What Does Micron Do? The Deposit-Locked DRAM Model

Micron designs and makes DRAM — including HBM stacks — and NAND: it gets paid when bits ship, while $12.75 billion of customer deposits lock future supply and Idaho wafers still wait until mid-2027.

HBM · Data as at 9 Oct 2026 · Next update: after FQ1 FY27 results or a dated Idaho wafer-output print
Affects: HBM · Semiconductors · US · Korea

It is the US-listed memory company on the HBM layer: DRAM bits, including stacked high-bandwidth memory, from rooms that already run. Korea still allocates most of the AI-class cubes — see What Does SK hynix Do?. Taiwan still joins those cubes to logic. See HBM, explained.

In short: Micron Technology filed its Form 10-K on 9 October 2026 for the 53-week year ended 3 September 2026. Revenue was $133.188 billion, of which DRAM was $100.679 billion. Customers posted $12.75 billion of cash deposits under take-or-pay agreements, nearly all due back in 2029–2031, plus $7 billion of letters of credit. Remaining performance obligations are about $134 billion; the company says about one-fourth of that book is expected as revenue in the next twelve months. Idaho’s first DRAM wafers are still dated mid-calendar 2027.

Education only, not advice to buy or sell any security. Figures are from company filings and company releases dated as shown.

Numbers that matter

Sources: Micron Form 10-K (company), filed 9 Oct 2026; Form 8-K and Exhibit 99.1, 30 Sep 2026. Status chips are Second Order’s read. The 10-K rounds gross margin to 81% on $107.504 billion of gross profit; the earnings release prints 80.7%.

What does it actually do?

Three steps, in order.

Stack. Ship. Lock.

1. It stacks memory. DRAM is the volatile bit that sits next to a processor. HBM is DRAM stacked in 3D, joined with through-silicon vias, so an AI GPU can move more data without a wider board. In 2026 HBM3E 12-high was the majority of Micron’s HBM shipments; it began volume production of HBM4 36GB 12-high on its 1β node and sampled HBM4 48GB 16-high. HBM4E, on the 1γ node, is expected to ramp in calendar 2027. It also sells DDR5, LPDDR, GDDR, and NAND. This page is the company that sells the bits. The join onto logic is still CoWoS.

2. It ships bits from rooms that already run. Revenue is recognised when control of the goods transfers. Fiscal 2026 bits came from fabs in Taiwan, Japan, and other rooms already on the floor — including Manassas, Virginia, on legacy DDR4. A $133 billion year is not an Idaho wafer. The 10-K is explicit: first DRAM wafer output at Boise is still projected mid-calendar 2027.

3. It locks supply with take-or-pay deposits. In 2026 it signed strategic customer agreements with binding volumes over multi-year terms. Pricing is fixed or banded. Customers posted $12.75 billion of cash deposits, nearly all scheduled to be repaid in 2029–2031 if they meet the minima, plus $7 billion of letters of credit that Micron can draw only on default. That cash is a place in line. It is not this year’s die.

SK hynix still sits on the allocation seat for most AI-class HBM. Micron sits on the US-listed bit seat. See Who makes HBM.

How does it make money?

It gets paid when a bit ships, and it holds deposits until that bit is taken. Three things decide which cash prints, and when:

• Recognition — a deposit in contract liabilities is not revenue until the customer takes the bits, or fails the minimum and Micron keeps some of the cash
• Mix — DRAM versus NAND, HBM versus DDR, cloud versus mobile
• The installed rooms — new US clean rooms do not print until 2027

On 9 October 2026 the 10-K printed $133,188 million of revenue: $100,679 million DRAM and $31,785 million NAND. Gross profit was $107,504 million (gross margin 81%). Operating income was $99,340 million. Net income was $84,969 million, or 64% of sales on the 10-K’s rounding. Cash and marketable investments were $73.45 billion (the 30 September release prints $73.48 billion including restricted cash).

The year is a 53-week year ended 3 September 2026, against $37,378 million in fiscal 2025. Our arithmetic: $133,188 ÷ $37,378 = 3.563, a 256% increase. DRAM was 75.6% of sales (100.679 ÷ 133.188 = 0.756). NAND was 23.9% (31.785 ÷ 133.188 = 0.239). Cloud Memory (CMBU, which includes HBM for all data-center customers) was $43.085 billion; Core Data Center (CDBU) was $37.592 billion. Together $80.677 billion, or 60.6% of the year (80.677 ÷ 133.188 = 0.606). HBM dollars are not split out. Do not read CMBU as an HBM line.

