Micron Trades at 6 Times Next-Year Earnings as SK Hynix's $38 Billion in New Capacity Stays Years Away
SEOUL, August 10. SK Hynix's board approved 54 trillion won, about $38 billion, for two new semiconductor fabrication plants last week, and the company's own construction schedule puts the first clean rooms in 2028 and 2029. That timeline is material to how Micron Technology (NASDAQ: MU), trading near $878, is valued: the stock sits at roughly 6 times expected earnings over the next year, a discount the market attaches because memory cycles end when supply arrives.
Key takeaways
- SK Hynix's board approved 54 trillion won (about $38 billion) for two new semiconductor fabrication plants, with first clean rooms scheduled for 2028 and 2029.
- Micron Technology (NASDAQ: MU) trades near $878, roughly 6 times expected earnings over the next year, a discount tied to memory cycles ending when new supply arrives.
- Micron reported fiscal Q3 (ended May 28, 2026) revenue of $41.5 billion, gross margin of 84.6%, and operating cash flow of $25.4 billion.
- Micron guided fiscal Q4 to about $50 billion in revenue, roughly 86% gross margin, and earnings per share of about $30.73.
- Micron has signed 16 take-or-pay customer agreements, generally running from calendar 2026 through the end of 2030, covering about 20% of its DRAM volume and about a third of its NAND volume.
SEOUL, August 10. SK Hynix's board approved 54 trillion won, about $38 billion, for two new semiconductor fabrication plants last week, and the company's own construction schedule puts the first clean rooms in 2028 and 2029. That timeline is material to how Micron Technology (NASDAQ: MU), trading near $878, is valued: the stock sits at roughly 6 times expected earnings over the next year, a discount the market attaches because memory cycles end when supply arrives.
What SK Hynix committed to build and when
The $38 billion covers two plants. The larger allocation, 35.2 trillion won, funds a DRAM fab called Y2 in Yongin, South Korea. The remaining 19.1 trillion won goes to a NAND plant called M17 in Cheongju. M17 breaks ground in February 2027 and opens its first clean room in December 2028. Y2 does not break ground until July 2027; its first clean room is scheduled for June 2029. A first clean room marks the start of equipping a fab, not the beginning of volume output.
An earlier SK Hynix Yongin plant, already under construction, targets a first clean room in February 2027. That is the nearest planned addition to industry supply on any published schedule.
Micron's current numbers and what the guidance implies
In its fiscal third quarter, ended May 28, 2026, Micron reported revenue of $41.5 billion, more than quadruple the year-ago figure and up from $23.9 billion in the prior quarter. Gross margin reached 84.6%, against 74.4% in fiscal Q2 and 37.7% a year earlier. Operating cash flow came in at $25.4 billion, more than five times the prior-year figure.
Guidance for the fiscal fourth quarter calls for revenue of about $50 billion, gross margin of approximately 86%, and earnings per share of about $30.73. Annualize that single guided quarter and the stock trades at roughly 7 times earnings.
Data center revenue exceeded $25 billion in fiscal Q3. In prepared remarks for the June earnings call, Micron said industry demand for DRAM and NAND "continues to significantly exceed industry supply," and the company expects tight conditions "to persist beyond calendar 2027."
How Micron has structured revenue through the next downturn
Micron has signed 16 take-or-pay customer agreements that commit buyers to specific volumes over multiple years. The contracts generally run from calendar 2026 through the end of 2030, covering roughly 20% of Micron's DRAM volume and about a third of its NAND volume. Management expects half or more of total revenue to eventually fall under these agreements. Price ceilings in the largest contracts are set at calendar second-quarter 2026 market prices; price floors hold through the full term.
CEO Sanjay Mehrotra said in the June earnings release that the agreements "will significantly enhance the durability and predictability of Micron's strong financial performance." Micron's capital expenditures in fiscal Q3 reached $7.1 billion, with management describing current spending as running at record levels.