SK hynix says its memory is sold out through 2029, and The Globe and Mail says Micron is also a winner from the tight market.
**Key Points**
- SK Hynix says its DRAM and HBM output is effectively sold out through 2029, and its CFO expects supply to trail demand through 2030.
- Making HBM uses far more factory capacity than conventional DRAM, so a shortage in AI memory can tighten supply across Micron's whole DRAM business.
- Memory is a cyclical business, and new capacity from Micron and its rivals could eventually weaken today's pricing.
SK Hynix (NASDAQ:SKHY), the South Korean memory chipmaker, reported third-quarter earnings on Oct. 28, and the results were strong. The company posted a record-setting quarter and its stock jumped today, but Micron Technology (NASDAQ:MU) shareholders also have reason for optimism.
SK Hynix reported that its production of dynamic random-access memory (DRAM) and high-bandwidth memory (HBM) is effectively sold out through 2029, with memory shortages expected to last through 2030. The company said long-term supply agreements, combined with customer contracts still under discussion, account for its expected production over the next three years.
"We expect it to be difficult to fully meet customers' volume requirements in the near term," Chief Financial Officer Woo-hyun Kim said on the company's earnings call. "Given the complexities involved in implementing leading-edge processes and the lead times required to construct new production facilities, a situation where supply cannot keep up with demand is expected to persist for some time, a constraint projected to continue through 2030."
That is outstanding news for SK Hynix, and it could be equally important for Micron, which competes with SK Hynix and Samsung in the global memory market.
**Micron has been warning about a memory shortage**
In August, Micron Executive Vice President and Chief Business Officer Sumit Sadana told investors at KeyBanc's Technology Leadership Forum that calendar 2027 would be "even tighter" than 2026. He also said Micron had no clear indication of when memory supply would catch up with demand. SK Hynix is now sending essentially the same message: the memory shortage won't disappear anytime soon.
That could give Micron considerable pricing power.
**Why HBM demand helps Micron's entire DRAM business**
HBM is a specialized form of DRAM that stacks memory chips vertically to deliver the enormous bandwidth required by AI accelerators. Micron manufactures both HBM and conventional DRAM, and the two products are closely linked.
Producing HBM requires considerably more manufacturing capacity than producing the same amount of conventional DRAM. Sadana explained that manufacturing 100 bits of HBM3E consumes as much production capacity as manufacturing approximately 300 bits of standard DRAM. He said the ratio increases to nearly 4-to-1 with the newer HBM4E technology.
As Micron, SK Hynix, and Samsung devote more resources to high-margin HBM products, they are reducing the capacity available for conventional DRAM, which is essential for computers, smartphones, and data center servers. As a result, even if Micron does not lead the HBM market, it can still benefit from the industry's shift toward HBM production.
Tighter supply combined with strong demand creates opportunities for higher selling prices. Because memory manufacturing has substantial fixed costs, higher prices can produce an outsized improvement in profit margins.
**What does this mean for Micron investors?**
SK Hynix's earnings show both the strength of memory demand and the profits it can generate. Revenue was 104.62 trillion won ($77.99 billion), up 328% from a year earlier. Operating profit was 83.33 trillion won ($62.12 billion), up 632% from last year, and the company posted a net profit of 39.78 trillion won ($29.65 billion). On Wednesday morning, SK Hynix stock was up 10%, while Micron stock rose nearly 5%.
Memory chips have historically been a cyclical business. Strong demand leads to higher prices, manufacturers expand production, and eventually excess supply sends prices and profits tumbling.
That risk has not disappeared. Micron is investing in additional manufacturing capacity, including new facilities in Idaho, and its competitors are expanding production as well. If demand slows or new capacity arrives faster than expected, today's favorable pricing conditions could weaken.
Still, SK Hynix's announcement offers another reason to believe Micron's earnings growth could continue beyond the current year. With the stock up more than 200% in 2026, that is good news for Micron shareholders.