RAM supply set to worsen, says Micron, as CEO celebrates ‘much higher’ prices
Posts huge leaps in revenue, profit, and margin, with more to come
Micron, the memory manufacturer, has warned that RAM shortages will continue until at least 2028, possibly even beyond. During the company's FY 2026 earnings call, CEO Sanjay Mehrotra conveyed to investors that Micron has already distributed the vast majority of the memory it intends to produce next year. Customers will subsequently be required to pay "much higher prices" for RAM compared to what they paid this year.
Mehrotra elaborated on the growing gap between demand and supply, stating that the industry's tightness will persist in 2027 and 2028 compared to 2026. He further emphasized that there is no foreseeable timeline for when balance will be restored between supply and demand.
Despite plans to introduce new factories online in 2028, aided by a $25 billion capital expenditure in the beginning half of its fiscal year, executives warned that these facilities will not instantaneously enhance availability or alleviate price pressures. The CEO highlighted that demand for high-bandwidth memory (HBM) in AI hardware is surging at a rate faster than demand for dynamic random-access memory (DRAM) utilized in servers.
Micron is actively seeking ways to bolster its margins for HBM, which currently lacks the profitability of DRAM. Despite this, both types of memory generate substantial profits.
Micron's Q4 earnings announcement disclosed an 83 percent gross margin for its cloud memory business, which specializes in HBM— a significant increase from 59 percent in Q4 the previous year. The datacenter core business unit, which sells more DRAM, exhibited a Q4 gross margin of 90 percent, up from 41 percent the previous year.
SSD sales for datacenters reached almost $10 billion in the quarter, representing a more than 1,000 percent year-over-year increase. Revenue for Q4 amounted to $54.25 billion, up from $11.3 billion in the previous year. Annual revenue reached $133.2 billion, considerably higher than last year's $37.4 billion. Net income surged by 895 percent to $85 billion.
Mehrotra informed investors that Micron possesses a promising roadmap for upcoming HBM products and is proud to collaborate with NVIDIA on the industry's first custom HBM4E implementation, NV-HBM, slated for adoption on subsequent generations of GPUs and NVLink fusion platforms. In NAND, Micron noted that AI context memory storage utilized for KV cache offload and HDD displacement opportunities are expanding the potential market for SSDs.
Micron projected Q1 FY27 revenue to range between $61.5 billion and $1.5 billion, with a gross margin of 86.25 percent. The company's share price experienced a spike and then reverted to its closing price after-hours, implying that investors anticipated the company's tremendous growth and profit.
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