- 2Q26 revenue was within our expectations, 1H26 revenue at 50% of our FY26 forecast. 2Q26 adj. PATMI exceeded our expectations, 1H26 PATMI at 58% of our FY26 forecast. 2Q26 adj. PATMI spiked 686% YoY to a record US$14bn, driven by bit shipment growth (est. +35% YoY) and a spike in DRAM/NAND ASPs (est. +107%, 118% YoY respectively).
- Micron entered its first five-year strategic customer agreement (SCA) with an undisclosed ‘large’ customer. Specific terms of the agreement are not disclosed. Previous long-term agreements (LTA) usually last only a year. We believe high-end chipmakers and hyperscalers view memory as strategically critical in the AI race, as longer-term contracts are being signed across the industry.
- We maintain BUY with a higher TP of US$530 (prev. US$500). We raised our FY26e revenue/PATMI by 43%/100%. Ongoing industry shortage in memory chips is expected to push DRAM/NAND ASPs higher. We expect industry supply to increase meaningfully starting from CY2H27e, as SK Hynix aims to maintain 2026 capex-to-sales ratio at about mid-30% level (2025 industry: ~31%). We lower our PE multiple to 9x FY26e PE (prev. 16.8x), a 43% discount to comparables’ forward PE of 15.7x, due to higher risks from the Middle East conflict. The closure of the Straits of Hormuz threatens 30% of global supply of helium, a critical component in semiconductor wafer manufacturing. We believe Micron is better insulated from the conflict than its Korean competitors due to its stronger presence in the US, which accounts for about 45% of global helium production (Qatar: ~30%).
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