Micron Technology, Inc. (MU) Narrative

Fiscal periods: Micron's fiscal year is the 52- or 53-week period ending on the Thursday closest to August 31. Fiscal 2025 ended August 28, 2025 (52 weeks). Fiscal 2026 contains 53 weeks; its third quarter (13 weeks) ended May 28, 2026, and its fourth quarter contains 14 weeks.

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Business

From the FY2025 Form 10-K, accession 0000723125-25-000028.

Micron designs and manufactures semiconductor memory and storage, DRAM, NAND and NOR, sold under the Micron and Crucial brands as components, modules, SSDs, managed NAND, multi-chip packages and wafers. Headquarters are in Boise, Idaho. Headcount was approximately 53,000 as of August 28, 2025.

This is a capital-intensity-and-cost-per-bit business. Micron states plainly that its success depends on returns on R&D, efficient utilization of manufacturing infrastructure, integration of advanced product and process technologies, and efficient capital spending. Each generation of process technology is meant to increase bit density per wafer and reduce per-bit manufacturing cost.

Reportable segments

Micron reorganized its business units in the fourth quarter of fiscal 2025; all prior-period segment amounts were retrospectively restated. Four business units, each a reportable segment:

• Cloud Memory (CMBU), memory for large hyperscale cloud customers, plus HBM for all data center customers. Also DDR, LPDDR and GDDR.
• Core Data Center (CDBU), memory for mid-tier cloud, enterprise and OEM data center customers, and storage (data center SSDs and NAND components) for all data center customers.
• Mobile and Client (MCBU), mobile and client memory and storage, plus Crucial-branded SSDs and DRAM sold to consumers and component DRAM/NAND.
• Automotive and Embedded (AEBU), automotive, industrial and consumer/embedded, sold into the intelligent edge; discrete and module DRAM, discrete and managed NAND, SSDs and NOR.

Fiscal 2025 revenue by unit: CMBU $13.52 billion (36%), CDBU $7.23 billion (19%), MCBU $11.86 billion (32%), AEBU $4.75 billion (13%).

Product technology

DRAM, $28.58 billion of fiscal 2025 revenue, versus $17.60 billion in 2024 and $10.98 billion in 2023. In 2025 Micron began shipping the industry's first 1γ (1-gamma) production node, its first DRAM node using EUV lithography; the majority of 2025 DRAM bit production was on the prior 1β node. The DRAM portfolio includes:

• HBM, 3D-stacked DRAM using through-silicon vias for high bandwidth at low power, the core AI product. Volume production of 8-high 24GB HBM3E began in 2024; by the fourth quarter of fiscal 2025, HBM3E 12-high was the majority of HBM shipments. HBM4 36GB 12-high samples were delivered to multiple key customers in 2025.
• DDR5, including a 128GB server module on a monolithic 32GB die built on 1β, positioned as an alternative to 3D TSV-based high-capacity modules.
• LPDDR5/LPDDR5X, mobile and, increasingly, servers; in 2025 Micron began volume production of LPDDR5 in SOCAMM form factor for server manufacturability.
• GDDR, graphics, gaming consoles and HPC.

NAND, $8.50 billion of fiscal 2025 revenue, versus $7.23 billion in 2024 and $4.21 billion in 2023. G9 (ninth-generation 3D NAND) volume production began in 2024; the majority of 2025 bit production was on G8 and G9. TLC and QLC. Products include data center SSDs (9550 series, 6550 ION, first G9-based PCIe Gen6 drives), client and consumer SSDs, managed NAND (e.MMC, UFS) and MCPs combining LPDDR with NAND.

NOR, code storage for automotive, industrial and consumer.

Customers, competition and geography

Roughly half of total revenue came from the top ten customers in each of the last three fiscal years. One customer was 17% of fiscal 2025 revenue, primarily in CMBU. Because industry conditions are volatile, customers are generally reluctant to sign long-term fixed-price contracts; Micron's long-term agreements historically acknowledged that pricing, quantity and other terms would be renegotiated periodically to reflect market conditions, a convention that changed materially in fiscal 2026 (see Current quarter).

