Micron flags prolonged DRAM shortages as AI demand drives record memory revenues

Surging AI data center demand and rapid adoption of high-bandwidth memory are tightening global DRAM supply, pushing prices higher and prompting Micron to secure long-term customer commitments even as it expands manufacturing capacity.

Micron Technology has warned that global DRAM supply constraints are likely to extend well beyond 2026, even as the US-based memory maker reports record revenues driven by strong demand from AI data centers and enterprise customers.

During its first-quarter earnings call for fiscal 2026, Micron said tight supply conditions across the memory market continue to favour manufacturers, while creating challenges for downstream segments such as PCs and consumer electronics. The company’s leadership reiterated that supply limitations are structural and unlikely to ease in the near term, prompting customers to seek multi-year agreements to ensure access to critical memory components.

AI and HBM reshape memory demand

Micron reported record quarterly revenue of $13.64 billion, marking a year-on-year increase of nearly 57 percent, alongside notable margin expansion. The company attributed this performance primarily to higher pricing and accelerating demand from AI-focused data centers.

High-bandwidth memory (HBM) has emerged as a key growth driver. Micron noted that HBM production consumes significantly more wafer capacity than traditional DDR5 memory, intensifying pressure on overall supply. The company expects HBM revenues to grow strongly, with the segment’s total addressable market projected to reach $100 billion by 2028—surpassing the size of the entire DRAM market in 2024.

Despite exiting the Crucial consumer brand, Micron said it continues to supply memory for PCs and smartphones and expects PC shipments to grow, albeit under constrained supply conditions.

Capacity expansion underway

To address long-term demand, Micron is expanding its manufacturing footprint. The company is developing two fabrication plants in Idaho, with the first scheduled to begin production in mid-2027. Plans for a New York fab are also advancing, with construction expected to start in early 2026 and production targeted around the end of the decade.

Even with these investments, Micron cautioned it will only be able to meet a portion of demand from key customers, reinforcing expectations of sustained DRAM shortages and continued price volatility in the memory market.