TLDR
- Citi cut its Micron price target to $1,150 from $1,400, keeping a Buy rating
- DRAM and NAND prices expected to peak in Q2 2027, then decline
- Micron stock fell more than 1.8% Friday and is down about 9% over the past month
- SK Hynix announced $38.15 billion in new chip fabrication investments in South Korea
- China’s YMTC and CXMT expanding memory capacity, flagged as the biggest long-term risk
Micron Technology (MU) stock dropped more than 1.8% on Friday, trading around $872, after Citi slashed its price target and SK Hynix announced a major new investment in South Korean chip manufacturing.
Citi cut its MU price target to $1,150 from $1,400, while holding its Buy rating. The bank reduced the valuation multiple to 8x from 10x on revised calendar-year 2027 earnings estimates.
“We trim MU TP to $1,150 from $1,400 based on 8x P/E vs prior 10x times revised C27 EPS to reflect lower market multiples on mixed memory peer results,” the Citi analyst wrote.
The target cut followed meetings with memory supply chain participants at the “Future of Memory and Storage” conference.
The core message from those discussions was that pricing momentum in DRAM and NAND is real, but it is fading.
Citi now expects both DRAM and NAND prices to decelerate quarter-over-quarter over the next four quarters, with prices peaking in Q2 2027.
In the second half of 2027, Citi projects DRAM prices down 3% half-over-half versus a previously flat outlook. NAND prices are seen falling 5% in the same period.
The firm also trimmed its FY27 and FY28 EPS estimates by 1% and 2%, respectively.
Margins Under Pressure
Citi expects Micron’s gross margins to come down from the current mid-80s range and hold in the mid-70s next year.
About 40% of Micron’s DRAM volume sits under long-term pricing agreements, which provides some cushion, but not enough to fully offset the expected pricing decline.
Micron has dropped roughly 9% over the past month, though the stock is still up more than 660% over the past 12 months.
SK Hynix Investment Adds Supply Concern
On Friday, SK Hynix said its board approved 54.3 trillion won ($38.15 billion) in new chip fabrication investments in South Korea.
That follows a combined 800 trillion won ($518.58 billion) commitment from SK Hynix and Samsung earlier this year to build new semiconductor manufacturing hubs.
New supply is not expected to arrive quickly. Large fabs typically take years to build.
Micron’s own $100 billion New York manufacturing project, announced in 2022, is not expected to begin production until 2030.
No major new memory capacity is expected to come online until roughly next year, with further capacity planned for 2028.
Samsung posted DRAM average selling prices up roughly mid-40% quarter-over-quarter in Q2, beating consensus. SK Hynix reported DRAM ASPs up 30% quarter-over-quarter and disclosed a five-year, $500 billion long-term agreement with Nvidia.
Sandisk missed its September-quarter revenue guidance on softer pricing, a data point Citi weighed when trimming its own estimates.
Citi flagged China’s memory capacity expansion as the biggest structural risk to its thesis. YMTC plans to add 50,000 to 60,000 wafer starts to its 200,000-unit capacity next year, targeting the top spot in global NAND by 2030.
DRAM producer CXMT intends to grow from 350,000 to roughly 400,000 wafers next year, with a 600,000-wafer target by 2030.
“While US government is unlikely to allow made in China memory sales to US, sales to data centers in other regions like Europe could indirectly impact Micron,” Citi analysts wrote.
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