美光长协的含金量：客户先押220亿美元，合同不可取消，还锁定「史上最赚钱」的毛利率

Original Author: Long Yue

Original Source: Wall Street Sights

The core terms of Micron's latest batch of Strategic Customer Agreements (SCAs) involve clients paying a $22 billion deposit upfront, signing non-cancellable long-term contracts, and accepting a pricing framework that is far more favorable for Micron than at any point in its history.

According to the Zhui Feng trading desk, on June 25, Barclays, Morgan Stanley, and JPMorgan collectively viewed these agreements as "game-changers." In a research report, JPMorgan semiconductor analyst Harlan Sur characterized these SCAs as a "fundamental shift" in Micron's business model — transforming it from a cyclical commodity supplier into a long-term supplier with multi-year contract protection and significant downside hedges on revenue and profits.

The value of these contracts lies in: First, the scale of coverage is significant, with signed agreements covering about 20% of DRAM volume and about one-third of NAND volume. Second, price and volume are linked, with 14 agreements, based on minimum commitment volumes and minimum prices, corresponding to approximately $100 billion in cumulative minimum revenue. Third, clients must provide a total of $22 billion in deposits and financial commitments. Fourth, the gross margin corresponding to the agreement's price floor is "well above historical peaks" (the historical peak is about 62%), effectively locking in a higher profitability floor for Micron.

16 Contracts Covering 20% of DRAM and One-Third of NAND

Micron disclosed that it has signed 16 SCAs, with customers spanning three major markets: data centers, consumer electronics, and automotive.

Customer distribution includes 4 large clients (widely speculated by the market to include hyperscale cloud providers and major consumer electronics OEMs), 3 medium-sized clients, and the remaining 9 are smaller clients in the automotive industry.

Contract terms: Data center and consumer electronics contracts are 5-year terms, covering 2026 to 2030; automotive contracts are 3-year terms.

Coverage scale: These 16 agreements collectively cover approximately 20% of Micron's DRAM shipments and about one-third of its NAND shipments.

According to a Barclays research report, management stated that once all planned SCAs are fully signed, it is expected that over 50% of the company's revenue will come from these agreements. Among them, agreements with fixed prices or price ranges are expected to account for approximately 40% of the company's revenue.

$22 Billion Deposits Raise Default Costs: Clients Pay First, Micron Holds Temporarily, Returns Upon Expiry

Under the 16 signed agreements, Micron will receive a total of approximately $22 billion in cash deposits and other financial commitments — $18 billion in unrestricted cash and $4 billion in letters of credit.

These funds are held by Micron, remain on the balance sheet during the contract period, and are returned to clients upon contract expiry. The return schedule is "back-end weighted," meaning the majority is returned in the latter half of the agreement.

This money cannot be simply viewed as deferred revenue. Its real function is to increase the cost for clients to back out.

Regarding the binding force of the contracts, a Morgan Stanley research report directly quoted management's statement from the conference call: "These contracts are non-cancellable." If a client fails to take delivery of the agreed volume and price, Micron can take action against the deposit. For Micron, this effectively adds a performance bond for part of its future demand. For clients, it is a constraint cost paid for supply certainty.

This also explains why clients are willing to accept price ranges and deposit arrangements. Driven by demand for AI servers, data center SSDs, HBM, and high-end devices, locking in volume itself holds value when memory supply is tight.

Pricing Structure: Has a Ceiling, but Gross Margin from Locked Floor Price "Far Exceeds Historical Peaks"

The pricing framework for SCAs falls into three categories: fixed price, price ranges with upper and lower limits, or floating near a reference market price within a close range.

Regarding the price ceiling: For existing products, the price ceiling refers to the market price in Q2 2026. This clause has been interpreted by some market participants as Micron "actively capping its upside potential," sparking some divergence of opinion.

However, the price floor is the real highlight: The gross margin corresponding to the floor price is "well above the peak profitability of any historical cycle." Micron's past peak gross margin was around 62%, while the current gross margin has reached 84.9% — meaning even if the floor price clause is triggered, Micron's profitability level would still far exceed its best historical performance.

But SCAs are not contracts where "prices only go up." Some existing products have price ceilings, with the cap anchored to the market price in Q2 2026. In other words, Micron traded part of its future pricing upside for higher revenue certainty and a gross margin floor.

Analyst Joseph Moore commented on this: "The contract price ceiling being flat with Q2 prices" does raise some concerns about the "company capping its upside." However, he also pointed out that gross margins are approaching 90% and are expected to remain in this range for a considerable period. It is reasonable for counterparties to seek some protection in negotiations, and the duration of the contract is the core dimension for assessing its value.

$100 Billion Revenue Floor, And That's Just the 'Minimum'

Of the 16 agreements, 14 have clearly defined price terms.

