Micron
MU · NasdaqRevenue rose 256%, cost of goods sold only 14%
Selling prices, not volume, lifted revenue to $133.2B while production cost barely moved, so gross margin reached 80.7% of revenue against 39.8% a year earlier.
FY2026, the fiscal year to Sep 3, 2026 · 10-K filed Oct 9, 2026
- Operating margin
- 74.6%
- Net income
- $85.0B
- Free cash flow
- $59.0B
Largest source of revenue: Dram, 75.6% of the total.
Where Micron's money goes
- 01
Revenue rose 256%, cost of goods sold only 14%
Selling prices, not volume, lifted revenue to $133.2B while production cost barely moved, so gross margin reached 80.7% of revenue against 39.8% a year earlier.
Why it matters
The filing attributes the DRAM revenue increase of 252.3% mainly to an approximate 180% rise in average selling prices, and the NAND increase of 273.8% mainly to an approximate 200% rise. Bit shipments grew far less than prices for both. Cost of goods sold was $25.7B against $22.5B a year earlier, so almost all of the added revenue became gross margin, which rose 622.8% to $107.5B.1
The filing explains why the cost line stayed put: 'A significant portion of our manufacturing costs are fixed and do not vary proportionally with changes in production output.' It credits the margin gain mainly to higher average selling prices, with a smaller benefit from favorable mix and manufacturing cost reductions.1
The same mechanism ran in reverse in the downturn year of the eight-year history: revenue fell to $15.54B from $30.76B the year before, while cost of goods sold was $16.96B against $16.86B, leaving a gross loss of $1.42B.1
AnalysisAnalysis: because cost barely moves with price, Micron's profit is largely a reading of memory prices. This year's 74.6% operating margin says more about the balance of supply and demand across the industry than about a change in what each wafer costs to make.
- 02
The fourth quarter earned 44% of the year's operating income
Fourth-quarter revenue of $54.2B was 40.7% of the year's total, and quarterly gross margin rose from $7.65B in the first quarter to $47.0B.
Why it matters
Quarter by quarter, revenue went from $13.6B to $23.9B, $41.5B and $54.2B, while cost of goods sold moved from $6.0B to $6.11B, $6.4B and $7.18B. Operating income went from $6.14B in the first quarter to $43.8B in the fourth, 80.7% of that quarter's revenue, against 32.3% in the fourth quarter a year earlier.1
The fourth quarter is not reported on its own: it is computed as the full year less the first three quarters. The filing also notes that this fiscal year contained one more week than the prior one, which adds slightly to the annual comparison.1
AnalysisAnalysis: the annual totals average a year that began with $6.14B of operating income on $13.6B of revenue and ended with $43.8B on $54.2B. A comparison of annual figures shows the average; the quarterly path shows how far prices had moved by the end of the period, and how much of the year's profit sits in its last months.
- 03
Capital spending used 34% of operating cash, down from 90%
Capital spending nearly doubled to $30.7B, yet it absorbed 34.2% of the $89.7B operating cash flow; a year earlier it took $15.9B of $17.5B.
Why it matters
Operating cash flow was $89.7B against $17.5B a year earlier, and capital expenditure $30.7B against $15.9B. Free cash flow was $59.0B, 44.3% of revenue, against $1.67B, or 4.5% of revenue, the year before.1
Across the eight-year history, capital spending usually took most of the cash the business produced: between 74.2% and 99.0% of operating cash flow in every earlier year except the downturn year, when it exceeded operating cash flow and free cash flow was negative $6.12B.1
The filing notes that part of this year's operating cash came from working capital: higher taxes payable, including noncurrent taxes tied to the Pillar Two minimum tax, and more consideration payable to customers for pricing adjustments, partly offset by a large rise in receivables. Customer deposits under the strategic agreements are reported in financing, not operating, cash flow.1
AnalysisAnalysis: the filing guides capital spending higher next fiscal year as fabs in Idaho, New York, Taiwan, Singapore and Japan are built. This year's low share reflects how far cash outran spending at peak prices; in thinner years, similar spending plans used nearly all of the operating cash.
