Micron's record quarter lifts outlook for Samsung, SK hynix

U.S. chipmaker Micron Technology shattered its quarterly revenue record on Wednesday, easing market fears that AI spending had become excessive and boosting hopes for Korean chipmakers.

The revenue for its fiscal third quarter, from March to May, reached $41.46 billion, more than quadrupling from a year earlier.

As the first major semiconductor company to report earnings each quarter, Micron is widely regarded as a bellwether for the chip industry. Its stronger-than-expected results have also raised expectations for fellow memory chipmakers Samsung Electronics and SK hynix.

The figure easily surpassed the $35.84 billion consensus estimate compiled earlier by the London Stock Exchange Group and exceeded the company's previous quarterly revenue record of $40 billion. Non-GAAP operating profit, excluding one-off items, came to $33.68 billion.

The record performance was driven by high-bandwidth memory (HBM) chips used in AI accelerators. Revenue from Micron's cloud memory business climbed to $13.77 billion, up more than 300 percent from a year earlier.

Its core data center business, which includes dynamic random-access memory (DRAM) and solid-state drives for servers, generated $11.52 billion in revenue, while its mobile and client business, serving smartphones and personal computers, posted $11.52 billion.

Industry analysts expect the momentum to continue. Micron forecast fourth-quarter revenue of $50 billion, well above the market consensus of $43.58 billion.

“Micron’s record fiscal third quarter financial results and even stronger outlook for the fourth quarter reflect the strategic value of memory in the AI era,” said Sanjay Mehrotra, Chairman, President and CEO of Micron Technology, in its report released Wednesday.

The company also held an earnings conference call on the same day. He indicated during the call that demand for memory supply is likely to outpace supply for the foreseeable future.

“Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand,” he said.

Micron's outlook has also fortified expectations for Korea's two major chipmakers, Samsung Electronics and SK hynix, in the second half of the year.

"Micron said it had signed 16 long-term supply agreements, with 14 of them expected to generate a combined $100 billion in revenue, and that tight memory supply will likely persist through 2027,” said Han Ji-young, an analyst at Kiwoom Securities. “Those factors should help improve earnings stability for memory chipmakers.”

Another notable trend is the chip industry’s growing shift toward long-term contracts, which is improving business predictability.

While Micron said it had signed 16 strategic customer agreements with terms ranging from three to five years, it added that more than half of its revenue would come from long-term contracts once negotiations currently underway are finalized.

Samsung Electronics has also been pursuing long-term memory supply agreements.

During its first-quarter earnings call, the company said it had already signed such contracts with some customers while continuing discussions with others.

The memory chip industry has historically experienced sharp earnings swings as periods of rising demand were followed by oversupply and steep price declines.

"In the past, memory chipmakers often had little choice but to absorb massive losses during industry downturns," a semiconductor industry source said. "Long-term contracts could fundamentally reshape the business by making future revenue more predictable."

Micron's earnings surprise also lifted semiconductor shares.

Micron rose more than 10 percent in after-hours trading on Thursday in Korea. SK hynix, which recently announced plans to raise capital through the issuance of American depositary receipts, closed at 2.917 million won ($1,890), up 13.06 percent from the previous session on the same day. Samsung Electronics climbed 5.29 percent to close at 358,500 won.

BY YI WOO-LIM [[email protected]]