Memory and storage supply are going to be “much tighter” in fiscal 2027 and 2028 than they were in an already tight 2026, Micron CEO Sanjay Mehrotra warned.
Enterprises dealing with soaring prices for hardware can not, in short, expect a reprieve anytime soon, as OEMs fight for upstream supply amid “AI-driven demand for an increasingly complex set of products across the memory hierarchy.”
“We do not see… when supply catches up with demand, because the demand trends of larger models, growing context, more concurrency, greater agents across enterprise and consumer only continue to drive greater need for memory… as well as for higher performance memory.” - Micron President Sanjay Mehrotra
Mehrotra was speaking as the company wrapped up a blockbuster year: Micron’s fiscal 2026 net income surged to $84 billion this year from $8.5 billion last year.
It also reported a gross margin of 90% in its out-performing data centre unit.
(Micron’s Q4 revenue alone was $54.2 billion, up 379% year-over-year.)
The Boise, Idaho-based chipmaker said it is signing growing numbers of multi-year “take or pay” agreements designed to “sharpen our long-term supply planning.”
It has signed 26 of these “strategic customer agreements” (SCAs) and said that it estimates these to account for over 35% of its revenue through 2030 – “a majority of which have pricing bands with floor and ceiling prices. The remaining quarter of this SCA revenue expectation has pricing negotiated periodically based on market prices.”
“We have a strong roadmap for future HBM [high-bandwidth memory] products and are proud to be working with NVIDIA on the industry’s first custom HBM4E implementation, NV-HBM, to be adopted on next generation of GPUs and NVLink fusion platforms,” Mehrotra added on a September 30 earnings call.
Micron expects “industry HBM bit shipments to grow faster than conventional DRAM through calendar 2028,” Micron’s CEO told analysts. “The structural gap between DRAM supply and demand growth rates is resulting in ongoing supply tightness.”
With “more and more of the inferencing related KV cache functionality is being offloaded to storage” and the “expansion of memory tiering to include more and more flash-based architectures, has that changed the team’s view on your R&D and CapEx investments in your NAND franchise?” asked JPMorgan’s Harlan Sur.
Mehrotra said the firm continues to invest strategically; first-half fiscal 2027 CapEx is slated to surge to approximately $25 billion. (Fiscal 2026’s CapEx was $27.37.)
“Even with any new clean room space coming up in 2028, we see continuing tight supply conditions because, first of all, clean rooms take a long while to build. Even after they are built, even after first wafer output, production ramps up only gradually in the clean rooms. That’s just the nature of what it takes to bring up production. With HBM going from HBM3E to a greater max of 4 and HBM4E, and with the trade ratio that exists, that again creates headwinds with respect to supply growth.”
In August Micron announced that Manish Bhatia was being promoted to President and Chief Operating Officer. EVP Scott DeBoer, also already with Micron, was appointed President, Chief Technology and Products Officer.
The COO will have “end-to-end responsibility for demand through supply, enabling faster, more integrated decision making and stronger alignment across the organization to meet our customers’ evolving needs”; the CTPO for “advancing Micron’s industry leading memory and storage roadmaps, accelerating innovation to meet customers’ rapidly evolving requirements, and overseeing Micron Research Labs, a global flagship research hub dedicated to breakthrough memory and compute technologies.
"Micron's numbers are another strong validation of AI and memory demand, but markets may increasingly be asking whether we are closer to peak memory shortage, even if demand continues to exceed supply," Charu Chanana, chief investment strategist at Saxo, commented.
