Micron Technology Says AI Memory Demand Still Outstrips Supply Through 2026, HBM4 Shipping Early

Micron Technology (NASDAQ:MU) executives told investors at Wolfe’s Auto, Auto Tech, and Semiconductor Conference that business conditions have strengthened since the company’s most recent earnings call, with demand continuing to outstrip supply across memory markets and tight industry conditions expected to persist beyond 2026.

Chief Financial Officer Mark Murphy, joined by Head of Investor Relations Satya Kumar, said Micron is seeing “significantly higher” demand than it—or the industry—can supply. Murphy added that the company is working to expand capacity through a combination of node transitions and greenfield investments, while also progressing on multi-year supply agreements with customers seeking longer-term visibility and assurance.

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Murphy said demand is being driven by AI systems that require “more and better memory” as models grow larger, context windows extend, and reasoning becomes more intense. He described increasing “tokens generated” and a broader “re-architecture of memory systems” that is pushing high-performance memory deeper into system architectures.

He pointed to improving server demand trends through 2025, noting that expectations moved from single-digit growth to the “mid-teens” as AI workloads expanded and began affecting even traditional server demand. Murphy also cited rising hyperscaler capital spending, saying expectations for 2026 are “close to $800 billion,” compared with “under $200 billion” a few years ago.

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While data center remains the primary driver, Murphy said demand is expected to proliferate to the edge over time, including smartphones and PCs, and eventually areas tied to autonomy-related activities.

On supply, Murphy said Micron’s inventories are lean—particularly in DRAM—and the company is “sweating the assets” to produce incremental bits where possible. Even so, he emphasized that supply is not meeting demand “by a substantial margin.” He referenced comments from Micron’s CEO on a prior earnings call that some key customers were only able to meet 50% to two-thirds of their demand, underscoring how widespread the shortfall is.

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Murphy outlined several steps underway to expand capacity over time:

• Node transition: The company is ramping its 1-gamma DRAM node, which Murphy said will provide supply into calendar 2026 and is expected to represent the majority of Micron’s bits in the second half of calendar 2026.

• Idaho One: Incremental greenfield capacity is expected to come online in “mid-2027.”

• Tongluo, Taiwan acquisition: Micron announced an acquisition of a site in Tongluo to support DRAM production. Murphy said the transaction is expected to close in calendar Q2 and that the fab could provide supply near the end of 2027 into 2028. He also said the acquisition price disclosed in the press release was $1.8 billion and that the deal, along with tool installation and related spending, will add to capital expenditures.

• Singapore NAND fab: Micron broke ground on a new NAND fab in Singapore, with “first wafer out” expected in the second half of 2028.

Murphy said supply additions take time, particularly for greenfield capacity. He also noted that node transitions are “less efficient than it used to be,” limiting how much incremental supply the industry can generate without building new facilities.

Another factor pressuring supply, Murphy said, is the increasing silicon intensity of high-bandwidth memory (HBM). He described a trade ratio that has historically been around 3-to-1 for HBM3 and said it increases as the industry moves to HBM4, HBM4E, and HBM5, further tightening supply.

Murphy also addressed what he described as “recent inaccurate reporting” about Micron’s HBM4 position. He said Micron is in high-volume production of HBM4, has commenced customer shipments, and expects shipment volumes to ramp successfully in calendar Q1—one quarter earlier than the company had mentioned on its December earnings call.

Murphy said Micron’s HBM capacity ramp is progressing and reiterated that the company has sold out its calendar year 2026 HBM supply. He added that HBM yields, including HBM4 yields, are on track, and said the HBM4 product delivers over 11 Gbps speeds. He expressed confidence in performance, quality, and reliability.

Asked about HBM share, Murphy said the company previously targeted ramping share in line with its conventional DRAM share and stated that Micron achieved that. He added that HBM is now managed like other products with portfolio decisions based on customer needs, manufacturing footprint, and value.

Murphy reiterated that Micron had guided to 68% gross margin and said the company’s financial outlook has improved since earnings, driven by pricing. He cautioned that at higher margin levels, incremental price increases have a smaller mathematical impact on margin expansion than they do at lower margins, but said Micron expects margins to expand from the fiscal second quarter into the third quarter.

In addition to pricing, Murphy cited strong cost performance from the 1-gamma ramp, operational execution, “very good” spend control, and improved absorption from higher volumes. He also pointed to mix as a contributor, saying Micron’s premium technology and portfolio provide flexibility to optimize toward higher-value areas over time.

On NAND, Murphy said the business remains important and described how the industry had “ample supply” from late 2022 onward, prompting Micron to reduce utilization and slow node migrations to restore supply-demand balance. Over that period, he said Micron sharpened its NAND portfolio, brought controller capability in-house, and extended process technology leadership.

Murphy said Micron now holds a “preeminent position” in NAND, focused on the data center SSD market, spanning performance TLC SSDs and capacity-oriented QLC drives. He said Micron has gained share and noted that the company discussed achieving “over a billion-dollar run rate again” in NAND during the prior quarter.

Murphy described tighter NAND market conditions as storage becomes a more important part of AI system architecture. He outlined a “hot, warm, cold” tiering approach, with HBM serving the hottest data, LPDRAM supporting warm data, and drives serving cooler data, including growing key-value (KV) cache offload needs. He said this dynamic contributed to Micron’s decision to add greenfield NAND capacity in Singapore, with output expected in 2028, while supply needs before then will be met through node transitions, including a G9 transition.

Kumar added that Micron published a white paper on LPDDR, describing systems expected to ship this year with triple the LPDDR content compared with last year, and asserting that additional LPDDR content can reduce time to first token by 98% and significantly improve inference.

Murphy closed by emphasizing that Micron will continue investing in a “disciplined way,” reassessing market conditions and competitive capacity additions, while working to expand supply and secure longer-term agreements with customers seeking supply assurance over multi-year horizons.

Micron Technology, Inc is a global semiconductor company that designs and manufactures memory and storage solutions. Its product portfolio includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives (SSDs), memory modules and embedded memory solutions for a wide range of computing and electronic devices. Micron supplies components used in data centers, enterprise and cloud infrastructure, client computing, mobile devices, automotive systems and industrial applications, and also markets consumer-facing products under the Crucial brand.

Founded in 1978 and headquartered in Boise, Idaho, Micron has grown into an international manufacturer with research, development and production facilities across multiple regions.

The article “Micron Technology Says AI Memory Demand Still Outstrips Supply Through 2026, HBM4 Shipping Early” was originally published by MarketBeat.