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    MU
    Earnings call· Feb 2026(Q2 FY26)

    MICRON TECHNOLOGY Q2 FY26 earnings call MU

    Mar 18, 2026 Source

    Executive summary

    Micron Q2 FY26 — AI-Driven Demand Outstrips Supply, Driving Robust Pricing and Significant CapEx

    Micron reported a strong Q2 FY26, driven by robust AI-fueled demand for both DRAM and NAND, leading to significant pricing increases. The company is investing heavily in CapEx, including new fab construction, to address the persistent supply-demand imbalance, though new capacity will not meaningfully impact shipments until FY28. Management highlighted strong product performance in HBM and Gen6 SSDs, while also noting increasing OpEx due to R&D investments.

    Highlights

    5

    • DRAM and NAND pricing increased strongly in Q2 FY26, with NAND pricing up even more than DRAM.

    • Micron is the first company to market with a Gen6 SSD, which works well with NVIDIA systems and is experiencing tremendous demand.

    • The company is seeing very robust demand for NAND, particularly from AI servers utilizing high-capacity and high-performance SSDs.

    • HBM3E 12-high execution has been strong, and HBM4 is showing an even faster yield ramp than HBM3E 12-high.

    • Cost reductions are being realized through successful 1-gamma (DRAM) and Gen9 (NAND) node transitions.

    Concerns

    4

    • Supply is nowhere close to meeting the demand for NAND for the foreseeable future, despite expansion efforts.

    • Tight supply conditions for DRAM are expected to continue beyond 2026, driven by escalating demand.

    • Cleanroom space remains a constraint for all major DRAM players through 2027, with meaningful improvement not expected until 2028.

    • Start-up costs for new fabs (ID1 and Tongluo) are projected to be $100M-$200M per quarter starting next quarter through FY27.

    Guidance & targets

    7
    CategoryTargetConfidence
    CapEx
    over $25B
    high materiality
    High
    Construction CapEx (net)
    mid- to high single-digit billions
    medium materiality
    High
    Incremental Construction Cost
    approximately $10B
    medium materiality
    High
    Equipment Spend
    increase
    medium materiality
    High
    OpEx
    close to $1.6B
    medium materiality
    High
    OpEx run rate
    over $1.6B, probably kind of a $1.7B run rate
    medium materiality
    High
    DRAM Supply Conditions
    tight supply conditions to continue beyond '26
    high materiality
    High

    Operational metrics

    14
    Start-up costs
    $100M-$200M
    per quarter

    for ID1 and Tongluo fabs

    OpEx
    $1.6B
    Q4 FY26

    expected to be close to $1.6 billion

    OpEx run rate
    $1.7B
    FY27

    expect in '27 for that OpEx number to be over $1.6 billion, probably kind of a $1.7 billion run rate number

    Industry bit shipments
    constrained by supply
    CY26

    those industry bit shipments are constrained by supply

    Micron supply growth
    in line with the industry
    CY26

    our supply, we expect to grow in line with the industry

    HBM3E 12-high yield ramp
    well
    Q2 FY26

    continued to execute well as we've gone through the last -- gotten to high volume over the last couple of quarters

    HBM4 yield ramp
    fasterthan HBM3E 12-high
    Q2 FY26

    even though we're in the early stages of the ramp, having an even faster yield ramp than HBM3E 12-high

    Node transitions
    1-gamma (DRAM), Gen9 (NAND)
    Q2 FY26

    driving our bit growth... a lot of efficiency there and cost downs

    DRAM pricing
    up strongly
    Q2 FY26

    both DRAM and NAND pricing was up strongly

    NAND pricing
    up stronglyeven more than DRAM
    Q2 FY26

    both DRAM and NAND pricing was up strongly, NAND, even more than DRAM

    DRAM volume
    grew sequentially
    Q2 FY26

    both also grew volume sequentially, NAND less than DRAM

    NAND volume
    grew sequentiallyless than DRAM
    Q2 FY26

    both also grew volume sequentially, NAND less than DRAM

    Q3 pricing factor
    largest factor
    Q3 FY26

    In Q3, we would expect price to again be the largest factor.

    Q3 volume growth
    modest growth
    Q3 FY26

    you can assume some modest growth, volume growth in third quarter for both DRAM and NAND.

    Industry KPIs

    1
    MetricValueDetails
    Node platform ramp schedule1-gamma (DRAM), Gen9 (NAND), HBM3E 12-high, HBM4

    Product announcements

    1
    ProductTypeDetails
    Gen6 SSDmilestone

    Capital programs

    3
    Tongluo fabacquired

    Benefit: DRAM

    Acquired facility, supply impact towards fiscal '28 in terms of meeting revenue shipments.

    Idaho Shell (DRAM)underway

    Benefit: DRAM

    New DRAM cleanroom project, supply impact towards fiscal '28 in terms of meeting revenue shipments.

    Singapore NAND fab (cleanroom expansion)breaking ground
    Start: now (breaking ground)

    Benefit: NAND cleanroom space

    Expansion at an existing site, not a greenfield site. Driven by space consumption for technology transitions, R&D relocation, and robust market demand. Not expected to provide new capacity until H2 2028.

