Micron Shares Rise 5% After TSMC Reaffirms Focus on Logic Chips Over Memory

Micron Technology shares advanced 5% on Monday after Taiwan Semiconductor Manufacturing Co. rejected market speculation that it intends to enter the memory chip manufacturing sector.

The clarification eliminated an immediate supply-side concern for incumbent memory suppliers currently benefiting from wide gross margins fueled by data-center hardware demand. Micron recorded an 86.8% gross margin in its fiscal quarter ended Sept. 3, roughly 20 percentage points above TSMC's 66.4% gross margin during its third quarter, illustrating the profitability of modern dynamic random-access memory.

The stock movement, reported by Yahoo Finance, followed market unease caused by an earlier report from The Information indicating that TSMC was evaluating 3D DRAM fabrication at Nvidia's request. TSMC addressed the report directly, telling Barron's that its strategic mission is "to be the trusted technology and capacity provider of the global logic IC industry for years to come."

Broader semiconductor equities rebounded concurrently following a sharp pullback tied to concerns over future infrastructure spending. Semiconductor manufacturing equipment supplier Applied Materials rose 11%, while connectivity suppliers Astera Labs and Arista Networks gained 12% and 8%, respectively. Optical component vendor Lumentum advanced 11% alongside Marvell Technology, which has an agreement to acquire it.

Despite the share price recovery, Micron's current valuation indicates sustained investor wariness regarding memory price cyclicality. Trading at approximately four times forward earnings, the stock sits close to valuation multiples observed during its 2017 and 2018 cycle peak, prior to a 79% decline in normalized earnings per share from fiscal 2018 to fiscal 2020. Wall Street consensus projections anticipate normalized earnings per share will more than double in fiscal 2027 and reach a cyclical peak in fiscal 2028 before moderating in fiscal 2029.

Near-term shipment volume is substantially insulated by pre-arranged customer commitments. Micron management stated on its fiscal fourth-quarter earnings call that over 75% of its fiscal 2027 output is already contracted under customer deals running through 2030.

Competitive and financial pressures continue to build on other fronts. In China, ChangXin Memory Technologies is expanding into server-grade memory, a product line where Micron captures some of its highest profit margins. Meanwhile, consensus estimates place Micron's capital expenditures at $54.5 billion in fiscal 2027, up from $30.7 billion in fiscal 2026.

Investors will assess semiconductor equipment demand when Applied Materials issues its fiscal fourth-quarter financial results after the market close on Thursday. Micron's next formal performance test will be its fiscal first-quarter report in December, which management has described as setting the gross margin floor for fiscal 2027.