Fiscal 2025 revenue by customer headquarters location: U.S. $24.11 billion, Taiwan $5.67 billion, mainland China (excluding Hong Kong) $2.64 billion, other Asia Pacific $1.91 billion, Hong Kong $1.14 billion, Japan $895 million, Europe $625 million, other $383 million.

Named competitors: Samsung Electronics, SK hynix, Kioxia, Sandisk, ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC). Micron flags government support for competitors and new entrants, specifically Chinese state investment behind CXMT and YMTC, as a source of oversupply risk. The May 2023 decision by China's Cyberspace Administration that critical information infrastructure operators in China may not purchase Micron products continues to impair Micron's ability to compete in China and elsewhere.

Manufacturing footprint

Wholly-owned facilities in Taiwan, Singapore, Japan, the United States, Malaysia, China and India, plus subcontractors for certain processes. All production is on 300mm wafers in fabs that generally run 24/7. Micron organizes around "centers of excellence," combining fabrication and back-end manufacturing in one location in Singapore and Taiwan. DRAM, NAND and NOR share many manufacturing processes, allowing shared infrastructure. Principal operations by site: Taiwan and Singapore (R&D, wafer fab, component and module assembly/test), United States (R&D, wafer fab, reticle manufacturing), Japan (R&D, wafer fab), Malaysia, China and India (assembly and test).

Long-lived assets at August 28, 2025: Taiwan $18.97 billion, Singapore $10.67 billion, U.S. $8.45 billion, Japan $7.04 billion, Malaysia $1.12 billion.

Micron notes that fab construction in the U.S. and certain other regions has been uncommon in recent years, that concurrent industry expansion competes for a limited pool of construction talent, and that expanding in these geographies is harder than in places with established ecosystems.

Government incentives

Incentives come primarily from India, Japan, Singapore and the United States, mostly as cash grants and tax credits tied to capital expenditure, employment and production milestones, and subject to clawback.

• Cumulative incentives had reduced property, plant and equipment by $5.04 billion as of August 28, 2025, of which $3.11 billion pertained to fiscal 2025 spending. Fiscal 2025 operating income benefited by $588 million (about 87% in cost of goods sold, 13% in R&D).
• Remaining commitments from governments, subject to performance conditions: $7.91 billion total, U.S. $5.21 billion, India $1.49 billion, Japan $929 million, Singapore $269 million, other $10 million.
• CHIPS Act. December 9, 2024 direct funding agreements with the U.S. Department of Commerce for up to $6.1 billion for a Boise, Idaho fab and two Clay, New York fabs; amended June 11, 2025 to add a second Idaho fab (funding total unchanged), plus a separate agreement for up to $275 million for the Manassas, Virginia fab, $6.4 billion of grants in aggregate. Funding is milestone-based. Defaults and clawbacks attach to missed completion dates, violations of restrictions on activities involving foreign countries of concern, and impermissible disposition of a project. Micron may owe "upside sharing" for up to ten years after cumulative project cash flow turns positive, capped at 75% of award disbursements.
• Capital-return restrictions attach to the CHIPS agreements. Ordinary recurring dividends and reasonable ordinary-course increases are permitted, but special and one-time dividends are restricted for five years from the December 9, 2024 award date. Share repurchases are limited in the first two years of that window to amounts specified in the agreements (broadly, offsetting employee-compensation dilution), and unrestricted in the final three years only if certain financial conditions are met.
• Investment tax credit. A 35% credit on qualified U.S. semiconductor manufacturing investments, raised from 25% by the One Big Beautiful Bill Act for assets placed in service after December 31, 2025.
• New York. A non-binding term sheet with the state for up to $5.5 billion over 20-plus years via capital tax credits and new-job wage incentives.
• India. Gujarat assembly and test facility incentives equal to 50% of total project cost from the central government and 20% from the state.

Intellectual property

Over 60,000 patents granted; approximately 15,000 active U.S. patents and 7,500 active foreign patents as of August 28, 2025, with terms expiring through 2044, plus thousands of pending applications. Micron periodically sells or licenses technology and continues to pursue monetization of its IP.

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Risk factors

From the FY2025 Form 10-K, accession 0000723125-25-000028, as restated and updated in the Q3 FY2026 Form 10-Q, accession 0000723125-26-000015.

