HBM demand continues to explode! Micron (MU.US) is building a new chip factory to accelerate production.

U.S. storage chip manufacturing giant Micron Technology, Inc. (MU.US) announced on Monday plans to build a second large chip manufacturing facility at one of the flagship wafer fabrication sites it recently acquired from Powerchip Technology Corporation (PSMC), one of the leaders in wafer foundry from Taiwan, China. From NVIDIA Corporation CEO Huang Renxun recently calling for how much HBM capacity expansion storage chip manufacturers can supply, to AMD CEO Su Zifeng planning to ally with Samsung Electronics to lock in HBM supply on a large scale, it is evident that the demand for storage chip products including HBM, DRAM, and NAND is experiencing exponential growth. This is driving Micron, SK Hynix, and Samsung Electronics, the three major storage chip OEM giants, to accelerate production expansion. In a recent statement, Micron indicated that this new chip manufacturing facility will significantly increase the supply of its most advanced data center-level DRAM series products, including high-bandwidth storage (i.e. HBM storage systems), to support the continuously growing demand for artificial intelligence computing power. Micron also stated that it has officially completed the acquisition of Powerchip's large-scale P5 wafer fabrication site, and the scale of the new second facility will be similar to that of its existing wafer fabrication site in Miaoli. The new construction plan is expected to commence before the end of Micron's 2026 fiscal year. Judging by Micron's latest ambitious production expansion plans, the storage chip giant plans to proactively prepare for the escalating demand for HBM and server-level DRAM series products driven by AI, and quickly turn the increased production capacity into large-scale shipments to increase ASP/actual profits. Explosive demand for storage chips As Micron accelerates the expansion of storage chip production, the global "storage super cycle" is sweeping the world, with insatiable demand from artificial intelligence data centers for HBM, server-level DDR5 storage, and enterprise-level high-performance SSD/HDD. According to analysts from Wall Street financial institutions such as Nomura, Citigroup, and Morgan Stanley, this wave of storage chip super demand cycle is expected to continue until early 2028. Media reports citing sources familiar with the matter revealed that NVIDIA Corporation's toughest competitor, AMD CEO Su Zifeng, is set to meet with Samsung Electronics Chairman Lee Jae-yong in South Korea this week to discuss active cooperation in ensuring supply of high-bandwidth storage (i.e. HBM storage systems) components used for AI chips. For AMD, which is striving to gradually erode NVIDIA Corporation's 90% market share in the trillion-dollar AI chip market, this cooperation may not immediately shake NVIDIA Corporation's CUDA ecosystem stronghold, but it can bring more realistic advantages in the current scenario of imbalanced demand and supply of storage chips: supply chain certainty. Whether it's the supermassive TPU AI power cluster led by Alphabet Inc. Class C, or the massive NVIDIA Corporation AI GPU power cluster, both rely on HBM storage systems integrated with AI chips. In addition to HBM, current tech giants like Alphabet Inc. Class C and OpenAI accelerating the construction or expansion of AI data centers also need to purchase server-level DDR5 storage, and enterprise-level high-performance SSD/HDD storage solutions. From the perspective of semiconductor and AI data center infrastructure intersection analysis, storage chips "perfectly position" the AI wave because they capture both the training expansion and inference expansion trends. Furthermore, they serve as a universal toll booth across platforms, architectures, and ecosystems. As the AI era shifts from training dominance to inference, agent, long context, and search enhancement dominance, the demand for capacity, bandwidth, power efficiency, and data persistence layers will only grow stronger. Different from Seagate and Western Digital Corporation focusing on monopolizing near-line large-capacity HDDs, SanDisk focuses on high-performance eSSDs, and Samsung Electronics, SK Hynix, and Micron, the three major storage chip OEMs, are well positioned in multiple core storage areas: HBM, server DRAM (including DDR5/LPDDR5X), and high-end data center enterprise-level SSDs (eSSDs), making them the most direct beneficiaries in the "AI memory + storage stack". These storage leaders collectively benefit from the "super dividend" of AI infrastructure. Several overseas media reports have indicated that Samsung, the largest player in the storage industry, has raised prices of dynamic random-access memory (DRAM series storage products) by over 100%. According to South Korean electronics news, Samsung completed final negotiations on first-quarter DRAM supply prices with major customers such as Apple Inc. Server, PC, and mobile general DRAM prices are up by about 100% compared to the previous quarter and doubled compared to the fourth quarter of last year, with some customers and products experiencing price hikes of over 100%. The report cited industry insiders revealing that negotiations have been fully concluded, and some overseas customers have completed payments. This price increase is above the 70% level negotiated in January and has expanded by approximately 30 percentage points in just one month. The rapid rise in prices of DRAM/NAND series storage products is reshaping the long-term contract conventions of the global storage industry, especially with the growing dependence of GPU/TPU systems on HBM, DRAM, and enterprise-level SSDs leading to a prolonged imbalance between supply and demand. The supply negotiation cycle has compressed from traditional annual contracts to quarterly contracts, and now even requires monthly adjustments, reflecting the severity of the imbalance in the storage chip market. Market expectations for explosive performance from Micron As the war between the United States/Israel and Iran erupts and spreads to multiple countries in the Middle East, igniting a new political superstorm of the GEO Group Inc that sweeps the global economy, investors' risk appetite has sharply decreased against the backdrop of soaring oil and gas prices. Their serious concern is that the global economy, still in a fragile recovery process, may face "stagflation" due to the out-of-control spike in energy prices, leading to recent severe downturns in global stocks, bonds, and cryptocurrency markets. However, a recent report from the analyst team at Bank of America Corp on Wall Street stated that the latest supply chain research and tracking of the storage industry show that the global storage industry, with storage chips at its core, is still in a "super-cycle" era. The impact of the geopolitical conflict in the Middle East by GEO Group Inc and the impact on fund managers' bullish sentiment towards the storage sector, is close to zero. Micron is set to announce its second-quarter financial results for the 2026 fiscal year after the U.S. stock market closes on March 18. The mainstream consensus on Wall Street for this earnings report is very high: revenue is expected to be around $19.15 billion, with non-GAAP adjusted EPS expected to be in the range of $8.6 to $8.66. Based on the guidance provided by the company's management in the previous quarter (first quarter), with revenue yielding $18.7 billion, and adjusted EPS at $8.42, it is clear that the market is betting heavily on Micron surpassing or at least meeting the upper end of the guidance, with some analysts expecting even higher results than what Micron's management has suggested. In comparison to the same period last year, Micron's actual performance in the second quarter of the 2025 fiscal year was: revenue of $8.053 billion, non-GAAP adjusted EPS of $1.56, and GAAP EPS of $1.41. If we calculate based on the current Wall Street consensus expectations, this means that Micron's second quarter revenue is expected to increase by approximately 137.8% year-over-year, and non-GAAP EPS is expected to increase by approximately 445% to 450%. In other words, the market is anticipating not "moderate growth", but an explosive growth financial report, and analysts generally believe that propelled by the AI data center construction frenzy driving almost endless storage demand, Micron is poised to greatly exceed the consensus expectations. French bank BNP PARIBAS recently released a report stating that contract DRAM prices are expected to surge by 90% in the first quarter of 2026, and NAND, known for its stable pricing curve, is expected to increase by 55%, with prices continuing to rise in the second quarter compared to the second half of 2025. The French bank's analyst team even set a target price of up to $500 for Micron within the next 12 months. As of Friday's closing on the U.S. stock market, Micron's stock price was at $426.13.