Published
# Micron Technology, Inc. (MU) — Fiscal 2026 Narrative
Micron's fiscal year is the 52- or 53-week period ending on the Thursday closest to August 31. Fiscal 2026 ran 53 weeks and ended September 3, 2026; fiscal 2025 and 2024 each ran 52 weeks. The extra week fell in the fourth quarter, which ran 14 weeks against 13 for the third quarter. Year references below are fiscal years unless they say calendar.
Sources: the Annual Report on Form 10-K for fiscal 2026 (accession 0000723125-26-000023, filed October 9, 2026); the Quarterly Report on Form 10-Q for the third quarter of fiscal 2026 (accession 0000723125-26-000015); the fourth-quarter and full-year earnings release furnished as Exhibit 99.1 to Form 8-K (accession 0000723125-26-000018, September 30, 2026); and other Forms 8-K cited where they are used.
## Business
*From the fiscal 2026 10-K, accession 0000723125-26-000023 (Item 1, Item 2, and Notes 16, 20, 21 and 22).*
Micron makes and sells semiconductor memory and storage: DRAM, NAND flash and NOR flash. It sells them as components, modules, solid-state drives (SSDs), managed NAND, multi-chip packages and wafers. Its customers are hyperscale cloud operators, data center OEMs, AI-focused cloud providers ("NeoCloud" customers), and makers of smartphones, PCs, cars and industrial equipment. DRAM is most of the business. Of fiscal 2026 revenue of $133.19 billion, DRAM was $100.68 billion (about 76%), NAND $31.79 billion (about 24%), and other products, mainly NOR, $724 million. About 60% of fiscal 2026 revenue came from the data center end market. Micron sells mainly through its own direct sales force under the Micron brand, and also through private labels, distributors and independent sales representatives.
Customer concentration is high but no single customer dominates. In each of the last three years, about half of revenue came from the top ten customers. No customer reached 10% of revenue in fiscal 2026, after one customer accounted for 17% in fiscal 2025. By the location of customers' headquarters, U.S.-based customers made up $91.32 billion of fiscal 2026 revenue (about 69%). Measured by where products were shipped, about 70% of revenue went to customer locations outside the United States.
The way Micron sells changed in fiscal 2026. Some customer contracts are still short-term. Starting in the third and fourth quarters of fiscal 2026, though, Micron signed multi-year **strategic customer agreements**. These are take-or-pay contracts with binding volume commitments. Prices are either fixed or periodically negotiated, and most of the agreements set minimum and maximum price bands. Customers secure the agreements with cash deposits and letters of credit. Management expects the banded agreements to earn gross margins "meaningfully above our peak quarterly margins in any past cycle" even at floor prices. As of September 3, 2026, Micron reported about $134 billion of remaining performance obligations under these contracts, and expects about one-fourth of that to be recognized as revenue over the next twelve months.
Micron reports four business units, organized by market:
- **Cloud Memory Business Unit (CMBU), $43.09 billion of fiscal 2026 revenue (32%), 72% operating margin.** It sells memory to large hyperscale cloud customers and HBM (high-bandwidth memory) to all data center customers. It also sells DDR5, LPDDR and GDDR. HBM3E 12-high made up most of HBM shipments in 2026. Volume production of HBM4 36GB 12-high began during the year, and HBM4E on the 1γ node is expected to ramp in calendar 2027.
- **Core Data Center Business Unit (CDBU), $37.59 billion (28%), 79% operating margin.** It sells data center SSDs and NAND components to all data center customers, and DRAM (mainly DDR5 and DDR4 RDIMMs) to OEM data center, enterprise and NeoCloud customers. Products include PCIe Gen6 SSDs and the 245TB 6600 ION SSD.
- **Mobile and Client Business Unit (MCBU), $36.60 billion (27%), 80% operating margin.** It sells LPDDR and managed NAND for smartphones, and DRAM modules, SSDs and component DRAM and NAND for PCs. It also includes the components business that supplies channel partners. Micron announced in December 2025 that it would exit its Crucial-branded consumer retail business, which sold DRAM modules and SSDs through retail channels.
- **Automotive and Embedded Business Unit (AEBU), $15.89 billion (12%), 71% operating margin.** It sells DRAM, NAND, managed NAND, SSDs and NOR for automotive, industrial and consumer-embedded uses.
Manufacturing is capital-intensive and vertically integrated. Micron fabricates on 300mm wafers in its own facilities in Taiwan, Singapore, Japan, the United States, Malaysia, China and India, and uses subcontractors for some steps. Most of its fiscal 2026 DRAM output came from fabs in Taiwan. Its technology roadmap aims to raise bit density per wafer, which lowers cost per bit. Most DRAM bit production in the fourth quarter of 2026 was on the 1γ (1-gamma) node, Micron's first DRAM node to use EUV lithography. Most NAND bit production in 2026 was on the G8 and G9 nodes. Micron reported about 61,000 employees and more than 62,000 patents granted as of September 3, 2026.