Price volatility is the first-named risk, and the disclosure cuts both ways. Over the past five fiscal years, annual DRAM average selling price changes have ranged from an increase in the low 40% range to a decrease in the high 40% range; NAND from an increase in the low 30% range to a decrease in the low 50% range. Micron discloses that DRAM ASPs rose approximately 140% and NAND ASPs approximately 130% in the first nine months of fiscal 2026 against the prior-year period. It also states that in some prior periods average selling prices have been below manufacturing costs, and could be again. This is the cycle, stated by the company in its own numbers.

Gross margin depends on per-gigabit cost reduction, and a large share of manufacturing cost is fixed. Named constraints include product mix and portfolio complexity, manufacturing process complexity and mask/fabrication step counts, difficulty transitioning to smaller line widths or more 3D layers or cell levels, yield and defect density, larger die sizes and advanced packaging for new products, capacity expansion start-up costs, regional cost differences, and inflation/tariffs. Because fixed costs do not scale down with output, underutilization, from weak demand, oversupply, inventory surpluses, ramp difficulties, supply chain disruption or equipment delays, raises per-gigabit cost and compresses margin. Custom or customer-specific finished goods may not be resellable, creating excess and obsolescence exposure.

The AI demand signal is explicitly labeled uncertain. Micron notes AI is a relatively new and rapidly evolving demand driver whose timing and magnitude can change significantly, that it has incurred and expects to keep incurring costs in anticipation of demand that may not materialize or be sustained, and that sustained high memory prices may themselves reduce demand or push customers to redesign products with less memory content or to alternative technologies.

HBM has a specific two-sided capacity risk. HBM requires more wafers and more cleanroom space per bit than conventional DRAM at the same node. If HBM demand weakens and suppliers shift that capacity back to conventional DRAM, conventional DRAM supply increases sharply and pricing falls.

Supply allocation is itself a disclosed hazard. With demand exceeding industry supply, Micron must make allocation decisions across customers and end markets. It warns that constrained supply, insufficient allocations or elevated pricing may strain long-term customer relationships, disrupt downstream markets and supply chains, and, where memory is viewed as a critical input to certain industries, draw legal disputes or government and regulatory attention that could limit or severely restrict its ability to sell into certain end markets in the future.

Customer and end-market concentration. Over half of fiscal 2025 revenue came from the top ten customers, and approximately one-half of total revenue was concentrated in the data center end market. Data center build-out requires significant energy capacity, water and capital; shortages of those, stakeholder opposition to data center development, delays, or constrained customer access to capital for large-scale infrastructure financing could reduce or delay Micron's revenue.

Strategic customer agreements are a new, named risk. Micron has entered and expects to continue entering multi-year take-or-pay agreements with binding volume commitments; most have fixed pricing or minimum/maximum price bands, and the largest have a ceiling price for existing products and a floor price through the term. A minority have no fixed pricing or bands. In connection with these agreements Micron has received and expects to receive customer deposits and other financial commitments. Disclosed consequences: failure to perform its own obligations could trigger contractual damages; the agreements constrain available supply and limit flexibility to respond to changing market conditions; and if customers fail to meet purchase commitments, enforcement could mean litigation or disputes that damage customer relationships.

Geopolitics and geographic concentration. In fiscal 2025 roughly one-third of revenue came from customers headquartered outside the U.S. and approximately 80% of revenue was from products shipped to locations outside the U.S. A majority of fiscal 2025 DRAM production output came from Taiwan fabs, any loss of that output would be material, and Taiwan is a central hub for the technology supply chain generally. The CAC restriction in China remains in force and could be extended. U.S. restrictions have limited and may again limit sales to specific customers, without necessarily binding non-U.S. competitors.

Trade policy is live. The U.S. Bureau of Industry and Security initiated a Section 232 national-security investigation into semiconductor imports on April 14, 2025, covering semiconductors, manufacturing equipment and derivative products; the outcome is unknown and may result in industry-wide tariffs and trade restrictions. On February 20, 2026, the administration announced new trade investigations under Section 301 of the Trade Act of 1974, scope unknown.