    Risks & headwinds

    3
    Supply constraintsforeseeable future, beyond 2026

    NAND supply is 'nowhere close to meeting' demand; DRAM 'tight supply conditions to continue beyond '26'

    Mitigation: Significant CapEx investment in new fabs and cleanroom expansion; ability to modulate tool installs.

    Cleanroom space availabilitythrough 2027

    Relative constraint for all major DRAM players through this year and into next year

    Mitigation: New fab construction projects, though meaningful improvement to cleanroom space availability is only expected out into '28.

    Start-up costs for new fabsstarting next quarter or so and continuing through '27

    $100M-$200M per quarter

    Mitigation: At current revenue and margin levels, the impact is a 'much smaller impact of 50 basis points or less'.

    What to watch in Q3 FY26

    5

    Start-up costs for new fabs

    Next quarter
    CurrentExpected to begin next quarter, $100M-$200M per quarter
    TargetActual dollar amount and impact on margins

    Why it matters

    Significant new CapEx programs will incur these costs, impacting profitability and requiring monitoring against guidance.

    And at the time, I said I think between 1 point and 2 points of cost. Now revenue was much lower at the time. So if we dollarize that, it's probably $100 million to $200 million per quarter starting in the next quarter or so and then continuing on through '27 and then it would come down off of that.

    Q&A highlights

    6

    Why is Micron adding greenfield NAND capacity when some industry participants believe node upgrades are sufficient, and what demand trends support this decision?

    Micron clarified it's adding cleanroom space at an existing site, not greenfield. The decision is driven by space consumption for technology transitions, relocating NAND R&D, and robust market demand from AI servers for high-capacity/performance SSDs. New capacity won't be available until H2 2028, and cleanroom space will remain a challenge for the industry.

    “our decision here while, yes, reflecting confidence in the market demand outlook, which Sumit will talk about, was also driven by our continued space consumption for those technology transitions and for the next technology transitions that we'll be having in the future as well as our decision to locate more of our NAND R&D in Singapore, where it's closer to our manufacturing.”

    asked by Melissa Weathers · answered by Manish Bhatia

    2 min read6 chapters

    Detailed Narrative

    01

    NAND Capacity Expansion Strategy

    Micron is adding cleanroom space at an existing Singapore site, rather than a greenfield location, to support technology transitions and relocate NAND R&D closer to manufacturing. This expansion reflects confidence in robust market demand, particularly from AI servers, but the new capacity is not expected to provide a meaningful boost until the second half of 2028. The company noted that cleanroom space across the industry, especially for NAND, is likely to remain a challenge in the medium term.

    02

    AI-Driven Demand for Memory

    The company is experiencing very strong demand for NAND, primarily driven by AI servers that require high-capacity and high-performance SSDs. Micron's Gen6 SSD, compatible with NVIDIA systems, is seeing tremendous, unmet demand. Similarly, DRAM usage in AI systems, including HBM, DDR5, and LPDDR, continues to grow, driven by the need for more memory capacity and bandwidth for reasoning capabilities and longer context windows in AI applications. This trend makes memory a strategic asset in the AI era.

    03

    DRAM Supply Outlook and Pricing

    Micron expects tight DRAM supply conditions to persist beyond 2026, as escalating demand from AI and other market segments continues to outpace supply. New DRAM fabs in Idaho and Tongluo are not anticipated to significantly impact revenue shipments until FY28. The company noted that both DRAM and NAND pricing increased strongly in Q2, with NAND seeing even greater gains, and expects pricing to remain the largest factor in Q3.

    04

    CapEx and Operating Expense Projections

    Micron has increased its FY26 CapEx outlook to over $25 billion, primarily for DRAM and HBM additions, including significant construction costs (mid-to-high single-digit billions). For FY27, an incremental $10 billion in construction costs is projected, with equipment spend also increasing. OpEx is expected to rise to approximately $1.6 billion in Q4 FY26, reaching a run rate of around $1.7 billion in FY27, driven by R&D investments and an extra week in Q4.

    05

    HBM vs. Non-HBM Allocation and Margins

    While HBM pricing, set in late calendar '25 for 2026 shipments, provides stability and robust profitability, non-HBM DRAM margins (including those outside the data center) have also become exceptionally strong. Micron views HBM and non-HBM allocations as strategic, aiming to provide customers with balanced product sets necessary for building AI systems, rather than making tactical shifts based solely on short-term pricing fluctuations.

    06

    Long-Term Demand and Cleanroom Constraints

    Micron has not updated its long-term bit growth numbers but acknowledges that current demand significantly exceeds prior forecasts, indicating a supply-limited market. The company is engaged in multi-year agreements with customers to assess longer-term demand, which continues to escalate with new vectors like robotics. Cleanroom constraints are expected to affect major DRAM players through 2027, with meaningful improvements not seen until 2028, making it unclear when supply will fully catch up📎 with demand.

    AI-generated summary of the company’s earnings call. Not investment advice.