The take-or-pay agreements that bears read as a cap on upside are the same ones that put a priced floor under Micron's worst case.
Micron Technology (MU) stock has returned nearly 700% over the past year and still trades at about 77% of its 52-week high. The argument worth having about it is not where DRAM prices go next. It is about the supply contracts the company signed during the shortage, and what they do to the bottom of the next cycle rather than the top of this one.
Customers Committed $100 Billion At Micron's Minimum Prices
The 16 strategic customer agreements are take-or-pay: binding commitments to buy specific volumes, typically over a five-year term to the end of calendar 2030. Fourteen of them carry ******* ulative revenue at the contracts' minimum prices of roughly $100 billion over the remaining term. That is a floor spread across the whole term rather than a year's worth, against $90.3 billion of revenue in Micron's last twelve months alone. The $100 billion is a minimum-price figure, not an expectation: management says it expects revenue under the agreements to run well above that minimum. Micron projects $22 billion of cash deposits and related financial commitments from those customers, deposits it holds while the agreements run and returns over time. The committed supply is DRAM, including HBM as appropriate, and NAND, the products behind an HBM4 ramp and a 1 gamma DRAM node on track to be among the highest-volume nodes in Micron's history.
Micron's Operating Margin Was Negative Three Years Ago
#prices #micron #committed
Micron Technology (MU) stock has returned nearly 700% over the past year and still trades at about 77% of its 52-week high. The argument worth having about it is not where DRAM prices go next. It is about the supply contracts the company signed during the shortage, and what they do to the bottom of the next cycle rather than the top of this one.
Customers Committed $100 Billion At Micron's Minimum Prices
The 16 strategic customer agreements are take-or-pay: binding commitments to buy specific volumes, typically over a five-year term to the end of calendar 2030. Fourteen of them carry ******* ulative revenue at the contracts' minimum prices of roughly $100 billion over the remaining term. That is a floor spread across the whole term rather than a year's worth, against $90.3 billion of revenue in Micron's last twelve months alone. The $100 billion is a minimum-price figure, not an expectation: management says it expects revenue under the agreements to run well above that minimum. Micron projects $22 billion of cash deposits and related financial commitments from those customers, deposits it holds while the agreements run and returns over time. The committed supply is DRAM, including HBM as appropriate, and NAND, the products behind an HBM4 ramp and a 1 gamma DRAM node on track to be among the highest-volume nodes in Micron's history.
Micron's Operating Margin Was Negative Three Years Ago
#prices #micron #committed
14 days ago
