Micron: High Bandwidth Memory Demand About To Surge

The dynamic random-access memory (DRAM) industry is primarily dominated by three major companies: Samsung, SK Hynix, and Micron Technology. In the third quarter of 2024, Micron held approximately 22% of the market, making it the third-largest player in this oligopoly.

Unlike central processing units (CPUs) and graphics processing units (GPUs), DRAM is often considered a commodity. The pricing cycle for DRAM typically lasts around four years and is known for experiencing sharp fluctuations. Investors and industry analysts often keep a close eye on these price movements as they can significantly impact revenue.

Looking forward, the key growth factor for Micron will be High Bandwidth Memory (HBM). This trend is largely being driven by the increasing demand related to artificial intelligence (AI) applications, which require faster and more efficient memory solutions.

On the supply side, there has been significant investment from industry leaders. For example, SK Hynix recently announced a planned investment of $60 billion to boost HBM production. Meanwhile, Micron is investing around $7 billion in expanding its production capabilities in Singapore.

For investors interested in Micron, the most advantageous time to purchase shares is often after a drop in DRAM prices. Historically, the company tends to face challenges during these downturns, sometimes burning through billions of dollars annually. However, we are currently far from such a collapse in prices, emphasizing the cyclical nature of this business. For those looking to invest, patience may be necessary as the market adjusts.

Micron continues to play a pivotal role in the evolving landscape of memory technology, with a focus on adapting to market demands and making strategic investments.

Micron, HBM, DRAM