Micron Signs 16 Long-Term Contracts as Gross Margins Hit 85%

According to Barron's, Micron Technology signed 16 long-term supply contracts this week as the memory chip shortage drives a strategic shift in the industry. The company's gross margins hit 85% in the latest quarter, with expectations to reach 86% next quarter, compared to the 61% peak achieved in the fourth quarter of 2018.

The three to five-year contracts, which cover customers of varying sizes, are expected to contribute approximately 40% of revenue once fully implemented. Analysts raised Micron's earnings per share forecast to $144.27 from $101.74, signaling confidence in the long-term profitability model. BNP Paribas analyst Karl Ackerman noted the memory industry is undergoing a structural shift toward sustained long-term contracts, reducing cyclical volatility.