Micron’s $200 Billion Question

by

Micron (MU +6.55%) stock, in a display of quantum financial uncertainty, briefly resembled a falling object on Tuesday following reports of a planned $50 billion expenditure on two new chip fabrication facilities in Boise, Idaho. One might reasonably assume such an outlay would induce a state of mild panic amongst investors, and indeed, it did. However, as is so often the case with financial markets, things turned out to be… complicated. By Wednesday morning, shares were not merely recovering, but were actually leaping ahead 6.9% as if propelled by a small, localized gravitational anomaly, effectively erasing Tuesday’s losses and then adding a bit extra for good measure. (One wonders if the market is aware that adding “a bit extra” is rarely, if ever, a sound fiscal strategy. But then, the market rarely seems to be aware of much of anything.)

What’s Micron Up To in Idaho?

The motivation, it appears, is a rather acute shortage of DRAM (Dynamic Random Access Memory) chips. This isn’t merely a “shortage” in the everyday sense; it’s a tightness of supply that is, quite literally, driving the price of these tiny silicon wafers into the stratosphere. Micron, therefore, is “rushing to add manufacturing capacity,” which is a perfectly reasonable response, assuming one accepts the premise that building enormous, incredibly complex structures is a viable solution to a supply problem. (It’s like trying to solve a leaky faucet by constructing a hydroelectric dam. Technically possible, but… ambitious.) The current plan involves doubling Micron’s 450-acre Boise campus with two new 600,000-square-foot factories. The first is slated to open in mid-2027, the second before the end of 2028. Both will be dedicated to churning out DRAM chips for High Bandwidth Memory (HBM) – the sort of memory that powers the increasingly demanding artificial intelligence data centers. (One imagines these data centers as vast, humming brains, perpetually hungry for more and more memory. It’s a slightly unsettling thought.)

And that’s not all. Micron is also building a $100 billion factory near Syracuse, NY, and a smaller $9.6 billion facility in Hiroshima, Japan. These investments, along with the Boise expansion, add up to a staggering $200 billion effort to “break the AI memory bottleneck.” (One pictures a tiny, metaphorical bottleneck, stubbornly refusing to yield to the combined force of $200 billion. It’s a surprisingly stubborn bottleneck.)

Loading widget...

Is Micron Stock a Buy?

With DRAM and HBM prices soaring, it’s understandable that Micron would want to capitalize on the situation. There’s just one small, rather significant problem: Micron doesn’t actually have $200 billion lying around. According to S&P Global Market Intelligence, its cash reserves are closer to $10 billion. (It’s a bit like deciding to build a spaceship with the contents of your wallet. Technically feasible, but requires a certain amount of… optimism.) Granted, Micron is currently generating a substantial amount of cash flow – more than $22 billion before accounting for all this capital spending. That might be enough to pay for everything… if DRAM prices remain high. (And that, as any seasoned financial observer will tell you, is a rather large “if.” The universe, it seems, has a peculiar fondness for undermining best-laid plans.)

If the semiconductor cycle turns downward too soon, however, the outlook becomes considerably less… buoyant. One might even say, precipitous. (Think of a very expensive, very complex structure built on a foundation of shifting sand. It’s not a pretty picture.)

Read More

2026-02-18 20:13