JPMorgan Micron Research: Even with the new plant starting production ahead of schedule, it can only meet half of the demand; contextual window storage becomes a new growth driver for NAND.

JPMorgan Micron Research: Even with the new plant starting production ahead of schedule, it can only meet half of the demand; contextual window storage becomes a new growth driver for NAND.

Micron Technology executives sent a clear signal at the latest investor meeting: Even with new wafer fabs coming online in 2027, the tight supply-demand situation for DRAM and HBM will remain difficult to resolve.

According to Wind Chaser Trading Desk, Micron’s CFO Mark Murphy and Chief Business Officer Sumit Sadana reiterated at an investor conference recently organized by J.P. Morgan that the company is currently only able to meet 50% to two-thirds of key customers' medium-term demand. Even though the newly built Idaho 1 wafer fab in Idaho will start mass production a quarter ahead of schedule in mid-2027, the ramp-up of capacity will be gradual, while demand continues to rise.

This supply-demand imbalance will continue to support memory prices. J.P. Morgan predicts that the average price of DRAM will increase nearly 60% year-on-year in 2026.

Micron management said that competitors’ new capacities will not come online until late 2027 or 2028, and will also face physical constraints on ramping up capacity. J.P. Morgan believes that tight supply will persist after 2026, boosting prices even further.

The supply gap is hard to close, ramp-up of new capacity is slow

Micron management revealed at the meeting that the company has moved up the first wafer output from Idaho 1 fab by about one quarter to mid-2027. However, management emphasized that the ramp-up of capacity for this new fab will be gradual, restricted by physical conditions rather than capital.

Competitors’ new capacities face similar challenges. J.P. Morgan pointed out that other companies’ new wafer fabs will start to come online in late 2027 and 2028, and the speed of ramping up will also be restricted. Meanwhile, demand for memory continues to grow "up and to the right."

Micron is currently limited in meeting incremental customer demand due to a lack of available cleanroom space. However, through process node transitions, improved production efficiency, and accelerated yield ramp-up, the company expects DRAM and NAND bit shipments to grow by at least 20% in 2026. However, this growth rate still can’t catch up to demand—J.P. Morgan expects demand to rise by over 30%.

Explosion of AI application demand; GPU and XPU orders continue to be revised upward

Micron management expressed a highly optimistic view about the demand environment for DRAM and NAND, with customers continually raising their memory and storage requirements. This trend has been evident in the GPU and XPU markets in recent months.

Nvidia previously announced that backlogged orders for Rubin and Blackwell products exceeded $500 billion (extending into the end of 2026), and the company stated that orders continue to rise. Broadcom’s TPU shipments are also ramping up. J.P. Morgan earlier this week raised its CoWoS capacity forecast, partly due to increased expectations for TPU shipments.

Micron management noted that even with new cleanroom capacity starting production in 2027, demand may still continue to exceed supply. J.P. Morgan expects that this persistent supply-demand tightness will support price strength through at least 2026, with an average DRAM price increase of nearly 60% year-on-year in 2026.

Context window storage emerges as new growth point for NAND

Micron management stated that Nvidia’s announcement at CES this week of a new inference context window storage platform was not surprising. Other companies (including hyperscale cloud providers with in-house AI XPU infrastructure) have already deployed or are developing KV cache management systems to address rapidly growing context windows, and the need to offload data from HBM and system memory.

Management believes this will open another channel for growth in NAND bit demand, as the configuration rate for Nvidia’s Bluefield-4 based systems is likely to be very high. Importantly, Micron expects that KV cache offloading will not affect customers' HBM roadmaps in the next few years, as those have already been determined.

Embodied intelligence and robotics to become “huge” drivers of demand

In line with statements by Nvidia, AMD, etc. at CES, Micron expects embodied intelligence (especially robotics) to become a “huge” driver of memory demand and could comprise a substantial share of overall industry demand, following generative AI.

Management says customer plans are “incredible” in both scale and implied memory demand. For example, a leading humanoid robot uses up to 64-128GB of DRAM and 1-2TB of NAND (both figures may rise in the future). If scaled to millions of units, this would mean significant incremental DRAM and NAND demand.

J.P. Morgan maintains its “Overweight” rating on Micron, with a target price of $350, based on $40 in earnings in 2026 and a price/earnings multiple of 8-12x, in line with mid-to-late cycle multiples for memory stocks.

 

 

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