AI storage chips are in short supply! Micron (MU.US) is investing an additional $50 billion in expanding production in the United States.

Storage chip giant Micron Technology, Inc. (MU.US) announced on Thursday that, driven by the continuous surge in demand for storage in the era of artificial intelligence, the company is accelerating its wafer factory and technology investment plans in the United States. The projected expenditure by 2035 has been increased from the previous plan of $200 billion to over $250 billion. Micron expects that the increase in investment will help achieve its long-term goal of increasing domestic DRAM production in the United States to 40% of the company's global total output, while also creating more high-paying direct and indirect job opportunities. At the same time as announcing the increased investment, Micron's giant wafer factory project in Clay, New York welcomed its first concrete pouring, a key milestone, ahead of schedule by more than a quarter. U.S. Commerce Secretary Howard Lutnick said at the event, "Today, Micron Technology, Inc. is laying the foundation for its massive semiconductor campus in northern New York and increasing its investment commitment in the United States to over $250 billion, creating nearly 100,000 jobs and providing leading storage supply in the United States." Going from $200 billion to $250 billion: Capacity "Arms Race" Driven by AI Demand Micron's increased investment is a strategic capacity expansion in the background of the explosive growth in AI storage demand. In June 2025, Micron first announced plans to invest around $200 billion in the United States to meet the growing market demand and eventually achieve 40% of DRAM production in the United States. Just a year later, with the continued overperformance of AI data centers' demand for high-bandwidth memory (HBM) and enterprise SSDs, Micron raised this figure to over $250 billion. Sanjay Mehrotra, Chairman, President, and CEO of Micron, said in a statement, "As the United States celebrates its 250th anniversary, data and memory have become the cornerstone of the modern economy - Micron is increasing its investment in the United States to over $250 billion by 2035 to meet this historic moment." In terms of job creation, Micron expects that multiple projects in the United States will create over 90,000 job opportunities. The New York project is expected to create 50,000 job opportunities, including 9,000 direct on-site positions. The project in Idaho is progressing rapidly, with the first wafer fab expected to start production and produce the first wafers by mid-2027. New York Super Factory: Early Concrete Pouring, the Largest Semiconductor Manufacturing Base in U.S. History The project in Clay, New York is the core of Micron's expansion plan in the United States. The project officially broke ground on January 16, 2026, with plans to build four advanced storage chip manufacturing plants over 20 years, with a total investment of up to $100 billion, making it the largest private investment project in New York State history. Once completed, it will be the largest semiconductor manufacturing base in U.S. history. The progress of the project has exceeded expectations. Micron initiated early construction in January of this year, and in June selected Bechtel as the engineering and construction partner for the next phase of the project. The early concrete pouring marks the project's transition from site preparation to vertical construction. On the local level, the Clay Town Council approved a $30 million agreement with Micron on July 7 by a unanimous vote of 6-0. Micron will pay the town government $30 million, exceeding the town's annual budget of $25 million, described by local officials as a "windfall." According to the agreement, Micron will pay $20 million in three installments over the next three years, and the town government will use the interest from this fund to cover the cost of issuing building permits; the remaining $10 million will be used for community improvement projects. Strengthening Local Supply Chain with $3 Billion: Providing $500 Million Strategic Financing to GlobalWafers for Silicon Wafer Production In addition to direct investments in wafer factories, Micron also announced plans to invest up to $3 billion to strengthen the U.S. semiconductor supply chain ecosystem. As a core part of this plan, Micron will provide $500 million in strategic financing support to GlobalWafers, a silicon wafer manufacturer in Taiwan, to advance the development and manufacturing capabilities of its 300mm original silicon wafer manufacturing plant in Sherman, Texas. At the same time, the two companies will also sign a 10-year supply agreement, through which Micron will obtain a significant amount of silicon wafer raw material capacity to support its long-term production plans. The two companies also plan to explore cooperation in next-generation wafer technology and process innovation to meet the needs of future semiconductor manufacturing. U.S. Commerce Secretary Lutnick said, "Micron is committing $3 billion to strengthen the U.S. semiconductor supply chain and expand domestic manufacturing capacity, making the United States stronger in this critical area for our economy and technological leadership." Outlook: Valuation