix as well, alongside ramping HBM shipments, how much of the higher market prices they can reflect in next year's supply contracts will likely determine the scale of profit improvement. "We have significantly increased 2027 HBM prices, and the new prices will take effect early next year, narrowing the profitability gap with commodity DRAM," president Bhatia said.
Micron said demand is broadening beyond HBM for graphics processing units (GPUs), where orders are surging with the spread of AI services, to memory semiconductors overall. As agentic AI that performs tasks on behalf of users spreads, central processing unit (CPU) servers also need more DRAM and solid-state drives (SSDs). Micron expects server shipments to increase by the high teens this year and next. "Agentic AI workloads require a lot of low-power DRAM and DDR memory, and SSDs," Bhatia said. "In data centers, DRAM is the primary supply constraint, more so than logic chips or power."
◇ Long-term contracts through 2031… even with new fabs, supply lags demand
Contract structures with customers are also changing from past memory boom periods. Micron's strategic customer agreements (SCA) rose to 26 from 16 in the previous quarter. The contracts now signed account for more than 35% of expected revenue through 2030, with some running through 2031. They use a take-or-pay structure under which customers must take the committed volumes or make payment.
The remaining performance obligations (RPO) for committed volumes under fixed pricing total about $150 billion (about 203.56 trillion won). Financial commitments including customer deposits rose to $32 billion (about 43.43 trillion won). "SCAs help us understand future demand and plan investments," chair Mehrotra said, adding, "This is a fundamental change that transforms an industry once marked by high volatility by allowing us to manage investments and supply with a long-term view."
Long-term contract prices are also rising. "While the basic framework of the contracts is similar, current market conditions and the outlook for future prices are reflected in negotiations," Bhatia said. "The direction for prices is higher." The interests of customers seeking to secure long-term volumes and suppliers seeking to validate investment returns have aligned.
Micron plans first-half fiscal year 2027 capital expenditures at about $25 billion (about 33.93 trillion won) net of expected government grants, and expects to invest more in the second half. However, more than half of the increase versus prior plans will go to fab construction, most of it to secure cleanroom space to be used after the end of 2028. "Spending money on construction does not immediately translate into bit production," CFO Murphy said. "We will install tools and start wafer production in the fabs when needed based on market outlook."
◇ "Customers are adding servers even if they cut memory per system"… eyes on Samsung and SK hynix results
Nvidia is reviewing a design that lowers the HBM capacity for the next-generation AI accelerator "Rubin Ultra" compared with the original plan. The SOCAM memory based on low-power DRAM (LPDDR5X) for the CPU on the Vera Rubin superchip is also reportedly halved from the initial plan. Some cloud service providers (CSPs) are also said to be considering reducing memory capacity in their next-generation in-house AI accelerators.
Micron did not see this as a sign of weakening memory demand. "Customers are trying to maximize compute chip shipments with the available memory," Bhatia said. "If memory supply increases, there is latent demand to expand the attached capacity on AI accelerators and CPUs." The move is a response to memory shortages—by cutting memory per AI accelerator to boost overall system shipments—so the impact on demand is limited, he said.
With Micron, the No. 3 memory chipmaker, posting an operating margin above 80% and signaling a prolonged boom, expectations are building for Samsung Electronics and SK hynix ahead of their third-quarter results. The market is watching how much the rise in commodity DRAM and NAND prices in the third quarter fed through, and whether next year's HBM contract prices will drive further profit gains.
