Micron Rings Up Record Profits as AI Demand Creates Memory Crunch
The U.S. memory chip maker Micron Technology is doing well in terms of releasing an exceptional financial statement and forecast, courtesy of entirely new demand in the AI sector. The company's performance causes ripple effects in the global supply chain and points toward a structural shortage lasting potentially much into the future for the high-performance memory.
Better-Than-Expected Financial Results
Magnifying the already well above Wall Street's expectations were Micron's first-quarter results:
- Revenues for Q1: US$13.64 billion (against estimates having US$12.95 billion).
- Non-GAAP EPS for Q1: US$4.78 (against estimates of US$3.90-US$4.00).
Micron's second-quarter forecast is even brighter, with revenue predicted at $18.7 billion and non-GAAP EPS between $8.19 and $8.42 - almost double what the market originally estimated. The gross margin expected to be at 67% is underlining the intense demand for memory from AI servers.
HBM Supply Sold Out until 2026
According to Micron CEO Sanjay Mehrotra, the memory demand created by AI was "exploding at an unprecedented rate" and that this indeed resulted in a critical shortage of High Bandwidth Memory (HBM). He confirmed that because of solid pricing and supply arrangements with customers, the whole of Micron's HBM production capacity for 2026 is already sold out.
He described this as not a quick cycle and would probably be termed a "structural shortage," with an anticipated continuation of deficit supply beyond 2026. "The best is yet to come," he added during the earnings call.
Further Impact on the Entire Supply Chain
The growing scarcity of HBM and high-end DRAM casts a spill effect economically. Taiwanese memory companies including module makers like ADATA and Phison besides manufacturers, such as Winbond and Nanya Technology, are experiencing much enhanced methods of working and stronger momentum for profits, which have risen through the price increases and inventory valuation.
Increased Investment and Global Expansion
Thus, to meet the demand, Micron has increased its planned fiscal year 2026 capital expenditure from $18 billion to about $20 billion to focus on expanding HBM capacity and mass production of the developed 1-gamma DRAM advanced processes.
The company is accelerating its global manufacturing footprint, too. It has a new fab in Idaho that will be online by mid-2027, ahead of the schedule, and it will break ground in early 2026 for a new fab in New York. Expansions in Japan, Singapore, and India are also under way.
Attention Shifts to NAND Flash Memory
AI has taken up DRAM and HBM in lofty amounts, putting the industry radar on NAND flash. According to experts, given that enterprise-grade SSDs and QLC NAND are likely going to see much bigger demand from AI servers, it might PROBABLY push up prices in NAND sometime in the next first quarter.