Its main competitors are Samsung Electronics, SK hynix, Kioxia, Sandisk, ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC). The last two receive Chinese state support. Since May 2023, a decision by China's Cyberspace Administration has barred critical information infrastructure operators in China from buying Micron products.
Micron is expanding capacity in several places at once:
- **Boise, Idaho.** First DRAM wafer output from the first fab is expected in mid-calendar 2027. Construction of a second fab began in 2026, with initial output expected by late calendar 2028.
- **Clay, New York.** The site is planned for up to four fabs. Ground was broken on the first in January 2026 and its first concrete was poured in July 2026. Initial output is expected in calendar 2030.
- **Manassas, Virginia.** The first 1α DDR4 production starts took place in 2026.
- **Tongluo, Taiwan.** A wafer fab bought from Powerchip Semiconductor Manufacturing Corporation for $1.8 billion in cash closed in March 2026. Meaningful shipments are expected from mid-calendar 2027, and a second cleanroom is under construction.
- **Singapore.** An HBM advanced packaging facility is expected to add capacity from early calendar 2027. A new NAND wafer fab facility is expected to open in the second half of calendar 2028.
- **Hiroshima, Japan.** A cleanroom project broke ground in July 2026, with output expected in late calendar 2028.
- **Gujarat, India.** The assembly and test facility began commercial shipments in 2026.
Government support underpins the U.S. projects. Micron holds CHIPS Act direct funding agreements for up to $6.4 billion in grants, receives a 35% investment tax credit on qualified U.S. investment, and has a non-binding term sheet with New York State for up to $5.5 billion over 20-plus years. In August 2026 it also announced Micron Research Labs in Boise, a planned investment of about $10 billion over the next decade.
## Risk factors
*From the fiscal 2026 10-K, accession 0000723125-26-000023 (Item 1A and Note 11).*
The risks below are the ones most specific to Micron's current position: record pricing, heavy AI and data center exposure, and a large build-out of new capacity.
- **Price volatility and the cycle.** Over the past five fiscal years, annual changes in DRAM and NAND average selling prices have ranged from an increase of about 200% to a decrease of about 50%. Demand has recently outpaced supply. As Micron and its competitors add supply, prices may fall, especially if demand growth slows. In some past periods, prices fell below Micron's manufacturing cost. Long periods of high prices can also lead customers to redesign products with less memory, or draw new entrants into the market.
- **AI and data center concentration.** About 60% of revenue comes from the data center end market, and more than half from the top ten customers. Delays in customers' data center build-outs could cut Micron's revenue. Those build-outs depend on energy, water, capital and other components, and face local opposition. Micron warns that AI-driven demand "may not be sustainable." HBM uses more wafers and cleanroom space per bit than conventional DRAM. If HBM demand weakened and suppliers moved that capacity back to conventional DRAM, the market could become oversupplied.
- **Strategic customer agreements carry their own risks.** The agreements could tie up supply and limit Micron's ability to respond to market changes. Enforcing them against a customer that misses its commitments could lead to litigation. If customers buy beyond their needs to meet take-or-pay obligations, inventories could build up and push prices down across the industry.
- **Geopolitics and trade.** Most DRAM output comes from Taiwan, so any political or economic disruption there could hurt Micron badly. The China ban imposed in May 2023 hurts sales to companies headquartered in mainland China and Hong Kong, and further Chinese action could reach Micron's operations in China or its shipments. U.S. export controls on AI-enabling products, the Section 232 investigation of semiconductor imports opened on April 14, 2025, and the new Section 301 trade investigations announced on February 20, 2026 could all lead to tariffs or trade limits. China is the main producer of rare earth elements and other materials Micron's supply chain needs, and has restricted exports of some of them.
- **Competition and state-backed rivals.** Chinese government support for CXMT and YMTC raises the risk of oversupply. Competitors are building new fabs at the same time as Micron. Some rivals are larger, have lower costs or are better funded.
- **Execution on capacity expansion.** Fab projects take years and require capital long before they earn a return. Building fabs in the United States has been rare in recent years, and the pool of construction labor is limited. Shortages of labor or equipment, inflation and tariffs could delay projects and raise costs. Micron sometimes depends on a single supplier for key equipment, including photolithography tools.
- **Conditional government incentives.** CHIPS Act grants and other incentives depend on meeting investment, employment and construction milestones. They can be reduced, terminated or clawed back, sometimes with interest. The CHIPS agreements also limit share repurchases.
- **Labor disruption.** Unions representing part of Micron's workforce have been organizing and bargaining collectively, including in formal mediations that could permit strikes if they fail, and have publicly demanded revised incentive structures. Even a short strike or work stoppage could cut output, damage work-in-process and put deliveries under the strategic customer agreements at risk.
