Nvidia supplier Micron Technology is airing its opinion regarding an “unprecedented” issue regarding AI, and Wall Street is standing up and taking notice.
For now, the chipmaker believes the biggest issue facing the AI sector is a memory shortage that won’t go away. Micron believes the issue is becoming an acute one, intensifying over the last three months. The issue will endure into 2026 because demand for high-end memory used in AI infrastructure is taking up space in the whole industry.
And the narrative just isn’t about data centers anymore.
Manish Bhatia, an executive at Micron, argues that high-bandwidth memory is “consuming so much” space that it is causing a “tremendous shortage” on the conventional side of the market, which includes phones and PCs.
That’s the AI memory tax: AI gets to use it first, while everyone else has to pay more or wait longer.
A new kind of scarcity is shaping the chip world. Micron just gave it a name.
Photo by ANDREW CABALLERO-REYNOLDS on Getty Images
It’s hard to ignore the numbers that Micron gave us
Micron’s actions don’t suggest corporate leadership is making hasty decisions.
Rather, the chipmaker has significant power over a finite supply, as evidenced by the numbers.
Micron reported the following for fiscal Q1 2026:
- $13.64 billion in sales
- 56.0% gross margin according to GAAP
- $8.41 billion in cash flow from operations
- $3.9 billion in adjusted free cash flow after $4.5 billion in net capital expenditures
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The company’s Q2 2026 estimate was even more impressive. The chipmaker is guiding for $18.7 billion in sales, accompanied by a midpoint 67% GAAP gross margin.
That’s why Micron can say “shortage” with a straight face; margins illustrate how much power you have over prices.
If you look at the big picture, Micron’s totals for fiscal year 2025 are:
- $37.38 billion in sales
- GAAP net income of $8.54 billion
- Net capital expenditures of $13.80 billion
What it means for your laptop and phone:
When the shortage is taking place, people normally don’t say, “Sorry, no DRAM.”
They think of it as;
- less sales
- lower specs for the same price
- launches that were late
- or more expensive mainstream devices
And the data from the industry is already turning yellow.
Related: Analyst’s bombshell memory price forecast shifts Micron bets
Counterpoint says that global smartphone shipments could drop 2.1% in 2026 because of memory shortages that drive up costs and make it harder to make phones.
As the industry shifts toward AI-driven demand, IDC also thinks that supply growth will be lower than usual in 2026, with DRAM supply growing by 16% and NAND supply growing by 17%.
Late 2025 saw a 40% to 50% increase in memory costs, a trend that suggests a tight market.
Micron is quite clear about how big the prize is
Micron predicted that the HBM industry will expand from about $35 billion in 2025 to nearly $100 billion by 2028, which is about a 40% CAGR. In addition, the chipmaker also said that the $100 billion milestone will come two years earlier than previously thought.
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In simple terms, HBM is getting so enormous that it might change the whole memory market and push out “normal” demand at the same time.
Micron is growing in many ways because it knows how long it takes to add genuine memory space.
- It decided to pay $1.8 billion for a fab location in Taiwan, where it expects to start making “meaningful” DRAM wafers in the second half of 2027.
- It has sought to transfer 40% of its DRAM production to the U.S.
- It got around $6.2 billion in financing from the CHIPS Act.
- The industry has also pointed out that the U.S. tax credit for semiconductor investment will go up to 35% in 2025.
The hitch for investors is that memory booms can evolve into memory gluts.
When everyone starts constructing at once, old-school chip investors feel anxious for a reason.
Today’s situation is good for Micron. Supply is low, prices are high, and margins are growing.
But memory has a long history of going too far. Barron warned that a lot of investment could eventually cause the market to go from being short on goods to a supply glut, even if the market stays tight until 2026.
So the real question isn’t if AI is making people want things.
The question is whether Micron can keep this AI memory tax going long enough to make the investing frenzy worth it before the cycle turns.