Micron CEO Sanjay Mehrotra says RAM shortages will persist into 2028 and perhaps beyond, and customers will pay "much higher prices" than they did this year (Simon Sharwood/The Register)

Memory company Micron has issued a warning that RAM shortages will continue through 2028, possibly beyond. At their latest earnings call for FY 2026, CEO and Chair Sanjay Mehrotra informed investors that the company has already distributed most of the memory they will produce next year, and customers can anticipate "much higher prices" compared to those paid this year.

Mehrotra elaborated that both in 2027 and 2028, demand is expected to outpace supply. He further stated that there is "greater tightness in the industry" in 2027 and 2028 compared to 2026, with no clear indication of when the supply-demand balance will be restored. Micron plans to launch new factories in 2028, with a planned capital expenditure of $25 billion in the first half of its fiscal year, but executives cautioned that these facilities will not immediately alleviate the availability issue or bring down prices.

The CEO noted that demand for high-bandwidth memory (HBM) required for AI hardware is expanding at a faster rate than demand for the dynamic random-access memory (DRAM) used in servers. Micron is also exploring ways to boost margins for HBM, which currently lags behind DRAM in profitability. Despite these challenges, both memory types remain highly lucrative.

Micron's second-quarter earnings report showed a Q4 gross margin of 83 percent for the cloud memory business unit, which specializes in HBM – a significant increase from 59 percent in the previous year's Q4. In contrast, the core datacenter business unit, which primarily sells DRAM, reported a Q4 gross margin of 90 percent, up from 41 percent last year.

SSD sales for datacenters reached nearly $10 billion, up over 1,000 percent year-over-year. Q4 revenue accumulated to $54.25 billion, a substantial leap from $11.3 billion in the previous year. Annual revenue hit an impressive $133.2 billion, a stark contrast to last year's $37.4 billion. Net income saw a remarkable surge of 895 percent to $85 billion.

Mehrotra expressed Micron's confidence in the future of HBM products, highlighting their partnership with NVIDIA on the industry's first custom HBM4E implementation, NV-HBM, which will be integrated into next-generation GPUs and NVLink fusion platforms. In the NAND segment, Micron is capitalizing on opportunities in AI context memory storage for KV cache offload and HDD displacement, expanding the potential market for SSDs.

Mehrotra informed investors that Micron has a solid plan for future HBM products and are optimistic about their collaboration with NVIDIA. In NAND, the growth in AI context memory storage for KV cache offload and HDD displacement is broadening the SSD market's addressable scope. Micron's Q1 FY27 revenue outlook is projected between $61.5 billion and $1.5 billion and a gross margin of 86.25 percent.

The company's stock experienced a brief surge following the earnings announcement, but then settled back to its regular close-of-day price in after-hours trading, indicating investor confidence in Micron's substantial growth and profit potential.