Reshaping from "Cyclical Stocks" to "AI Infrastructure Stocks" From a macro industry perspective, Micron's unexpected increase reflects the core anxiety of the semiconductor industry today: the "storage deficit" in the AI era. From the supply side, new production capacity from storage giants like Micron and SK Hynix will not be fully deployed until the end of 2027 or 2028, while storage consumption in AI data centers continues to accelerate. From the demand side, the demand for HBM and enterprise SSDs in the era of AI inference is reshaping the supply-demand balance of the storage industry - storage is no longer a cyclical "commodity," but a "strategic asset" in AI infrastructure. Micron's early concrete pouring in the New York factory is to seize an advantage in the "race against time" with Samsung and SK Hynix. By localizing 40% of DRAM production capacity, Micron can not only benefit from the policy dividends of the U.S. Chip Act and local governments but also secure long-term orders with high profit margins from North American AI tech giants (such as Microsoft Corporation, Meta, Alphabet Inc. Class C). Micron's factory layout in New York and Idaho is also a long-term bet on this structural shift. However, the commitment of $250 billion in capital also implies significant execution risks - delays in construction, iterations in technology roadmaps, and questions about the sustainability of AI capital expenditure could impact the ultimate return on this massive investment. For investors, Micron is at a critical crossroads: the valuation logic of storage chips is shifting from a "strong cycle" to "AI infrastructure," but the completion of this shift depends on whether AI demand can continue to absorb the expanding capacity. Over the next few quarters, the pace of capital spending by cloud service providers, the price trend of HBM, and the construction progress of Micron's New York factory will be key variables for the market to validate this narrative. Wall Street's Debate on Storage Super Cycle: Consensus and Cracks Exist Against the backdrop of the storage chip sector experiencing an epic surge in the first half of the year, followed by a sharp pullback since the end of June, major Wall Street institutions have engaged in heated debates on the sustainability, valuation rationale, and investment strategies of this "super cycle." From Goldman Sachs Group, Inc.'s "shortage to last until 2028" to Morgan Stanley's "sell chips, buy cloud," the differences in views have reached a recent peak. Goldman Sachs Group, Inc., Bank of America, and UBS Group AG remain bullish, believing that the storage industry is undergoing a historic transformation from a "strong cyclical product" to a "strategic resource in AI infrastructure." Goldman Sachs Group, Inc. explicitly stated that the supply tightness in the DRAM, NAND, and HBM markets will exceed 2026 levels by 2027, and the shortage will continue until 2028; the valuation framework has officially switched from price-to-book (P/B) ratio to price-to-earnings (P/E) ratio, and based on this, they have significantly raised their target prices for Samsung, SK Hynix, and Kioxia. Bank of America predicts global cloud and AI infrastructure capital expenditure to reach $1.5 trillion in 2027, emphasizing that the current pullback is a "summer reset" rather than a structural deterioration of demand, and reaffirms its "buy" rating on Micron with a target price of $1550. UBS Group AG has significantly raised its forecast for DRAM contract prices, expecting a 32% increase quarter-on-quarter in Q3 and another 18% increase in Q4, and predicts that the total revenue of the storage industry in 2026 and 2027 will reach $992 billion and $1.76 trillion, respectively. Morgan Stanley, on the other hand, takes a more cautious stance, believing that storage is approaching the "peak of change" and recommending a tactical reduction in holdings. Their Chief U.S. Equity Strategist Michael Wilson explicitly advises clients to "sell chips, buy cloud," comparing the trend of storage chips to "silver reaching a peak." He believes that as the most commodity-like subsector in semiconductors, storage has high price elasticity and quick reversals, making it the leading sector in this round of adjustment. However, there is internal disagreement at Morgan Stanley - its industry analysts have raised Micron's target price from $1050 to $1200 and maintained a "hold" rating. Their tech team further points out that the investment logic is transitioning from "benefiting from price increases across the board" to "structural differentiation," recommending a priority for DRAM in the NAND industry chain and favoring OEMs with supply control rather than module factories. Overall, the consensus on Wall Street is that the overall direction of AI-driven storage demand remains unchanged, but the differences are focused on the slope and pace of the cycle. Both sides agree that long-term supply agreements (LTAs) are reshaping the industry's profit model and valuation logic. The focus of the disagreement is whether storage is the "new oil" or the "new silver"? Are cloud service providers' capital expenditures "insufficient" or "excessive"? As the July earnings season opens, fundamental data will be the key litmus test for the success of this "super cycle."