Why Micron Is Doubling Down While the HBM Shortage Persists

Summary

Investors looking ahead to when the high-bandwidth memory (HBM) shortage will end can start looking a little further out. Micron’s NASDAQ: MU response to SK Hynix's bold U.S. entry reveals that HBM shortages persist and will likely linger into the next decade (as indicated by the SK Hynix CEO), and that both companies are scrambling to ramp production. Micron Technology TodayMUMicron Technology$932.20 -47.10 (-4.81%) As of 12:00 PM Eastern This is a fair market value price provided by Massive. Learn more.52-Week Range$103.38▼$1,255.00Dividend Yield0.06%P/E Ratio21.11Price Target$1,263.76 While SK Hynix will use its IPO funds to bolster U.S. capacity, Micron is using its robust cash flow and financial position to do the same. The company upped its planned 10-year investment outlook to $250 billion domestically, money to be spent on U.S.-based fabrication capacity and HBM technology advancement.Get Micron Technology alerts:Sign Up The battle is for market share. SK Hynix commands a lion’s share of the market due to its close ties with NVIDIA NASDAQ: NVDA, but its dominance isn’t assured. Micron, for its part, is working to align more closely with NVIDIA’s standards to carve out a larger share of business from this single client. Meanwhile, Micron is capturing a significant share of the second-tier AI infrastructure market, including Amazon NASDAQ: AMZN, which uses HBM for its Trainium chips, Alphabet NASDAQ: GOOGL, which uses it for its Tensor Processing Units, and Microsoft NASDAQ: MSFT, which uses HBM for its Maia architecture. Looking ahead, Micron is expected to benefit from the dual tailwinds of high demand, fixed-cost leverage, and pricing power for many years. The latest news in DRAM and HBM sales is that price caps are being lifted or removed from long-term contracts, opening the door to maximum pricing power. While Micron has yet to follow suit, similar moves are possible. Until then, Micron is sitting pretty, providing an in-demand product with a multiyear s...