DISK

Micron Technology Inc. (MU, Financials), the memory and storage chipmaker, is locking more business into long-term agreements as customers seek to secure DRAM supply years in advance.

RBC reports that the number of strategic client agreements rose to 26 from 16 in the prior quarter. Customer deposits increased from $22 billion to $32 billion, but remaining performance commitments reached over $150 billion, or more than 35% of projected income until 2030.

Approximately 75% of agreements have price structures with floor and ceiling levels, and some stretch through 2031. Although its enforceability during a memory downturn has not been verified, RBC stated that those arrangements might offer downside protection.

Longer contracts may lessen some of the earnings volatility that has previously been linked to memory pricing cycles, which makes the change significant.

Additionally, Micron anticipates a tightening of DRAM supply and demand until fiscal 2028. According to Citi, greater inventory, compensation, and launch costs may lead gross margins to drop in the November quarter before rising when higher high-bandwidth memory price takes effect in January.

Following the outcomes, ratings for Morgan Stanley, J.P. Morgan, RBC, Bank of America, and Citi remained favorable.

As Micron progresses into fiscal 2027, investors will next keep an eye on margin recovery, new customer agreements, and possible capital returns.