Supply chain. Only a limited number of suppliers can meet Micron's standards for certain materials, components and services; some are single- or sole-sourced, and for certain equipment, photolithography tools specifically, Micron is sometimes dependent on a single supplier. Shortages and extended lead times are occurring for some materials. China is a predominant producer of rare earth elements, minerals and metals and has restricted exports of certain of them; constrained supply could restrict Micron's ability to manufacture and to compete against manufacturers with access. Operations also depend on uninterrupted electrical power, gas and water.

Manufacturing interdependence. Because the fab network is interdependent, a disruption at a single Micron, subcontractor or supplier facility can have a disproportionate effect across many products.

Capacity expansion may not earn its cost of capital. Fab projects are multi-year commitments of capital well ahead of any return. Named risks: inability to fund expansion during low-free-cash-flow periods, unavailable external funding, failure to realize expected grants and tax credits, changes to incentive laws, environmental permitting delays and restrictions, construction overruns and delays, talent shortages, cost-structure increases until new capacity reaches scale, and insufficient customer demand to fill it.

Government incentives are conditional. Milestones for investment, capital spending, employment, technology deployment, construction and production must be met; failure can trigger clawback of up to all of certain incentives, with interest and in some cases loss of project assets. Granting agencies hold audit rights.

Intellectual property litigation is broad. Micron discloses that the pending patent lawsuits pertain to substantially all of the DRAM, NAND and other memory and storage products it manufactures, which account for substantially all of its revenue. Adverse outcomes could require monetary damages, license or settlement agreements, product or process redesign, or cessation of manufacture, sale or import in certain jurisdictions.

Tax. Singapore enacted Pillar Two legislation effective for Micron in fiscal 2026, which largely offsets the benefit of its Singapore tax incentive arrangements. The aggregate impact of the One Big Beautiful Bill Act, primarily effective for fiscal 2026 and 2027, remains uncertain.

Capitalization. Debt carrying value was $5.72 billion at May 28, 2026, with a $2.00 billion revolving credit facility available. Micron flags credit-rating sensitivity to cash flow volatility, counterparty default risk on cash deposits, investments, derivatives and customer receivables, and stock price volatility. On capital returns: approximately $2.16 billion remains of the $10 billion repurchase authorization, with no obligation to use it; annual repurchase spending since the program began in 2019 has ranged from zero to $2.66 billion, and repurchases are further constrained by the CHIPS funding agreements. Dividends may be reduced or discontinued at any time.

Also named: cybersecurity breaches of Micron's own systems and of systems incorporating its products, with AI increasing attack sophistication; risks from Micron's own adoption of AI, including IP loss and evolving regulation; competition for highly skilled talent; responsible-sourcing program compliance, where a customer may disqualify Micron as a supplier; sustainability goals and disclosure standards; acquisition, joint venture and strategic-investment risk, including losses on strategic investments and their illiquidity; restructure plans that may not deliver expected savings; product defects and incompatibility, with elevated liability where products serve critical functions such as driver assistance, security and medical monitoring; system-level products that deepen dependence on specific customers and carry higher per-unit cost and longer qualification cycles; foreign currency exposure (Canadian dollar, Chinese yuan, euro, Indian rupee, Japanese yen, Malaysian ringgit, New Taiwan dollar, Singapore dollar); and environmental, health, safety and product regulation, including PFAS restrictions.

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Management's discussion and analysis, fiscal year 2025

From the FY2025 Form 10-K, accession 0000723125-25-000028. Fiscal 2025 ended August 28, 2025; fiscal 2024 ended August 29, 2024; each of fiscal 2025, 2024 and 2023 contained 52 weeks.

Industry conditions as management described them

AI-driven demand accelerating and outpacing industry supply. During fiscal 2025 Micron shifted a portion of DRAM supply toward data center and hyperscale cloud, with emphasis on HBM, tilting mix toward faster-growing, higher-margin segments. That pivot plus robust DRAM demand and constrained supply lifted profitability across the DRAM portfolio. NAND revenue rose on higher bit shipments; NAND gross margin improved on cost reduction, with management stating it continues to manage NAND supply growth and node cadence against its demand projections.

Results

Revenue rose 49%. DRAM sales rose 62% on a low-40% range ASP increase and mid-teen bit shipment growth; NAND sales rose 18% on high-teen bit shipment growth. Gross margin expanded from 22% to 40%, DRAM on higher ASPs, a richer mix including HBM, and cost reductions from product and process technology; NAND primarily on cost reductions.

