16 long-term contracts with customers → 26… Secure more than 35% of expected sales by 2030
Over $50 billion in facility investment next year... Full-scale deployment of new production capacity will begin in mid-2027.
Micron again posted its best quarterly performance ever. The performance exceeded market expectations and even the outlook for the next quarter exceeded expectations, but what attracts more attention than performance is the movements of customer companies. We have begun securing the memory volume required until 2031 through a long-term contract.
Long-term contracts increased from 16 to 26 in one quarter, and future sales captured under the contracts also increased significantly. Micron plans to expand facility investment to more than $50 billion next year to meet increasing demand. On the other hand, the point in time when new production capacity leads to actual supply is concentrated after mid-2027.
Customers are holding on to supplies for a few years ahead, but it takes time for supply to catch up. This is why Micron sees memory supply and demand in 2027 and 2028 as tighter than this year.
Long-term contract larger than $54.2 billion in sales
Micron announced on the 30th (local time) that it recorded sales of $54.23 billion in the fourth quarter of fiscal year 2026 (June-August)*. It increased 30.8% from the previous quarter's $41.46 billion and also exceeded market expectations. It is the highest ever on a quarterly basis.
*Micron's fourth quarter of fiscal year 2026 lasts 14 weeks from May 29 to September 3, 2026.
Adjusted earnings per share (EPS) was $33.42. The sales forecast for the next quarter was also presented at $60 billion to $63 billion, exceeding market expectations.
Along with the good performance, there was a change in the contract method with customers.
Micron's Strategic Customer Agreements (SCA), long-term contracts in which customers secure the amount of memory they need in advance over several years, increased from 16 to 26 last quarter. The contracts currently in place cover more than 35% of the company's projected sales through 2030, with some extending into 2031.
The price is also largely determined at the contract stage. Approximately 75% of the sales expected to occur in long-term contracts have a price determination method set in advance, and a method of setting upper and lower prices was applied to many contracts.
The size of future sales captured in the contract also increased. According to Micron Chief Financial Officer Mark Murphy, remaining contractual obligations (RPO) increased 50% from about $100 billion last quarter to about $150 billion this quarter. The amount agreed upon by customers in relation to long-term contracts also increased from $22 billion to $32 billion. Most of them are in the form of cash deposits.
Investment exceeding $50 billion... There is a lag in supply expansion
In line with the increase in demand, Micron's investment will also increase significantly. We plan to invest approximately $25 billion in the first half of fiscal 2027, and even more in the second half of the year. Annual facility investment is expected to exceed $50 billion.
Compared to the scale of investment, the pace at which actual supply increases is slow. It takes time for a semiconductor factory to increase production through construction, bringing in equipment, preparing for mass production, and Micron's ongoing expansion will be reflected in production sequentially from 2027 to 2030.
HBM's advanced packaging facility in Singapore will begin initial production in early 2027, and the first wafers will be released from ID1 in Idaho, USA, in the middle of the same year. Significant product shipments are also scheduled to begin around this time from the Tongluo factory in Taiwan.
Additional production capacity will be added in 2028. Singapore's new NAND factory will begin production in the second half of the year, and the Idaho ID2 and Japan DRAM factory expansions are also scheduled to begin their first production by the end of the year. The first wafer production at the first factory in New York, USA is targeted for 2030.
If we take into account the process of sufficiently increasing production after factory operation, the time lag becomes even longer. The company explains that it will take several more quarters for the new DRAM and NAND factories to reach meaningful production scale. Even if an investment of more than $50 billion is made, new volumes will enter the market sequentially over several years, starting in 2027.
The contract runs until 2031... New supply begins in 2027
Micron CEO Sanjay Mehrotra said, “We expect the memory and storage supply and demand situation in 2027 and 2028 to be much tighter than in 2026.” A significant portion of the HBM volume for 2027 has already been confirmed for sale.
The memory market has repeated a cycle of rising prices followed by increased investment, followed by an increase in supply over time, followed by a price decline. The difference this time is that long-term contracts are increasing rapidly ahead of supply expansion.
Customers are extending the contract period until 2031, while new production capacity will be added sequentially from mid-2027. This is why Micron sees memory supply and demand as tight over the next two years despite large-scale investments.
This is also something to keep an eye on for Samsung Electronics and SK Hynix. If long-term contracts increase not only for HBM but also for general DRAM, it may affect future supply and demand and price trends.
What is noticeable about Micron's recent performance as a record number is that customers are securing supplies in advance, even for several years ahead. There is a movement to dominate demand rather than expand supply.