Fourth-quarter revenue was $54.229 billion (Exhibit 99.1, 30 Sep 2026) — our arithmetic: 54.229 ÷ 37.378 = 1.45× the whole of fiscal 2025. Q4 GAAP gross margin was 86.8%. That is the run-rate from rooms that already exist.

Our arithmetic on the book. Remaining performance obligations were about $134 billion as of 3 September 2026, of which $13 billion sat as contract liabilities. The company says approximately one-fourth of that book is expected as revenue over the next twelve months: $134 billion × 1/4 = $33.5 billion. It also says remaining performance obligations are “not expected to be indicative of future revenue,” and it excludes contracts of a year or less and deals without a price floor. Deposits of $12.75 billion are 9.5% of the $134 billion book (12.75 ÷ 134 = 0.095). Deposits plus letters of credit are $19.75 billion. Cash-flow proceeds from those deposits were $12,747 million.

Who gets paid. Micron, when a bit ships, and as holder of the deposits. Toolmakers, as capex leaves: net capital expenditures were $27.37 billion in fiscal 2026; Q1 FY27 net capex is estimated at about $11.5 billion. Who pays. Hyperscalers, OEM data-center buyers, and the neoclouds CDBU names as a customer set. Money sticks at the shipped bit and at the deposit, not at a CHIPS headline. The country door on this filing is already live: Mid-2027 Isn't Wafers.

FQ1 FY27 is guided at $61.5 billion ± $1.5 billion. That is outlook, not Q1 cash. We do not annualise it.

What limits it?

Idaho wafers first. HBM attach second. Neighbour clocks third.

1. This year’s bits are not next year’s US wafers. Construction of the Boise leading-edge DRAM fab began in October 2023, with first wafer output projected mid-calendar 2027. A second Idaho fab began construction in 2026, with initial wafers late calendar 2028. Clay, New York, poured first concrete in July 2026; first wafers calendar 2030. Our arithmetic: 9 October 2026 to 1 July 2027 is 265 days. CHIPS Act grants of up to $6.4 billion ($6.1 billion Idaho/New York plus $275 million Manassas) offset some of the US spend. A grant is not a wafer. US HBM packaging is “announced,” with no date in this 10-K.

2. HBM still has to attach. HBM4 36GB 12-high was already in volume in 2026; HBM4E is expected to ramp in calendar 2027 in rooms that already exist. That is not the Idaho greenfield clock. SK hynix still allocates most AI-class cubes. A Micron stack that does not qualify on the customer’s CoWoS package does not ship. The packaging expansion dated early calendar 2027 is the nearer attach clock, and it is not Boise. See memory process tools.

3. The neighbour finish-line is still a join. TSMC still owns the CoWoS step. AMD’s 2027 supply jump still waits on HBM4. A sold-out DRAM book is not a shipped accelerator.

The honest uncertainty is conversion of the deposits and the Idaho date. An 81% gross margin can still sit on rooms that already run while the US leading-edge bay stays construction.

Who else does this?

Roles, not a league table.

What separates them is who can ship a qualified HBM cube this year, and whether CoWoS then lets that cube become a module.

What would change this view?

The read on the model weakens if:

• Micron or the state confirms Idaho first DRAM wafers ahead of mid-calendar 2027, with a lot a customer will accept
• Remaining performance obligations convert much faster than one-fourth in twelve months — the long book becoming nearer cash
• Deposits start being repaid early, which would mean customers already took the bits the cash was securing
• US HBM packaging is dated with meaningful output, not only an announcement
• Idaho slips past mid-2027 without a new dated filing — the clock would be worse, not better
• Buyers cut memory per server so hard that existing rooms cover demand and the Idaho clock stops binding

It stays intact while Idaho is still a 2027 date, New York is still 2030, HBM4E ramps in rooms that already exist, and the $12.75 billion of deposits is still cash that waits on bits from rooms that are not yet Boise.