The 2023 trough is worth holding in view. Fiscal 2023 carried a $1,831 million charge to write inventory down to net realizable value; fiscal 2023 gross margin was negative 9% and the company lost $5.8 billion. Lower costs on the sale of previously written-down inventory then flattered fiscal 2024 by $987 million. Two years later the same business earned a 40% gross margin. That is the amplitude of this cycle.

By business unit:

Unallocated costs, substantially all stock-based compensation, plus the effects of inventory net-realizable-value write-downs, gains and losses from settlements, and restructure and asset impairments, were $1,076 million in fiscal 2025 and a net benefit of $356 million in fiscal 2024. Those reconcile the business-unit operating income subtotals of $10,846 million and $948 million to the consolidated operating income of $9,770 million and $1,304 million shown in the Results table above.

CMBU revenue rose 257% on DRAM bit shipments and ASPs driven by AI demand for HBM, high-capacity DIMMs and low-power server DRAM, aided by the deliberate reallocation of DRAM supply into high-value data center markets. CDBU rose 45%. MCBU rose only 2%, mobile and client were the source of the reallocated supply, with higher DRAM ASPs offset by lower bit shipments. AEBU rose 3%, with bit growth partly offset by price pressure on legacy products.

Expenses, taxes and capital

R&D rose 11% on employee compensation, depreciation and higher development wafer volumes. SG&A rose 7%. Interest income (expense), net improved on higher capitalized interest from construction activity.

Tax incentive arrangements, principally Singapore, expiring in whole or part through 2034 and conditional on business operation and employment thresholds, reduced the fiscal 2025 tax provision by $1.05 billion, worth $0.93 of diluted EPS. That benefit was not material in fiscal 2024 or 2023 given low profitability. Singapore's Pillar Two implementation, enacted November 27, 2024, applies to Micron beginning in fiscal 2026.

Liquidity and capital resources

Cash and marketable investments were $11.94 billion at August 28, 2025, against $9.15 billion a year earlier, with $5.20 billion held by foreign subsidiaries. $3.50 billion was available under the revolving credit facility. Purchase obligations for property, plant and equipment were approximately $1.77 billion, substantially all payable within a year; total noncancelable purchase commitments beyond one year were approximately $5.5 billion.

Fiscal 2025 cash flows: $17,525 million from operations (from $8,507 million), $14,087 million used in investing, $15.86 billion of capital expenditures offset by $2.01 billion of government incentive proceeds, and $850 million used in financing, comprising $4.62 billion of debt repayment and $522 million of dividends against approximately $4.43 billion of new issuance. Capital expenditure guidance given for fiscal 2026 at that time was approximately $4.5 billion in the first quarter, described as a reasonable quarterly baseline.

Through August 28, 2025 Micron had repurchased $7.19 billion cumulatively under the $10 billion authorization. On September 23, 2025 the Board declared a quarterly dividend of $0.115 per share.

Capacity program as of the 10-K

Boise, Idaho leading-edge fab: ground broken September 2022, construction begun October 2023, first DRAM wafer output projected in the second half of calendar 2027. A second Idaho fab was announced in June 2025 alongside the CHIPS amendments. Clay, New York: up to four fabs over 20-plus years, with production expected to ramp after the second Idaho fab. India: Gujarat assembly and test under construction. Japan: Hiroshima being modernized for EUV DRAM. Singapore: ground broken on an HBM advanced packaging facility to expand advanced packaging capacity beginning in calendar 2027. Taiwan: DRAM and HBM capacity modernization.

Critical estimates worth knowing

Inventory is carried at the lower of cost or net realizable value, FIFO, with all inventories (DRAM, NAND and other memory) treated as a single group for the analysis. Management disclosed the sensitivity directly: a 5% decrease in future average selling prices would have changed the estimated net realizable value of finished goods and work-in-process inventories by approximately $750 million as of August 28, 2025. Goodwill was tested quantitatively both immediately before and after the fiscal 2025 business unit reorganization and was not impaired; a $101 million impairment of the former Storage Business Unit's goodwill was recorded in 2023.

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Current quarter, Q3 fiscal 2026 (quarter ended May 28, 2026)

From the Form 10-Q for the quarterly period ended May 28, 2026, accession 0000723125-26-000015.

