[News] Micron Ramps FY26 Capex to $25B, Signs First 5-Year Customer Deal

Micron is riding the AI memory upcycle, delivering strong 2QFY26 results and guiding third-quarter revenue above market expectations. Even more striking, the company flagged a major step-up in capital intensity, with capex set to exceed $25 billion this fiscal year and climb further in 2027 as manufacturing expansion accelerates, according to Reuters.

Notably, this surge in investment coincides with a broader structural shift: CEO Sanjay Mehrotra, cited by Investing.com and ZDNet, said Micron has signed its first five-year strategic customer agreement (SCA) and is actively in talks with multiple customers—signaling growing traction for longer-term supply models that complement the company’s aggressive expansion.

Why Micron’s Capex Is Surging

While the company invested $13.8 billion in capex in fiscal 2025, its latest forecast for 2026 spending suggests an over $10 billion increase compared with previous year, and its 2027 capex is expected to rise further. Micron, according to Reuters, indicated that construction-related costs alone could surge by more than $10 billion compared with 2026 levels.

Sumit Sadana, Micron’s chief business officer, also told Reuters that the firm’s $1.8 billion acquisition of a fabrication facility from PSMC is also contributing to elevated spending in 2026. The site is expected to begin supporting DRAM wafer production in the second half of 2027, with plans already in place to build a second fab at the location to further expand capacity, the report adds.

Other aggressive expansion plans are also under way, as the U.S. memory giant is ramping up its U.S. capacity. CNBC notes that initial output from the Idaho site is targeted for mid-2027, while the company broke ground in January on its $100 billion New York project and anticipates wafer production to begin in the second half of 2028.

The Rise of Multi-Year Memory Contracts

Notably, Micron appears confident that strong customer demand justifies its aggressive spending. ZDNet reports that during the earnings call, the company highlighted its first-ever five-year Strategic Customer Agreement (SCA). Unlike typical one-year long-term agreements, this deal reportedly includes detailed multi-year commitments aimed at boosting both business visibility and operational stability.

The report also notes that like Micron, South Korean memory giants, including Samsung Electronics and SK hynix, is also moving toward long-term supply agreements spanning three to five years with major global tech firms.

Earnings Soar as Gross Margin Nears 75%

Micron’s aggressive operational push is paying off in its latest financials. In 2QFY26, the company posted revenue of $23.9 billion—nearly three times higher than a year ago—with earnings per share soaring to $12.20, well above analyst expectations, CNBC reports.

The surge is fueled by memory makers rapidly shifting capacity toward HBM and rising prices for standard memory products. Reflecting this, Micron said in a press release that its GAAP gross margin more than doubled year over year to 74.4%, up from 36.8%, and climbed from 56% in the prior quarter.

Bottom-line performance surged as well, with net income jumping to $13.8 billion, or $12.07 per share, compared with $1.58 billion, or $1.41 per share, in the same period a year earlier.

Meanwhile, Micron also delivered an upbeat outlook, projecting third-quarter revenue of $33.5 billion, plus or minus $750 million—well above the $24.29 billion consensus estimate compiled by LSEG, according to Reuters.

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(Photo credit: Micron)