Key Takeaways
- Micron fell more than 17% on November 5 as Democratic midterm wins and a reported Taiwan plant pause hit memory stocks.
- Fourth-quarter revenue jumped 379% to $54.2 billion, and Micron guided to $61.5 billion for the current quarter.
- Taiwan makes most of Micron’s DRAM, so a stalled $4.5 billion plant there adds an operational risk to a political one.
- A $35.16 billion buyback can start December 9, and the December report will test whether demand and pricing hold.
Micron Technology (MU) fell more than 17% on November 5 as a brutal chip selloff hit memory stocks hardest.
Two things landed at once. Democrats won control of both chambers of Congress in the midterms, so investors began pricing in a slower data center buildout. Before the open, Bloomberg reported that Micron had suspended a $4.5 billion Taiwan memory plant over a labor dispute.
That’s a lot of fear for a company that just guided to $61.5 billion in quarterly revenue.
Its closest rival makes the selloff look even stranger. SK Hynix (A000660) reported record third-quarter revenue of 104.6 trillion won with an 80% operating margin, nearly matching Micron’s. Yet investors are treating both companies’ profits as borrowed time.
Politics and a paused plant
Thursday’s damage went well beyond Micron. By midday, the iShares Semiconductor ETF was down more than 9%, and the Nasdaq Composite slid into a correction.
The Taiwan news, however, was Micron’s alone:
- Micron has all but halted construction in Taoyuan, and executives fear a deal with a local union could be overturned.
- Taiwan produces about three-fifths of Micron’s conventional memory chips.
- Micron has invested close to $50 billion on the island over three decades.
Even before Thursday, high-flying memory stocks were already well off their 2026 highs…
The drop gave back a big chunk of this year’s run, although the stock still trades far above its level a year ago.
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Data centers do the heavy lifting
The political worry makes sense once you see where the money comes from. In the fiscal fourth quarter ended September 3, revenue jumped 379% to $54.2 billion. Adjusted EPS climbed to $33.42 from $3.03, so profits grew even faster.
Which unit did most of that work?
Core Data Center revenue hit $18.0 billion, more than 11 times the year-ago level, at an 85% operating margin. So a slower data center buildout would hit Micron’s most profitable business first.
Management still sounds confident. “Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027,” CEO Sanjay Mehrotra said in the results release.
Part of that confidence is contractual. Noncurrent customer contract liabilities rose to $12.9 billion from $0.6 billion a quarter earlier, because customers paid deposits under supply deals.
SK Hynix shows the same pattern. Its revenue rose 32% from the prior quarter, while Micron’s grew 31% sequentially.
A cheap stock facing cyclical doubts
Memory is still a cyclical business, and that’s the bear case in a sentence. Gross margin reached 86.8% last quarter, up from 44.7% a year earlier. Margins like that usually invite new supply.
The Taiwan pause cuts both ways. Less new capacity could keep pricing tight for longer. But Taiwan is where Micron makes most of its DRAM, so labor trouble there is a real operational risk.
Here’s how the market is pricing those earnings…
The forward multiple sits far below where it traded a year ago, so investors clearly expect profits to fade.
Micron now has the means to push back. Its board lifted the buyback authorization to $35.16 billion, and purchases can start December 9. CHIPS Act funding agreements cap repurchases, though, so the full amount may never be spent.
The balance sheet is not the constraint. Micron ended fiscal 2026 with $73.5 billion in cash and investments against $4.7 billion of long-term debt. It also produced $62.3 billion of adjusted free cash flow last year.
My take: Thursday priced in a policy slowdown that hasn’t happened yet. I’d treat the Taiwan pause as the more concrete risk, since it touches the factories that make most of Micron’s DRAM. Still, a company guiding to 86% gross margins doesn’t need perfect politics to earn its buyback.
Micron’s next report, expected in December, is the real test. It needs to land near $61.5 billion in revenue and show whether long-term contracts are holding pricing as the buyback begins.
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Disclaimer:
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