The industry condition, in management's words

"AI-driven memory and storage growth is outpacing industry supply." Data-center-led demand has accelerated faster than Micron's and the industry's ability to add supply, forcing allocation decisions that management acknowledges may affect certain customers and end markets. Robust DRAM and NAND demand against constrained supply drove pricing and profitability across the portfolio.

Results

Revenue rose 346% year over year and 74% sequentially. Gross margin reached 85% of revenue, from 74% in the second quarter and 38% a year earlier; the nine-month figure is 77% against 38%. Operating margin was 80%. Nine-month net income of $47.3 billion exceeds the sum of the prior five fiscal years' results.

What drove it: price, not volume

Sequentially (Q3 versus Q2 FY2026): DRAM sales +67%, on a low-60% range ASP increase and only a low-single-digit percentage bit shipment increase. NAND sales +99%, on a mid-80% range ASP increase and a mid-single-digit bit shipment increase.

Year over year (Q3 FY2026 versus Q3 FY2025): DRAM sales +343%, on a low-260% range ASP increase and a low-20% range bit shipment increase. NAND sales +361%, on a mid-310% ASP increase and a low-double-digit bit shipment increase.

Nine months: DRAM +211% (ASPs approximately +140%, bits approximately +30%); NAND +183% (ASPs approximately +130%, bits low-20% range).

Revenue by technology in the quarter: DRAM $31,328 million (from $7,071 million), NAND $9,943 million (from $2,155 million), other primarily NOR $185 million.

The composition matters for anyone modeling durability. Bit shipments grew in the mid-single digits to low-20s; price did essentially everything else. Cost of goods sold rose only 10% year over year, from $5,793 million to $6,400 million, on materially higher volume, so nearly the entire incremental $32.2 billion of revenue fell through to gross margin.

Segment results

Unallocated costs, substantially all stock-based compensation, were $363 million in the quarter. Year-over-year revenue growth: CMBU +307%, CDBU +653%, MCBU +254%, AEBU +311%. Sequentially: CMBU +78%, CDBU +103%, MCBU +49% (with lower bit shipments), AEBU +71%. The striking feature is breadth: every unit now earns a 75%-plus operating margin, and MCBU, mobile and client, the unit whose supply was being sacrificed in fiscal 2025, carries the highest margin of the four at 86%.

Nine-month segment revenue: CMBU $26,802 million, CDBU $19,590 million, MCBU $23,487 million, AEBU $9,062 million.

Customer concentration eased in relative terms: one customer was 10% of nine-month fiscal 2026 revenue, versus 16% in the prior-year period.

Strategic customer agreements, the structural change

Management devotes a dedicated section of its discussion to this and it is the most consequential disclosure in the filing. With supply structurally constrained and memory now central to customers' product roadmaps, customers are seeking committed long-term access and Micron is signing multi-year contracts. Terms as disclosed:

• Take-or-pay structure, with binding, contractually enforceable commitments for specific volumes over multi-year terms.
• Pricing for most agreements is fixed or bounded by minimum and maximum prices. The largest agreements generally carry a ceiling price for existing products that approximates the market price in the second calendar quarter of 2026, and a floor price through the term of the agreement. A minority have no fixed pricing or bands and float with the market.
• Management's stated expectation: gross margins from the agreements with price bands, even at floor pricing, would exceed Micron's peak quarterly margins in any past cycle. It frames this as accelerating a transformation of the business model and significantly enhancing the durability and predictability of financial performance.

Two things follow. The floor claim, if it holds, is the strongest argument yet advanced that this cycle is different for Micron. The ceiling is the other side: by anchoring the cap for existing products near mid-calendar-2026 market prices, Micron has traded away the upside above today's spot in exchange for the floor.

Contract accounting so far: remaining performance obligations were approximately $5 billion at May 28, 2026, measured only on minimum committed volumes and minimum pricing, excluding agreements without fixed pricing or bands and excluding contracts with original terms of one year or less, of which $422 million had been recognized as contract liabilities, primarily customer deposits sitting in other noncurrent liabilities. Approximately one-third of the remaining performance obligations are expected to be recognized as revenue within twelve months. At August 28, 2025 remaining performance obligations were not material. Management cautions that this disclosure is not expected to be indicative of future revenue under these contracts.

