prepared remarks<\/a> delivered during the company\u2019s Q3 earnings call. He explained that Micron has signed 16 SCAs, most of them covering 2026 to 2030, and that they involve a commitment to buy a certain quantity of product and pay for it in a pricing band that has a floor and a ceiling price. The floor price covers the historically high gross margins mentioned above, and the ceiling price means those who commit to an SCA are insulated if memory prices go even higher.<\/p>\nThe CEO said 16 customers have signed SCAs and then explained why it\u2019s worth locking into the deals even though they bake in such high margins.<\/p>\n
\u201cOur customers are recognizing that supply shortages in memory and storage will take considerable time to improve,\u201d he said. \u201cEven as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand.\u201d<\/p>\n
Even massive efforts to build new chip fabs aren\u2019t much help, he said, because the increasing complexity of new memory types means it takes longer to build factories \u2013 and when they come online there still won\u2019t be enough capacity to build both the high-bandwidth memory needed for AI and other types of NAND and DRAM.<\/p>\n
\u201cSupply is structurally constrained in its growth and ability to meet industry demand, despite our comprehensive efforts to increase supply,\u201d he said.<\/p>\n
Don\u2019t assume that SCAs mean your suppliers get price certainty, because Mehrotra said the deals will account for 40 percent of Micron revenue \u2013 meaning the company is reserving most of its inventory to sell at prices it can negotiate.<\/p>\n
The CEO did have a little good news in the form of predictions that Micron\u2019s DRAM output in 2026 will \u201cgrow in the low- to mid-20s percentage range, slightly above our prior outlook.\u201d He also revealed that the SCAs see customers pay up front, which helps Micron to fund its fab expansions.<\/p>\n
Q3 results were also exceptional.<\/p>\n
Revenue landed at $41.5 billion, a fifth consecutive quarterly revenue record and 346 percent year-over-year jump. DRAM revenue alone reached a record $31.3 billion, up 343 percent year-over-year. NAND revenue rose 361 percent year-over-year, to $9.9 billion.<\/p>\n
Net income reached $28.9 billion, and consolidated gross margin came in at 84.9 percent.<\/p>\n
Execs predicted even better results, offering Q4 guidance of $50 billion in revenue, gross margins hitting \u201capproximately 86 percent\u201d, and telling investors that the increased complexity of memory means future products will cost even more than Micron\u2019s current kit.<\/p>\n
But while Micron thrives, IT pros will toil to make workloads perform with less memory: Mehrotra said Micron expects sales of conventional servers will grow in the mid-teens percentages during calendar 2026 but predicted \u201cmodest reduction in average server DRAM content growth as customers focus on maximizing unit shipments amid a very tight allocation of memory.\u201d<\/p>\n
Investors liked what they heard: Micron\u2019s share price popped 15 percent in after-hours trading. \u00ae<\/p>\n","protected":false},"excerpt":{"rendered":"systems Big buyers agree to deals that will deliver historically enormous margins and profits Memory-maker Micron has found…\n","protected":false},"author":2,"featured_media":759818,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[45,49,48],"class_list":["post-759817","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-ca","tag-canada"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/759817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=759817"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/759817\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/759818"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=759817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=759817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=759817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}