- 04
Phone and PC memory earned the widest margin, not cloud
Mobile and Client lost bits to the data center units, yet its operating income was 79.8% of revenue, above the Cloud Memory unit's 72.5%.
Why it matters
Operating income as a share of each unit's revenue: Mobile and Client 79.8% ($29.2B on $36.6B), Core Data Center 78.6% ($29.5B on $37.6B), Cloud Memory 72.5% ($31.2B on $43.1B) and Automotive and Embedded 70.6% ($11.2B on $15.9B).1
The filing says Mobile and Client revenue rose mainly on higher average selling prices, 'partially offset by lower bit shipments as MCBU product supply was redirected to other business units.' For every unit it attributes the operating income increase primarily to higher selling prices, and for the other three units also to higher bit shipments.1
AnalysisAnalysis: in a shortage, price rises reach every market a supplier serves, including the ones that receive fewer bits. The narrow spread, 70.6% to 79.8%, suggests this year's profit came from an industry-wide shortage more than from a premium confined to AI products. Unit results are before unallocated items, so they do not add up to consolidated operating income.
Sources
- 1.Micron 10-K for the period to 2026-09-03 (the filing), Oct 9, 2026, read Nov 2, 2026
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Growth, profit and margin
Revenue went from $4.8B in FY2009 to $133.2B in FY2026, the operating margin from -34.9% to 74.6%, over 17 years.
- Revenue$133.2B
- Operating income$99.3B
- Operating margin74.6%
- Period
- FY2026
- Revenue
- $133.2B
- Operating income
- $99.3B
- Operating margin
- 74.6%
- Net income
- $85.0B
- Free cash flow
- $59.0B
Does the profit turn into cash?
FY2026: free cash flow of $59.0B against net income of $85.0B.
- Operating cash flow$89.7B
- Capital expenditure$30.7B
- Free cash flow$59.0B
- Net income$85.0B
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Financial data and sources
How the revenue mix has shifted
Each breakdown the filing reports, as shares of revenue, for every period it restates.
Revenue - Revenue by Technology (Details). The filing restates this breakdown for 3 periods.
Click a member to isolate it across the years shown.
The figures
Margins, cash and growth for the period, each with what it was computed from.
Where revenue comes from
Every breakdown the filing reports for the period, with each item's share.
Revenue streams
| Dram | $100.7B | 75.6% |
| Nand | $31.8B | 23.9% |
| Other (primarily NOR) | $724.0M | 0.5% |
Segments
| Cmbu | $43.1B | 32.3% |
| Cdbu | $37.6B | 28.2% |
| Mcbu | $36.6B | 27.5% |
| Aebu | $15.9B | 11.9% |
| All other | $24.0M | 0.0% |
Geographic markets
| Other Asia Pacific | $5.8B | 4.3% |
| Europe | $1.7B | 1.3% |
| Other | $729.0M | 0.5% |
These items do not sum to total revenue; the filing states them beside it. Source10-K, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-K filed 2026-10-09
ConsolidationItems
| Operating segments | $43.1B | 32.3% |
| Unallocated | $0 | 0.0% |
These items do not sum to total revenue; the filing states them beside it. Source10-K, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-K filed 2026-10-09
What it costs
The cost lines beneath operating income, each as a share of revenue, then the operating result.
Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.
| Cost line | FY2026 | Of revenue | Source |
|---|---|---|---|
| Cost of goods sold | $25.7B | 19.3% | Source10-K, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-K filed 2026-10-09 |
| Operating income | $99.3B | 74.6% | Source10-K, us-gaap:OperatingIncomeLoss, as reported in the 10-K filed 2026-10-09 |
Operating income by segment
Where the operating profit is earned, as the filing reports it.
