The total addressable market (TAM) represents a forecast of future sales volume—more precisely, the projected quantity of products that can be produced and sold. It does not account for total demand, which may be significantly higher, as evidenced by the backlog of orders for HBM memory and its primary drivers (GPUs and XPUs used for AI inference and training). When the TAM expands, it means revenue distribution among competitors also grows. This explains the excitement surrounding Micron Technology's (MU.US) recent surge in the HBM stacked memory market.
"As global tech leaders advance toward artificial general intelligence (AI) and reshape the global economy, our customers are investing heavily in large-scale data centers—a multi-year construction cycle," said Micron CEO Sanjay Mehrotra during an earnings call with Wall Street analysts. The call reviewed the company's Q1 FY2026 financial results for the period ending November.
"AI data center capacity growth is significantly driving demand for high-performance, high-capacity memory and storage. Server demand has strengthened considerably, and we now expect server unit growth in 2025 to approach 10%, up from our previous forecast. We anticipate this momentum will continue into 2026, with server memory and storage requirements rising generationally."
This boom extends beyond HBM to other DRAM, LPDRAM, and flash memory used in AI systems. Mehrotra highlighted that Micron’s data center NAND storage business surpassed $1 billion for the first time in Q1 FY2026. The company’s G9 flash series is the first to adopt PCI-Express 6.0, with QLC versions (122TB and 245TB) undergoing certification at major hyperscale data centers and cloud providers.
Industry-wide, DRAM bit shipments are projected to grow ~20% in 2025, while NAND shipments will rise over 10%—exceeding Micron’s earlier estimates. By 2026, both DRAM and NAND shipments are expected to grow ~20% year-over-year. Any revenue growth beyond this will stem from price increases due to demand and inflationary factors. For instance, Micron CFO Mark Murphy noted DRAM bit costs rose 20% in Q1 FY2026, with shipments growing modestly, while NAND shipments increased in the "mid-to-high single-digit percentages" but bit costs climbed ~15%.
To meet demand for 1γ DRAM and HBM, Micron raised FY2026 capital expenditures by $2 billion to $20 billion, accelerating equipment orders and installations. Its first Idaho fab will now launch in mid-2027 (vs. late 2026), with a second fab starting construction next year for 2028 operations. A New York fab will break ground in 2026, supplying chips by 2030, while a Singapore HBM packaging facility will come online in 2027.
Micron’s updated HBM TAM forecasts show dramatic growth: - December 2024 projection: $35 billion in 2025, reaching ~$100 billion by 2030 (23.2% CAGR). - Current projection: $100 billion by 2028 (40%+ CAGR from 2025’s $35 billion).
Extrapolating, cumulative HBM revenue from 2025–2030 could hit $555 billion under the new forecast (46.8% higher than prior estimates), driving GPU/XPU-related system sales to ~$2.1 trillion.
Micron’s Q1 FY2026 revenue surged 56.7% YoY to $13.64 billion, with operating income up 2.8x to $6.14 billion and net income also 2.8x higher at $5.24 billion. Capital expenditures totaled $5.4 billion (27% of FY2026’s $20 billion plan), up 1.7x YoY. The firm ended the quarter with $10.32 billion in cash.
DRAM sales jumped 68.9% YoY to $10.81 billion, while NAND revenue grew 22.4% to $2.74 billion. Data center revenue rose 55.1% to $7.66 billion, with operating income nearly doubling to $3.79 billion.
HBM, high-capacity server DRAM, and LPDDR5 memory collectively generated $5.66 billion—over half of total DRAM sales—up 5x YoY, fueled by NVIDIA’s AI engines. However, NVIDIA contributed just 17% ($2.32 billion) of Micron’s revenue, with other buyers driving growth. High-capacity server DIMMs and LPDDR5 sales (~$1.4 billion, up 3.7x) and HBM (~$4.27 billion, up 5.7x) led the charge.
Micron’s strategic re-entry into the HBM market, leveraging U.S.-based production and technological edge, positions it for dominance during this upcycle. While memory cycles remain volatile, the next 1–2 years promise robust growth for the company.
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