Estimated consideration payable to customers, pricing adjustments and returns, in other current liabilities rose to $3.32 billion from $1.19 billion.

Balance sheet

Three items deserve attention. Receivables tripled to $31.0 billion, with trade receivables at $26.9 billion against $7.2 billion, this is the single largest working capital swing and it consumed $19,953 million of operating cash in the nine months. Inventory barely moved at $8.57 billion versus $8.36 billion, but its composition shifted: finished goods fell to $621 million from $1,094 million while work in process rose to $6,960 million from $6,401 million, a company shipping everything it finishes. Other noncurrent liabilities rose to $7.09 billion from $1.44 billion, of which $5.79 billion is noncurrent income taxes payable (from $648 million), a consequence of Pillar Two implementation.

Cash and marketable investments totaled $30.13 billion, from $11.94 billion, with $5.40 billion held by foreign subsidiaries.

Cash flow and capital allocation, nine months

Investing: $19,602 million of capital expenditures, $2,989 million of government incentive proceeds, $2.84 billion of net outflows into available-for-sale securities. Financing: $9,380 million of debt repayment, $762 million of employee-award withholding repurchases, $650 million of open-market repurchases (2.5 million shares), $437 million of dividends.

Capital expenditure guidance for fiscal 2026 is approximately $27 billion, net of government incentive proceeds, against $15.86 billion in fiscal 2025 and against the roughly $18 billion annualized pace implied by the guidance in the annual report. Purchase obligations for property, plant and equipment were approximately $2.93 billion, substantially all payable within a year.

Repurchases: none in the third quarter; $650 million year to date; $7.84 billion cumulative under the $10 billion authorization, leaving $2.156 billion. Dividends declared were $0.115 per share in each of the first two quarters and $0.15 in the third.

Debt, deleveraging into the upcycle

Micron used the cash to retire debt aggressively. Prepayments in the first nine months of fiscal 2026 totaled $8,511 million of principal for $8,985 million of cash, recognizing losses of $323 million in the third quarter and $500 million year to date in other non-operating expense:

• Full prepayment of the 2028 Notes, 2029 B Notes (October 24, 2025), 2029 Term Loan A (October 27, 2025), 2029 A Notes (February 20, 2026) and 2030 Notes (February 23, 2026).
• Partial prepayment on April 3, 2026 of the 2031, 2032, 2033 A, 2033 B, 2035 A and 2035 B Notes, following cash tender offers for any and all of those six series.
• A small partial prepayment of the 2051 Notes on January 23, 2026.

Total debt carrying value fell to $5,722 million from $14,577 million, of which $2,670 million is finance lease obligations. Interest expense was zero in the third quarter, against $123 million a year earlier. Fair value approximated carrying value. On May 6, 2026 Micron reduced its revolving credit facility from $3.50 billion to $2.00 billion; it was undrawn, matures March 12, 2030, and carries a net leverage covenant of no more than 3.25x adjusted EBITDA.

Taxes

The effective rate was 15.0% in the quarter and 14.8% for nine months, against 11.1% and 11.5% a year earlier, primarily because Singapore's Pillar Two implementation took effect for Micron in fiscal 2026 and largely offsets the benefit of its Singapore tax incentive arrangements. The aggregate impact of the One Big Beautiful Bill Act remains uncertain.

Capacity program, updated and accelerated

• Taiwan. In March 2026 Micron completed the acquisition of a wafer fabrication facility in Tongluo, Miaoli County, Taiwan, from Powerchip Semiconductor Manufacturing Corporation for cash consideration of $1.8 billion, expected to support meaningful shipments from the existing fab beginning in mid-calendar 2027. Construction of a similar-sized second cleanroom at the site has begun.
• Idaho. First Boise fab DRAM wafer output now projected mid-calendar 2027 (pulled in from "second half of calendar 2027" in the annual report). Construction of the second Idaho fab begins in 2026, with initial wafer output expected late calendar 2028.
• New York. Ground broken on the first Clay fab in January 2026; supply expected in 2030 and beyond.
• Singapore. HBM advanced packaging capacity begins expanding in the first half of calendar 2027. In January 2026 Micron broke ground on an additional wafer fab within its existing NAND complex, operational in the second half of calendar 2028. Incentive arrangements for Singapore manufacturing expansion were finalized November 19, 2025 and for Singapore R&D expansion on April 17, 2026, both with confidential terms.
• India. The Gujarat assembly and test facility has commenced commercial shipments and starts ramping production in 2026.
• Japan. Hiroshima modernization for future DRAM nodes and AI memory production.

