Micron shares jump 5% - chipmaker increases its capacity by nearly 20%

Micron, the largest memory chip maker in the U.S., said it has completed the purchase of a chip plant in Taiwan from Powerchip Semiconductor Manufacturing for $1.8 billion. The company plans to build a second chip plant at the site.

According to industry analysts, this expansion could increase Micron's global production capacity by almost 20%. Against this background, analysts at RBC Capital Markets recommended buying the chipmaker's securities, increasing their target price.

On March 16, shares of Micron jumped by 5.5%. On Wednesday, March 18, the company will have to publish its quarterly report.

Micron announced its intentions to acquire a chip plant in Taiwan back in mid-January. By the standards of the memory chip industry, this is a significant expansion, notes Barron's. Buying an existing facility would add about 300,000 square feet (about 28,000 square meters) of clean manufacturing space to the company. Research firm TrendForce estimates that this will increase Micron's global manufacturing capacity by more than 10% from about the second half of 2027, Barron's writes.

Micron also said that construction of a second facility at the same site will add about 270,000 square feet (about 25,000 square meters) of cleanroom space. The company expects to begin construction by the end of the current fiscal year - Micron's fiscal year ends at the end of August.

Overall, the planned expansion will increase Micron Technology's existing capacity worldwide by nearly 20%, Barron's points out.

Shares of Micron at the trading on March 16 added 5.5% on the background of news about the purchase of the plant in Taiwan and investors' expectations of the publication of quarterly reports on Wednesday, March 18. According to analysts' forecasts, the chipmaker's revenue for the quarter ended in February will more than double, and profit may increase more than five times, Barron's wrote. Since the beginning of 2026, Micron's securities have risen 57.56%, adding more than 336% over the past 12 months.

Even if Micron's newly acquired chip production capacity were to come online now - and the startup of this work at Micron's first facility is not expected until 2027-2028 - it would still not be enough to meet the market's sharply increased demand for memory chips, Barron's writes. In mid-December, Micron said it would only be able to cover half to two-thirds of demand from a number of key customers with its products in the medium term.

Supply shortages are bad news for manufacturers of smartphones and other electronics, the publication notes. Citigroup analysts estimate that Apple could see prices for dynamic DRAM memory chips rise by about 50 percent in the second quarter of 2026 and 100 percent in the second half of the year. Concerns over this are already weighing on the shares of companies that depend on smartphone sales, such as Qualcomm and Arm Holdings, Barron's notes.

Eliminate the shortage of memory chips on the market, among others, can own investment program Micron in the U.S., the volume of $ 200 billion, which the company announced last summer. Micron plans to have two chip plants up and running in Idaho by the end of 2028. Each will have about 600,000 square feet (56,000 square meters) of clean manufacturing space.

In addition, Micron in mid-January began construction of a major $100 billion manufacturing complex in Onondaga County, New York. It will include four facilities, each with approximately 600,000 square feet of clean manufacturing space. Production at it is expected to begin in 2030.

High demand and rising prices for memory chips can continue to support the prospects of Micron Technology, according to analysts at RBC Capital Markets. Their opinion quotes CNBC.

On March 16, the bank reiterated its recommendation to buy the company's shares (Outperform rating) and raised its target price from $425 to $525 per paper. The new forecast suggests a potential upside of about 23% relative to the last closing price. Analyst Srini Pajuri noted that the company continues to benefit from the strong pricing environment in the memory market, which could lead the company to another quarterly result above expectations.

"Data centers now account for more than half of the DRAM industry's revenue, and we expect strong demand for HBM (high bandwidth memory) and DDR (double data rate) memory from artificial intelligence systems to continue through at least 2027," RBC said.

Pajuri also recalled that Micron executives recently announced that all HBM memory scheduled for production in 2026 has already sold out, with the new generation HBM4 set to enter mass shipments in the first quarter of the calendar year.

"The amount of DDR memory in AI servers is also increasing rapidly - due to the growth of inference tasks (the process of AI models processing queries and issuing responses to users. - Onivest note)," the analyst added. - Therefore, we expect that a possible drop in demand in the PC and smartphone markets will be more than offset by demand from AI and data centers," he suggested.

Wall Street is generally positive on Micron shares, with 44 out of 50 analysts covering the company's securities advising to buy them. Four recommend to keep them in the portfolio and two - to sell.

This article was AI-translated and verified by a human editor