- **Utilities and supply chain.** Micron's fabs need reliable power, gas and water, and AI data centers are increasingly competing for the same utility capacity. Some materials and components come from a single or sole source.
- **Litigation and IP.** The patent suits pending against Micron cover substantially all of its DRAM, NAND and other memory and storage products. YMTC has suits against Micron in the United States, China, the United Kingdom and Germany (the Munich outcome is described under Subsequent events). On June 25, 2026, a putative class action filed in the Northern District of California accused Micron, Samsung and SK hynix of conspiring to restrict supply and fix DRAM prices from October 26, 2022. A similar complaint followed in Hawaii on July 17, 2026. Separately, local groups have filed petitions challenging permits and the environmental review for the Clay, New York project.
- **Tax.** Singapore's Pillar Two 15% minimum tax took effect for Micron in 2026 and largely offsets its Singapore tax incentives. Further Pillar Two rules and the U.S. One Big Beautiful Bill Act add uncertainty.
## Management's discussion of fiscal 2026
*From the fiscal 2026 10-K, accession 0000723125-26-000023 (Item 7, Item 5 and Note 9).*
Fiscal 2026 was a pricing-driven year. AI demand for memory and storage grew faster than Micron or the industry could add supply. Micron had to decide how to allocate supply among customers and end markets, and prices and margins rose across the portfolio.
**Revenue** rose 256% to $133.19 billion from $37.38 billion. DRAM sales rose 252%, from an increase of about 180% in average selling prices and a mid-20% range increase in bit shipments. NAND sales rose 274%, from an increase of about 200% in average selling prices and a mid-20% range increase in bit shipments. Revenue grew in every business unit: CDBU by 420%, AEBU by 234%, CMBU by 219% and MCBU by 209%. MCBU's bit shipments fell because supply was redirected to other units. In the prior year, fiscal 2025 revenue had risen 49%, led by data center DRAM and HBM.
**Margins.** Gross margin rose to 81% of revenue from 40%. Management attributes the gain mainly to higher prices, with help from favorable mix and lower manufacturing costs. R&D expense rose 49% to $5.65 billion, from higher employee pay (including variable compensation) and more development wafers. SG&A rose 62% to $1.95 billion. Other operating expense of $567 million included $500 million of patent license charges. Operating income was $99.34 billion, or 75% of revenue, up from $9.77 billion. Net interest income rose to $978 million from $19 million, because cash balances rose and debt fell. Other non-operating expense of $647 million included a $510 million loss on debt prepayments.
**Tax and earnings.** The effective tax rate rose to 14.8% from 11.6%, mainly because of Pillar Two in Singapore. Even after that offset, tax incentive arrangements reduced the fiscal 2026 tax provision by $2.21 billion, or $1.93 per diluted share. Net income was $84.97 billion, up from $8.54 billion, and diluted EPS was $74.33, up from $7.59.
**Cash generation and the balance sheet.** Operating cash flow was $89.68 billion, up from $17.53 billion. It was partly offset by a $25.21 billion increase in receivables, and helped by higher tax and customer pricing-adjustment accruals. Spending on property, plant and equipment was $30.71 billion, partly offset by $3.32 billion of government incentives. Investing cash also included $32.88 billion of net purchases of marketable securities and $1.05 billion of non-marketable equity investments, which were held mainly in AI and technology companies. The strategic customer agreements brought in $12.75 billion of customer deposits, and nearly all of that is scheduled to be repaid between 2029 and 2031. Customers also had $7 billion of letters of credit issued or committed in Micron's favor. Cash and marketable investments ended the year at $73.45 billion, up from $11.94 billion.
**Debt and shareholder returns.** Micron used its cash to cut debt. Debt carrying value fell from $14.58 billion to $5.18 billion, and the 10-K's debt note puts fiscal 2026 prepayments at $8.77 billion of principal. Fixed-rate debt fell to $2.79 billion from $10.55 billion. Micron also bought back $650 million of stock and paid $610 million in dividends.
**Outlook for capital spending.** Management expects capital expenditures, net of government incentives, of about $11.5 billion in the first quarter of fiscal 2027 and about $25 billion in the first half, with more in the second half. Purchase obligations for property, plant and equipment were about $4.18 billion at year-end.
## Current quarter: fiscal fourth quarter 2026
*From the earnings release furnished with Form 8-K, accession 0000723125-26-000018 (Exhibit 99.1, September 30, 2026). Third-quarter context is from the fiscal Q3 2026 10-Q, accession 0000723125-26-000015.*
The fourth quarter of fiscal 2026 ran 14 weeks, one more than the other quarters. That extra week flatters comparisons with both the third quarter and the 13-week fourth quarter of fiscal 2025. Revenue, gross margin, operating income, net income, operating cash flow and business-unit revenue below equal the 10-K's full-year figures less the third-quarter 10-Q's nine-month figures; per-share amounts, non-GAAP amounts and business-unit operating margins are as printed in the release.