Segments
| Cmbu | $31.2B | 31.4% |
| Cdbu | $29.5B | 29.7% |
| Mcbu | $29.2B | 29.4% |
| Aebu | $11.2B | 11.3% |
| All other | $2.0M | 0.0% |
Shares of operating income. The segments do not sum to the total; the filing states them beside it. Source10-K, us-gaap:OperatingIncomeLoss, as reported in the 10-K filed 2026-10-09
Operating figures the company states
From the text of the filing rather than its statements, each with the sentence that states it.
View source
we owned approximately 15,500 active U.S. patents and 8,000 active foreign patents
View source
we owned approximately 15,500 active U.S. patents and 8,000 active foreign patents
View source
Sales of DRAM products increased 252% primarily due to an approximate 180% increase in average selling prices and a mid-20% range increase in bit shipments.
View source
As of September 3, 2026, we had approximately 61,000 employees located primarily in Asia, North America, and Europe.
View source
Sales of NAND products increased 274% primarily due to an approximate 200% increase in average selling prices and a mid-20% range increase in bit shipments.
View source
As of September 3, 2026, we have been granted over 62,000 patents
The statements, as filed
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Income statement20 lines, as presented in the 10-K
Cash flow statement32 lines, as presented in the 10-K
Balance sheet27 lines, as presented in the 10-K
About this data
- Source
- Micron 10-K, accession 0000723125-26-000023, filed Oct 9, 2026, read on Nov 2, 2026.
- History
- From the SEC's XBRL company facts, the value from the latest filing that stated each period.
- Reading
- Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
- Version
- methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
What holds Micron's model up, and what could bend it
Competitive edge
Each new process node fits more bits per wafer
Research of $5.65B, 4.2% of revenue, funds the process nodes that lower cost per bit; most fourth-quarter DRAM bits came from the newest node.
The detail
The filing says its investment in proprietary product and process technology 'generally increases bit density per wafer and reduces per-bit manufacturing costs of each generation of product.' The majority of DRAM bit production in the fourth quarter was on its leading-edge node, its first DRAM node using EUV lithography, and most NAND bits came from its two newest NAND nodes.1
Research and development rose 48.8% to $5.65B but fell to 4.2% of revenue from 10.2%. The company reports over 62,000 patents granted, with approximately 15,500 active U.S. patents and 8,000 active foreign patents.1
AnalysisAnalysis: this is the advantage that matters across a price cycle. Lower cost per bit helped hold this year's rise in cost of goods sold to 14.1% while output grew, and cost position is what separates profitable producers from unprofitable ones when prices fall.
Multi-year take-or-pay contracts with price floors
New strategic agreements bind customers to volumes over several years, with prices mostly held inside bands and secured by cash deposits and letters of credit.
The detail
In the third and fourth quarters the company entered strategic customer agreements 'structured as take-or-pay agreements, with binding commitments for specific volumes over the multi-year contract terms.' Pricing is fixed or periodically negotiated, with most agreements 'subject to minimum and maximum bands.' Customers provide cash deposits and letters of credit as security.1
The company says it expects banded agreements, 'even at floor pricing levels, to yield gross margins meaningfully above our peak quarterly margins in any past cycle,' and that they will 'significantly enhance the durability and predictability' of its results. This is the company's expectation, not a reported result.1
AnalysisAnalysis: the structure trades some upside at the peak for committed volume in the trough. It has not yet been tested through a memory downturn, and the filing itself notes that customers could fail to meet commitments and that aligning supply to these contracts could add to industry oversupply.
HBM built in-house, from base die to packaging
Micron designs and makes both the base logic die and the memory dies of its newest HBM, which the filing credits for its performance and power position.
The detail
The filing says its newest HBM uses advanced CMOS and metallization processes on the base logic die and DRAM core dies, 'which are designed and manufactured in-house,' and that this, with its own HBM design, packaging and test capability, 'enables our industry-leading performance and low-power leadership.' HBM is sold through the Cloud Memory unit to all data center customers.1
The Cloud Memory unit had $43.1B of revenue, 32.3% of the total, and $31.2B of operating income. The filing describes an HBM advanced packaging facility under way in Singapore and plans to bring HBM packaging to the United States.1
AnalysisAnalysis: HBM has to be qualified with each customer's AI platform well ahead of volume production, so owning the die, the stack and the test gives the company more control over that schedule. The claim of leadership is the company's own.
