Micron and SK Hynix Face Uncertainty as Memory Supercycle Nears Peak
The DRAM market, driven by AI demand rather than traditional consumer electronics cycles, has seen a surge in prices and profits for companies like Micron Technology (MU) and SK Hynix (SKHY). Unlike past memory supercycles linked to smartphones or computers, this one is fueled by the continuous expansion of compute capacity required for AI development. High bandwidth memory (HBM), essential for GPUs used in AI applications, has become a key driver of demand. Despite strong current performance and high gross margins, DRAM manufacturers face constraints that limit their ability to rapidly increase production. These include limited access to extreme ultraviolet lithography machines from ASML Holding and the higher wafer capacity required for HBM compared to standard DRAM. As a result, supply is expected to remain below demand well into 2030. Analysts project Micron's earnings will peak at $170.70 per share in fiscal 2028 before declining significantly by the following year and stabilizing around $50 per share long-term. SK Hynix is expected to reach a high of $42.21 per share in 2028, with no clear post-peak trajectory yet established.
Topics: AI demand DRAM cycle memory market Micron Technology SK Hynix