Micron Executive: Free Cash Flow to Reach New Highs, Memory Supply Constraints Expected to Last Beyond 2026

Manish Bhatia, Executive Vice President of Global Operations at Micron Technology, and Samir Patodia, Senior Director of Investor Relations, attended JPMorgan's 54th Annual TMC Conference on Wednesday, providing the most explicit positive signal since the financial report call in March: the free cash flow in the third fiscal quarter is expected to reach another historical high, the balance sheet is in its strongest position ever, and the three major rating agencies have all upgraded Micron's rating this year.

The unexpected demand side is the core driver of this revision. The management pointed out that smart AI and machine workloads are driving the proportion of inference demand in total customer demand to continue to rise, and memory is increasingly positioned as a strategic asset – higher performance, larger capacity memory can directly enhance the overall performance of AI models.

On the supply side, it is suppressed by two structural factors: the continuous decline of per-node bit gains brought by the process migration of DRAM and NAND; the number of wafers required per bit of HBM is more than three times that of standard DRAM, and this calculation ratio continues to widen during the iteration of HBM3E→HBM4→HBM4E. The management clearly stated that the supply tension of HBM, DRAM, and NAND is expected to continue after 2026.

In terms of capacity expansion, the progress of multiple projects has exceeded expectations. The acquisition of the Taiwan Tongluo plant has been completed ahead of schedule, and the renovated wafer factory is expected to produce advanced DRAM in the second half of 2027. The adjacent Shuanglian factory will start construction this summer, and after the two factories are merged with the existing capacity in Taichung, they will form a super cluster.

The production time of Idaho 1 in Idaho has been advanced from the second half of 2027 to the middle of the year, and Idaho 2 is expected to produce wafers at the end of 2028; the construction progress in New York State is ahead of schedule, and the main concrete pouring will start later this year; the Singapore HBM factory is expected to form production capacity in 2027.

In terms of technological execution, the mass production ramp-up speed of HBM4 is twice that of HBM3E in the same period last year, and the yield improvement is also faster.

HBM4E plans to start mass production in 2027. The first product will be based on 1-gamma DRAM and use TSMC logic chips according to JEDEC standard specifications, later providing customized solutions for high-value customers. Both 1-gamma DRAM and G9 NAND are expected to become the main production nodes of their respective product lines by mid-2026, with ramp-up speeds faster than their predecessors.

In terms of data center SSD market share, Micron has increased from 5% to 7% in 2022 to about 15% currently, ranking third globally. Gen 6 9650 was the first in the industry to obtain mass production qualification and pass the NVIDIA STX platform certification.

The progress of strategic customer agreements is also worth noting: since the announcement of the first 5-year DRAM long-term contract in March, several new customers are in active discussion stages, and the coverage of the agreement has been explicitly extended to NAND products - against the backdrop of similarly tightening NAND supply, this is seen by the management as an additional positive signal.