- **Revenue** was $54.23 billion, up from $41.46 billion in the third quarter (about 31%) and $11.32 billion a year earlier (about 379%).
- **Gross margin** was 86.8% of revenue, up from 84.6% in the third quarter and 44.7% a year earlier.
- **Operating expenses** were $3.30 billion, up from $1.74 billion in the third quarter. The increase reflects $500 million of patent license charges plus higher R&D and SG&A.
- **Operating income** was $43.75 billion, or 80.7% of revenue.
- **Net income and EPS.** GAAP net income was $37.70 billion, or $32.87 per diluted share. On the company's non-GAAP basis, which excludes the patent license charges, stock-based compensation and other items, net income was $38.40 billion, or $33.42 per diluted share.
- **Cash flow.** Operating cash flow was $43.97 billion, against $25.39 billion in the third quarter.
- **Business units.** Fourth-quarter revenue was $18.00 billion for CDBU (85% operating margin), $16.28 billion for CMBU (76%), $13.11 billion for MCBU (88%) and $6.82 billion for AEBU (79%). CDBU passed CMBU as the largest unit this quarter.
Product milestones in the release include sampling of a 512GB DDR5 RDIMM. Revenue from the server LPDDR SOCAMM line more than doubled from the prior quarter. Micron is now shipping 6-channel 1γ LPDDR5X for flagship phones. Micron also reported design wins for its AI workstation product with every Tier 1 OEM.
**Guidance for the first quarter of fiscal 2027:**
- Revenue of $61.5 billion ± $1.5 billion
- GAAP gross margin of about 85.95% (about 86.25% non-GAAP)
- GAAP operating expenses of about $2.31 billion (about $2.06 billion non-GAAP)
- GAAP diluted EPS of $37.84 ± $1.00 ($38.15 ± $1.00 non-GAAP), on about 1.15 billion diluted shares
**Earlier in the second half.** The third-quarter 10-Q reported revenue of $41.46 billion for the 13 weeks ended May 28, 2026. That was up 74% from the second quarter and 346% from a year earlier, on a gross margin of 85%. In that quarter DRAM prices rose by a low-60% range from the second quarter and NAND prices by a mid-80% range. The 10-Q also disclosed two developments after May 28, 2026: more strategic customer agreements, and a purchase of non-marketable equity securities in an AI company the filing describes only as "a leading AI company." By year-end, non-marketable equity investments had grown to $1.30 billion from $185 million at May 28, 2026.
## Subsequent events
*From the fiscal 2026 10-K, accession 0000723125-26-000023 (Item 5, Note 11, Note 12) and the earnings release, accession 0000723125-26-000018.*
These developments came after the fiscal year ended on September 3, 2026:
- **Netlist litigation settled (October 5, 2026).** Micron and Netlist agreed to dismiss all litigation claims against each other under settlement and license agreements. The agreement covers the patent suits Netlist had brought since 2021 in Texas, Delaware, California and Germany. Netlist had also filed a complaint with the U.S. International Trade Commission, which opened a Section 337 investigation on September 23, 2026, in which Netlist sought to bar imports of certain Micron DRAM products. The 10-K does not say whether that investigation has ended, and does not disclose the settlement terms. The fiscal 2026 results include $500 million of patent license charges recognized in the fourth quarter. The contingencies note says Micron cannot estimate losses on the matters it describes, and names these charges as the one exception.
- **Adverse German patent ruling against Micron (October 6, 2026).** After a hearing on September 17–18, 2026, the Munich Regional Court issued written rulings in YMTC's case. It found that certain Micron 3D NAND products infringe two YMTC utility models. Micron must stop offering, marketing, importing or holding the accused products in Germany, and must stop shipping abroad to customers it knows will supply them into Germany. It must also account for the alleged infringement and surrender accused products in Germany. Micron has appealed. Further hearings on the other two utility models and the asserted patent are scheduled for June and September 2027.
- **Share repurchase authorization raised (October 8, 2026).** The board raised the total authorization to $35.16 billion, with repurchases to be made from December 9, 2026 under the terms of the CHIPS Act funding agreements. Item 5 of the 10-K builds the new total from two pieces. The first is the roughly $2.16 billion left under the 2018 authorization. The second is a $33.03 billion basis for the increase, equal to fourth-quarter adjusted free cash flow of $33.20 billion less $174 million of dividends paid.
- **Dividend (September 30, 2026).** The board declared a quarterly dividend of $0.15 per share.
The fiscal 2026 10-K reports no acquisition, divestiture, debt issuance or new borrowing after the year ended. The last acquisition it describes is the Tongluo, Taiwan fab, which closed in March 2026, inside the fiscal year.