This article first appeared on GuruFocus.
Micron Technology (NASDAQ:MU) warned that the current global memory chip shortage has intensified to unprecedented levels and is expected to last beyond 2026. In a recent interview, Executive Vice President Manish Bhatia stated that high-bandwidth memory used in AI accelerators is consuming so much of the available capacity across the industry that it is leaving a severe deficit for the smartphone and PC sectors. This supply-demand imbalance has already pushed Chinese smartphone giants like Xiaomi and Oppo to trim their 2026 shipment targets by up to 20%, as they face rising memory costs.
To respond to the structural tightness and support future output, Micron also announced plans to buy a fabrication site in Taiwan for $1.8 billion to expand its memory chip production. The deal is expected to close by mid-2026 and meaningful DRAM wafer output slated for the second half of 2027. The site adds roughly 300,000 square feet of existing 300mm fab cleanroom space to Micron’s footprint and is designed to improve production capacity where demand continues to outpace supply.
The market has responded accordingly. Micron’s stock climbed about 240% in 2025, far outpacing the semiconductor index, as market participants priced in persistent tightness and stronger memory pricing. The company’s strategic capacity investments, alongside a backdrop of limited supply growth relative to AI-driven demand, have underpinned confidence in sustained margin expansion and future earnings power.