Practical takeaways

• Micron’s model on this layer is Stack → Ship → Lock: DRAM including HBM, bits from rooms that already run, then take-or-pay deposits
• FY26 10-K (filed 9 Oct 2026): $133.188bn sales, $100.679bn DRAM, $31.785bn NAND, 81% gross margin, $84.969bn net income
• Our arithmetic: DRAM 75.6% of sales; NAND 23.9%; CMBU+CDBU 60.6%; Q4 $54.229bn was 1.45× the whole of FY25
• Deposits $12.75bn (repaid 2029–31 if minima are met) plus $7bn letters of credit; remaining POs ~$134bn, about $33.5bn in twelve months on the company’s one-fourth
• Stuck step: Idaho first DRAM wafers, mid-calendar 2027 — 265 days from this filing to 1 Jul 2027, our arithmetic
• A deposit is a place in line, not a Boise wafer. CHIPS grants of up to $6.4bn are not output
• Watch FQ1 against the $61.5bn ± $1.5bn guide, then Idaho wafers — not the CHIPS headline

FAQ

What does Micron do?
Micron designs and manufactures semiconductor memory and storage — DRAM, including high-bandwidth memory stacks, plus NAND and NOR. It gets paid when bits ship from fabs that already run. In fiscal 2026 it also took $12.75 billion of customer deposits under take-or-pay agreements to lock future supply.

What does Micron do in simple terms?
It makes the memory chips that sit next to AI processors, sells those chips, and takes deposits from big customers so they keep a place in line. The new US factory that would add more chips is still dated mid-2027.

How does Micron make money?
Mostly when DRAM and NAND ship. Fiscal 2026 revenue was $133.188 billion, 75.6% DRAM on our arithmetic. Deposits of $12.75 billion are contract liabilities, not this year’s sales, unless a customer misses the minimum and Micron keeps some of the cash.

Is Micron profitable?
Yes on the dated print. Fiscal 2026 net income was $84.969 billion on $133.188 billion of sales, with an 81% gross margin (Form 10-K, filed 9 Oct 2026). That is not a forecast.

How is Micron different from SK hynix?
Both sell HBM. SK hynix still allocates most of the AI-class cubes; its stuck step is allocation. Micron is the US-listed supplier: it already got paid on fiscal 2026 bits, holds $12.75 billion of deposits, and still dates Idaho DRAM wafers to mid-2027. See What Does SK hynix Do?.

Should I buy Micron shares?
We do not make buy or sell calls, and nothing here is a recommendation. What we can tell you is what the company does, how it gets paid, and which figures would change the picture. The decision is yours.

Keep reading on the map

• The layer: HBM · Semiconductors
• The mechanism: HBM, explained · Who makes HBM
• The country door: Mid-2027 Isn't Wafers · US · Korea / HBM allocation
• The neighbours: CoWoS, explained · What Does TSMC Do? · What Does SK hynix Do? · What Does ASML Do?
• The Wire: AMD 2027 supply and HBM4
• The clocks: Remaining performance obligation · Take-or-pay · Cash capex

The members cut on Micron’s clean rooms is already live: Micron clean-room Analysis. The long clock: Where does the stuck step move?. This page stays the free Stack read of the Micron model.

Sean

Writes Second Order by TKN — a plain-English map of AI infrastructure. Who gets paid, where money sticks, which step is stuck. Not investment advice.

Author page → · Editorial standards →

How we check this

Figures come from Micron Technology’s Form 10-K for the year ended 3 September 2026, filed 9 October 2026, and from the 30 September 2026 Form 8-K and Exhibit 99.1. Idaho, New York, CHIPS, deposit, letter-of-credit and remaining-performance-obligation figures are the company’s. Mix percentages, the $33.5 billion one-fourth, the 9.5% deposits-to-book, the $19.75 billion of customer security, the 1.45× Q4-versus-FY25 check, the 256% year-on-year, and the 265-day count are labelled our arithmetic. A 10-K is not Idaho output. Remaining performance obligations carry the company’s caution that they are not expected to be indicative of future revenue.

Last reviewed: 12 Oct 2026 · Next review: after FQ1 FY27 results or a dated Idaho wafer-output print

Spot an error? Tell us and we will correct it and note the change here.
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Sources

1. Micron Technology, Form 10-K for the year ended 3 September 2026 (company), filed 9 Oct 2026 — $133,188m revenue, $100,679m DRAM, $31,785m NAND, 81% gross margin, $99,340m operating income, $84,969m net income, $12.75bn deposits, $7bn letters of credit, ~$134bn remaining performance obligations, Idaho mid-calendar 2027, Idaho 2 late 2028, New York 2030, CHIPS grants up to $6.4bn
2. Micron Technology, Form 8-K, 30 Sep 2026 — exhibit index for Q4 and FY26 results
3. Micron Technology, Exhibit 99.1 press release (company), 30 Sep 2026 — Q4 revenue $54,229m, FY net capex $27.37bn, cash/marketable/restricted $73.48bn, FQ1 FY27 guide $61.5bn ± $1.5bn

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