Micron making a killing from memory shortages

Perhaps the most eye-watering figure was Micron’s GAAP gross margin of 86.8 per cent, up from 44.7 per cent a year earlier. Its non-GAAP gross margin reached 87 per cent, making the traditionally volatile memory business look like a licence to print money.AI infrastructure demand continues to outstrip available memory supplies, with Micron expecting constraints to persist through 2028. High-bandwidth memory remains particularly important for AI accelerators, while conventional DRAM and NAND are benefiting from expanding server infrastructure.

Micron’s core data centre business generated $18 billion in quarterly revenue, compared with $1.58 billion a year earlier, with gross margins reaching 90 per cent. Its cloud memory business contributed another $16.28 billion, up from $4.54 billion.

Even the mobile and client division, which supplies memory for ordinary computing devices, delivered a 90 per cent gross margin on $13.11 billion in revenue. PC manufacturers and consumers are unlikely to share Micron’s enthusiasm for expensive memory.

Micron chairman and chief executive Sanjay Mehrotra said: “Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027.”

“AI is becoming Super Intelligence (SI), and memory enhances this intelligence and the competitiveness of our customers’ platforms. We are increasing our investments in technology, products and manufacturing to help drive SI forward with our customers, and our Strategic Customer Agreements provide added confidence in the durability of Micron’s financial performance.”

Full-year revenue reached $133.19 billion, compared with $37.38 billion in fiscal 2025, while GAAP net income jumped from $8.54 billion to $84.97 billion. Operating cash flow reached $89.68 billion, allowing Micron to spend $27.37 billion on capital expenditure.

The company is expanding manufacturing operations in the US and Japan, with initial wafer production at new facilities expected in mid-2027. However, additional semiconductor capacity takes time to bring online, leaving PC manufacturers competing with data centre operators for limited supplies.

Micron has secured 26 long-term strategic customer agreements extending through 2031, with customer commitments reportedly increasing to $32 billion from $22 billion in June. Remaining performance obligations have reached approximately $150 billion.

For the first quarter of fiscal 2027, Micron expects revenue of approximately $61.5 billion, a non-GAAP gross margin of 86.25 per cent and adjusted earnings of $38.15 per diluted share. Meanwhile, it has begun sampling LPDDR6 memory manufactured using its 1-gamma process for customers developing physical AI systems.