Musk calls Micron's memory prices reasonable at an 81% gross margin
Elon Musk called memory pricing 'extortionate' and praised Micron, whose latest quarterly gross margin was 81%. Tom's Hardware reports market insiders and analysts expect shortages through at least 2028, and hardware budgets have to cover that horizon.
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Micron has signed 26 strategic customer agreements covering more than 35% of its expected revenue through 2030. The agreements include $32 billion in customer financial commitments, most of it cash deposits.
| Figure | Value | Note | Claim |
|---|---|---|---|
| Micron's expected revenue through 2030 covered | 35% more than | 6 | |
| Agreements signed | 26 agreements | 6 | |
| Customer financial commitments in the agreements | $32 billion | Most of it cash deposits | 7 |
What happened
- Musk did not name the companies he meant, but Tom's Hardware says his remarks seem aimed at Samsung Electronics and SK hynix.
- Micron's fiscal fourth-quarter 2026 revenue was $54.23 billion, and its GAAP gross margin was 40% a year earlier.
- Micron has signed 26 strategic customer agreements covering more than 35% of its expected revenue through 2030.
- Memory makers have raised prices severalfold without comparable increases in production capacity, according to Tom's Hardware.
Why it matters
- What it costs cost A buyer signing a Micron-style agreement puts up cash deposits at prices that, by Micron's own account, already reflect the shortage.
- What doesn't add up contradiction Musk's praise cannot be used to choose a supplier on price, because the comparison he implies cannot be determined from what he disclosed.
- What it limits constraint Earlier shortages ended when aggressive capacity expansion brought oversupply and falling prices, and this cycle has no comparable capacity increase.
- What it sets up precedent If Samsung's reported contract coverage is accurate and SK hynix follows, multiyear contracts become the normal way to buy memory, and spot buyers compete for the 20% to 25% left over.
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"Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today's customers will not forget," Musk wrote in a post on X [1]. He added: "Micron is making the smart move for long-term customer loyalty." [2] The operative word is "future". We think he means contract pricing, since long-term supply agreements are how memory makers now fix DRAM, HBM and NAND prices ahead of delivery [5].
By Musk's standard, an 81% gross margin counts as reasonable [12]. The gain over a year is 41 points [16]. The segment lines matter more to a buyer. Micron's mobile and client unit sold $13.114 billion at a 90% non-GAAP margin [13]. Its core data center storage business sold $18.002 billion, also at 90% [14]. Buyers in the client unit pay the same margin as the biggest data center line.
Tom's Hardware concludes that client memory earned Micron more profit than data center memory [17]. That holds on margin against the cloud memory unit, which sold $16.283 billion at 83% [15]. It fails in dollars against core data center. At the listed margins, client yields about $11.8 billion of gross profit [18] and core data center about $16.2 billion [19]. Some of the listed margins are non-GAAP, so treat both figures as approximations.
The agreements carry the money. Micron's customers have committed $32 billion, mostly as cash deposits [7]. Across 26 agreements that averages about $1.23 billion each [11]. Supplier terms tend to be confidential [4], and Tom's Hardware does not say whether any of these contracts reprice if the market falls.
The through-2028 estimate comes from unnamed market insiders and analysts in Tom's Hardware's account [9]. The same report says supply still lags demand and will for years [10]. The estimate holds only if capacity additions stay below demand growth. In our view, a budget should carry current contract prices through 2028 and treat any decline as upside.
What to watch
- Whether Samsung or SK hynix confirms the reported contract coverage for 2027, since the Samsung figure rests on Korea Economic Daily via a social media account.
- Micron's next quarterly report: whether the 81% GAAP gross margin and the 90% client margin hold.
- Capacity announcements that match demand growth would undercut the through-2028 shortage estimate.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence58
- Adoption55
- Hype gap+30
- Incentives70
- Confidence62
Perspective Coverage
3 publishers- Builder
- Builder 18%
- Operator
- Operator 30%
- Investor
- Investor 52%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Musk wrote in a post on X: "Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today's customers will not forget,"
- [2]
"Micron is making the smart move for long-term customer loyalty."
- [3]
Musk did not identify the companies he criticized, but his remarks seem to be directed at Samsung Electronics and SK hynix, as he praised Micron for a more reasonable approach.
- [4]
Musk did not provide specific details of the extortionate pricing or disclose terms offered by different memory suppliers, which tend to be confidential; it is impossible to determine whether Samsung and SK hynix charge substantially more than Micron for comparable products.
- [5]
Memory manufacturers are increasingly shifting toward long-term supply agreements that guarantee future supply and provide customers with predictable prices of DRAM, HBM, and NAND.
- [6]
Micron has signed 26 strategic customer agreements that cover more than 35% of its expected revenue through 2030.
- [7]
Micron's long-term agreements include $32 billion in customer financial commitments, most of which consist of cash deposits.
- [8]
Micron acknowledges that its new agreements reflect higher prevailing memory prices, and it is not trying to sell memory at a discount.
- [9]
Market insiders and analysts expect memory supply shortages to persist through at least 2028.
- [10]
Supply still lags behind demand and will continue to do so for years to come.
- [11]
The $32 billion in commitments averages about $1.23 billion per agreement across 26 agreements.
- [12]
In its fourth quarter of fiscal 2026, Micron reported revenue of $54.23 billion and a GAAP gross margin of 81%, up from 40% a year earlier.
- [13]
Micron's mobile and client revenue was $13.114 billion with a non-GAAP gross margin of 90%.
- [14]
Micron's core data center storage business sold goods worth $18.002 billion with a 90% gross margin.
- [15]
Micron's cloud memory unit earned $16.283 billion, with a non-GAAP gross margin of 83%.
- [16]
Micron's GAAP gross margin rose 41 percentage points year over year.
- [17]
Tom's Hardware says Micron earned higher profit selling memory and storage for client devices than it did selling memory solutions for data centers.
- [18]
At the listed 90% margin, Micron's client revenue of $13.114 billion implies about $11.8 billion of gross profit.
- [19]
At the listed 90% margin, Micron's core data center storage revenue of $18.002 billion implies about $16.2 billion of gross profit.
- [20]
Samsung has reportedly secured long-term contracts covering 75% to 80% of its planned memory output in 2027, according to Korea Economic Daily (via @Jukan05); SK hynix is reportedly pursuing similar arrangements.
- [21]
Manufacturers have raised memory prices severalfold without comparable increases in production capacity.
- [22]
Historically, memory makers responded to strong demand and rising prices with aggressive capacity expansions, which eventually led to oversupply and falling prices.
- [23]
Samsung's reported coverage leaves 20% to 25% of its planned 2027 output outside long-term contracts.
Sources
3 independent publishers whose own reporting we read for this story.
- cryptobriefing.comElon Musk calls Micron’s memory pricing ‘reasonable’ as AI shortage bites
1 article · October 15, 2026
- en.sedaily.comMusk Blasts Memory Chipmakers Over "Extortionate" Pricing, Praises Micron
1 article · October 13, 2026
- tomshardware.comElon Musk calls out memory makers over 'extortionate' chip pricing, says Micron is playing smart for long-term loyalty
1 article · October 15, 2026
Topics and entities
Topics
- Long-term supply agreements
- HBM and DRAM Supply
- Memory Pricing