What to watch
The same price cycle has produced operating losses
Three years earlier, revenue fell to $15.54B from $30.76B on an almost unchanged cost base, giving a $5.75B operating loss and negative free cash flow.
The detail
The filing lists price volatility first: over the past five fiscal years, annual DRAM and NAND average selling price changes ranged from a rise of about 200% to a steep decline, and in some prior periods prices fell below manufacturing cost. It warns that 'as we and others increase supply, average selling prices may decline, particularly if demand growth slows or declines.'1
Supply is being added across the industry. Micron is building or expanding fabs in Idaho, New York, Taiwan, Singapore and Japan, competitors have similar plans, and the filing names state-supported Chinese producers CXMT and YMTC as a source of possible oversupply. It also notes that HBM uses more wafers per bit, so a shift of capacity back to conventional DRAM could raise supply quickly.1
AnalysisAnalysis: the fixed cost base that turned this year's price rise into a 74.6% operating margin works the same way in reverse, which is what the downturn year in the history shows.
Over half of revenue came from ten customers
Over half of revenue came from the top ten customers and most from data centers, so a slower AI build-out would reach results directly.
The detail
The filing says over half of revenue came from the top ten customers and that the data center end market accounted for most of total revenue. It ties data center build-outs to customers' access to energy, water, capital and components, and says a delay there, or a top customer cutting orders, could hurt results.1
It adds risks that come from the shortage itself: sustained high prices may lead customers to design in less memory or attract new entrants, and customers 'have from time to time overstated their expected demand requirements, possibly to procure additional supply.'1
AnalysisAnalysis: concentration is the counterpart of the supply shift that lifted this year's profit. The more output goes to a few large data center buyers, the more results depend on their build-out schedules and on whether the demand they state matches what they finally take.
Most DRAM output comes from fabs in Taiwan
A majority of DRAM output came from Taiwan, China bars some buyers from Micron products, and US export rules limit sales to certain customers.
The detail
The filing says a majority of its DRAM production output this year came from fabs in Taiwan and that political, economic or other actions there could have a material adverse effect. Manufacturing also runs in Singapore, Japan, the United States, Malaysia, China and India, and an outage at one site can have a disproportionate effect across the network.1
China's Cyberspace Administration has ruled that critical information infrastructure operators may not buy Micron products, and US export restrictions limit sales to some customers. Government action also reaches tax: the effective tax rate rose to 14.8% from 11.6%, which the filing ties to Pillar Two minimum tax rules taking effect in Singapore.1
AnalysisAnalysis: apart from tax, these risks do not show in this year's figures. They matter because the margin depends on uninterrupted output from a small number of sites, and because trade rules can change which customers the company may serve.
Sources
- 1.Micron 10-K for the period to 2026-09-03 (the filing), Oct 9, 2026, read Nov 2, 2026
Micron, further in
Member research, then your own questions on ChatGPT.
What could change the outlook
What Micron's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
- What has to stay true for these margins to last
The supply additions, contract terms and demand signals the numbers now depend on, and what to look for in each filing to tell whether the shortage is easing.
- How much protection do the price-band contracts give?
What the take-or-pay structure covers and what it leaves open, how deposits and letters of credit work in a downturn, and where the company's own expectations stop.
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Have a question about Micron?
Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.
- How much of Micron's latest gross margin came from higher memory prices rather than lower cost per bit?
- Why did Micron's Mobile and Client unit earn a wider operating margin than its Cloud Memory unit last year?
- How would Micron's take-or-pay agreements with price bands affect its cash flow in a memory downturn?
Business Lens describes Micron from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.