Litigation

Patent matters remain broad, and Micron restates that they pertain to substantially all products accounting for substantially all revenue. Active matters include multiple Netlist complaints, the May 23, 2024 E.D. Texas jury verdict of $425 million on the '912 patent and $20 million on the '417 patent is under appeal by Micron, while the PTAB found the sole asserted claim of the '912 patent unpatentable and Netlist has appealed that; a German invalidity ruling on one Netlist patent was affirmed on appeal May 21, 2026. YMTC has filed a wide set of complaints, including a batch on October 6, 2025 across E.D. Texas, the English High Court, the Unified Patent Court in Düsseldorf and Munich Regional Court, plus a separate Lanham Act false-advertising suit filed June 7, 2025. Advanced Memory Technologies and, on March 6, 2026, Nextech Semiconductor have also filed. BeSang lost at the district court on September 17, 2025 and has appealed.

Shareholder litigation cleared: the securities class action alleging misstatements about supply/demand dynamics was dismissed February 3, 2026 with leave to amend, and plaintiffs voluntarily dismissed the case on April 3, 2026; the consolidated Idaho derivative action was dismissed following that, and a substantially similar Delaware derivative complaint was dismissed April 24, 2026.

One new matter: on January 16, 2026, Neighbors for a Better Micron and Jobs to Move America petitioned the Supreme Court of New York challenging the environmental review underlying permits and approvals for the planned Clay, New York fabs, seeking to annul and void them.

Micron states it cannot predict the outcome of these matters or estimate a range of possible losses.

Other

No significant changes to critical accounting estimates and no material changes to market risk since the annual report. No changes in internal control over financial reporting during the quarter. Micron does not include forward revenue or earnings guidance in the quarterly report. Two waivers and amendments (No. 3) to the CHIPS direct funding agreements for the Idaho and New York entities, dated February 27, 2026, were filed with the report in partially redacted form.

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Subsequent events

From the Form 10-Q for the quarterly period ended May 28, 2026, accession 0000723125-26-000015.

Additional strategic customer agreements, and $22 billion of committed deposits. Micron entered strategic customer agreements in both the third and fourth quarters of fiscal 2026, including agreements executed after May 28, 2026, and expects to continue entering them. In connection with these agreements it expects to receive cash deposits and related financial commitments of $22 billion for agreements concluded to date, of which approximately $18 billion will be in the form of cash deposits. For scale: that is roughly 73% of the cash and marketable investments on the balance sheet at quarter end, and it is customer money, not borrowed money, an unusual source of capital for a memory manufacturer entering a $27 billion annual capital expenditure program. Management lists these deposits among the sources it expects to fund requirements over the next twelve months and beyond.

Equity investment in an AI company. Subsequent to May 28, 2026, Micron purchased non-marketable equity securities in a leading AI company. Neither the counterparty nor the amount is disclosed in the filing. For context, total non-marketable equity investments carried at cost less impairment were $185 million at May 28, 2026 and $194 million at August 28, 2025, so the new position is not reflected in any reported balance.

Quarterly dividend declared. On June 24, 2026 the Board declared a quarterly dividend of $0.15 per share, payable in cash on July 21, 2026 to shareholders of record at the close of business on July 6, 2026.

No acquisitions, divestitures, financings or litigation outcomes were disclosed as post-period events. The Tongluo, Taiwan fab purchase from Powerchip for $1.8 billion closed within the quarter, in March 2026, and is reflected in the reported balance sheet.

For reference, the FY2025 Form 10-K (accession 0000723125-25-000028) disclosed one post-period item: after August 28, 2025, Micron finalized a new incentive arrangement with the Japanese Ministry of Economy, Trade and Industry to modernize the Hiroshima manufacturing facility, with an additional commitment amount of up to 500 billion Japanese yen (approximately $3.4 billion).