Micron Technology (NASDAQ:MU) executives said demand tied to artificial intelligence infrastructure is strengthening into 2027 and 2028, while industry supply remains constrained by cleanroom capacity, increasingly complex high-bandwidth memory products and diminishing returns from technology transitions.
During the company’s fiscal fourth-quarter analyst call, President and Chief Operating Officer Manish Bhatia said Micron has committed more than 75% of its planned shipments for fiscal 2027. That visibility has allowed the company to begin allocation discussions with customers for 2028, he said.
AI Demand Expands Beyond Accelerators
Bhatia pointed to continued server-unit growth and the spread of agentic AI workloads as major demand drivers. He said agentic AI is creating a CPU-driven source of demand in addition to the memory needs associated with AI accelerators.
According to Bhatia, agentic workloads require significant attachments of LP memory, DDR memory and solid-state drives. He said server units are growing in the high teens, while customers are currently seeking to maximize the amount of compute silicon they can ship with available memory supply.
That situation has created latent demand for additional memory, executives said. If more memory became available, customers could add more memory to AI systems and improve system performance.
Bhatia also said the company sees DRAM as the principal constraint on data-center expansion rather than logic or power. He cited the rapid adoption of enterprise and consumer agentic software as evidence of the demand environment.
HBM Remains a Key Growth Product
Micron expects high-bandwidth memory, or HBM, shipments to grow faster than conventional DRAM through 2028. Bhatia said the product category will therefore represent a growing share of industry capacity.
The company said it significantly increased HBM pricing for calendar 2027, with the change intended to narrow the profitability gap with conventional DRAM. Micron did not provide an updated estimate for the HBM total addressable market, nor did it provide a specific HBM market-share target.
Bhatia said Micron expects its HBM share to remain around its broader DRAM market share, though he noted that the result may vary based on several factors. He said the company had reached its prior goal of bringing HBM share to its broader DRAM share about a year earlier.
Scott DeBoer, Micron’s President and Chief Technology and Products Officer, said the company has worked with NVIDIA for more than a year on HBM4E, referred to as NVHBM. He characterized it as the first major custom HBM product expected in the market and said the co-designed product could provide value beyond standard HBM4E.
DeBoer clarified that the HBM4E co-design uses a foundry process for both customized and JEDEC-specified products, rather than Micron’s in-house optimized base die approach used with HBM4. He said Micron seeks differentiation through power efficiency, speed performance, product margin and product quality.
Supply Agreements and Capacity Investments
Micron said its supply-chain agreements, or SCAs, cover both DRAM and NAND. The company has discussed a goal of SCAs covering 35% of sales by 2030, though Bhatia said Micron was not breaking out the agreements by product category.
He said DRAM bit volume covered by the agreements is somewhat below approximately 35%, while NAND bit volume is somewhat above that level. The company has SCAs across all business units, including mobile and client markets, and said it signed 10 new customers during the quarter.
Most pricing frameworks in the agreements use floors and ceilings, Bhatia said, while approximately one-quarter of SCA revenue has pricing subject to periodic negotiations tied to market conditions. Newer agreements reflect higher current market pricing and Micron’s outlook for future tightness, he added.
Micron is increasing construction capital expenditures primarily to accelerate cleanroom availability beginning in late 2028 and beyond. Bhatia said these investments will not immediately translate into bit production, as fabs must still be equipped and qualified before meaningful shipments begin.
Chief Financial Officer Mark Murphy said most of the planned capital-expenditure increase is directed toward construction rather than equipment. Micron plans to equip cleanrooms and add production capacity based on demand trends, executives said.
Technology, China Exposure and Near-Term Modeling Items
DeBoer said Micron’s technology lead over Chinese competitors is currently at least two DRAM nodes. He said Micron’s 1-gamma DRAM technology has become the majority of its bit output and is on track to become the largest node in company history. The company’s next-generation 1-delta node is under development, with a ramp targeted for the second half of next year.
Micron expects China exposure to fall into the single-digit percentage range in fiscal 2027, Bhatia said.
In mobile and client products, Micron reported sequential bit declines but revenue growth driven by higher pricing and favorable mix. Bhatia said premium PCs and flagship smartphones continue to show robust demand for higher-content, higher-performance memory, even as unit volumes decline.
For the fiscal first quarter, Murphy said Micron’s guidance assumes single-digit sequential bit growth and double-digit cost growth for both DRAM and NAND. He also said that, excluding incentive-compensation effects, the company expects its year-over-year research-and-development spending increase to exceed $1 billion in fiscal 2027 as it expands R&D activities.
About Micron Technology (NASDAQ:MU)
Micron Technology, Inc is a semiconductor company that develops and manufactures memory and storage solutions. Its product portfolio includes dynamic random-access memory (DRAM), NAND flash memory, three-dimensional XPoint-related technologies, solid-state drives, and high-bandwidth memory products designed for demanding computing applications.
The company serves customers across the data center, artificial intelligence, networking, automotive, industrial, mobile, consumer electronics, and embedded markets.