According to Barclays and JPMorgan research reports, the total minimum committed revenue (RPO, or Remaining Performance Obligations calculated based on minimum committed volume and price) for these 14 agreements is approximately $100 billion.

Management explicitly stated that actual revenue is expected to be "well above" this floor — because this $100 billion is merely the guaranteed value calculated at the floor price. If market prices exceed the floor price, revenue will naturally be higher.

For new products, the agreements also retain additional upside pricing potential.

Long-Term Contracts Still Require Capacity Expansion; CapEx Has Not Disappeared

Locking in demand does not equate to automatic delivery.

Micron raised its FY26 net capital expenditure guidance to approximately $27 billion, up from the previous ~$25 billion. FY27 quarterly CapEx is expected to be higher than FQ4 levels, with over half of the year-over-year increase coming from construction CapEx for pre-investing in cleanroom capacity.

This indicates that SCAs do not lead to an asset-light model but rather provide a more certain reason for expansion.

Clients are willing to put up money, and Micron also needs to invest. Long-term contracts make expansion more justifiable, but if future demand or prices deviate, capacity deployment could still become a cyclical variable.

Behind the Three Major Institutions Unanimously Raising Target Prices: Market Re-evaluating 'How Long Peak Profits Can Last'

All three institutions raised their Micron price targets, but the logic is not solely based on the May quarter earnings beat.

Barclays (Analyst Tom O'Malley): Raised price target from $1,175 to $2,000, based on 12x CY27 EPS of $166.74. The report stated that SCA details were "better than expected," viewing these agreements as "materially positive for downside protection," and noting that the supply-demand imbalance will not fade in the near term, leaving further upside.

Morgan Stanley (Analyst Joseph Moore): Raised price target from $1,050 to $1,200, based on 30x through-cycle earnings power ($40 per share). The report raised the through-cycle earnings estimate from $35 to $40, citing that the earnings run rate is approaching $200/share.

JPMorgan (Analyst Harlan Sur): Significantly raised the price target from $550 (Dec 2026 target) to $1,540 (Dec 2027 target), based on 10x (10-year median P/E) FY28 EPS of $154. The report characterized the SCA expansion as a "step-function change," fundamentally altering the nature of Micron's business model.

Behind these model changes, the key variable is profit sustainability.

Micron's May quarter revenue reached $41.456 billion, up 73.7% quarter-over-quarter. The August quarter revenue guidance midpoint is $50 billion, with a non-GAAP EPS midpoint of $31. The single-quarter figures are already high, but SCAs pose another question for the market: If prices stop rising rapidly, can Micron maintain its high gross margins and high free cash flow?

The current framework suggests: A portion of revenue has stronger protection, but not all revenue. Price ceilings, future capacity expansion, and the sustainability of AI demand remain boundary conditions.

Deposits and Cash Flow Open Up Capital Return Possibilities, but Timing is Constrained

SCAs also bring a change to the balance sheet: deposits flow into Micron's hands. Although they must eventually be returned to clients, they increase the cash balance in the short term.

As of the May quarter, Micron had cash and investments of approximately $26 billion. Operating cash flow for the quarter was $25.4 billion, with adjusted free cash flow of $18.3 billion. The August quarter is also expected to receive approximately $10 billion in customer cash deposits.

The path for capital returns is also becoming clearer. Restrictions related to the U.S. CHIPS Act currently constrain Micron's share buyback capacity in the near term. After December 9, 2026, once the restriction window passes, the company's stance points towards gradually returning 100% of excess cash to shareholders, with buybacks being the primary method.

This part is not a direct revenue contribution from SCAs, but it is another facet of how SCAs change the market narrative: if high profits persist and cash accumulates quickly, Micron may not just be "earning cyclical money" but could transition into a more stable cash return framework.

The Earnings Report Itself: Gross Margin Hits Record High, Next Quarter Guidance Beats Expectations Again

Beyond the SCAs, Micron's May quarter (FY3Q26) earnings data was also robust:

• Revenue: $41.456 billion, up 73.7% QoQ, significantly exceeding market expectations of $35.6 billion
• DRAM revenue: $31.3 billion (QoQ +67%), NAND revenue: $9.9 billion (QoQ +99%)
• DRAM average selling price (ASP) rose approximately over 60% QoQ, NAND ASP rose approximately in the mid-80% range QoQ
• Gross margin: 84.9%, a record high, exceeding market expectations of approximately 81.8%-81.9%
• Earnings per share (EPS): $25.11-$25.12, significantly exceeding market expectations of approximately $20.49

August quarter (FY4Q26) guidance:

• Revenue guidance: $50 billion (midpoint), higher than market expectations of approximately $43.1-$43.6 billion
• Gross margin guidance: approximately 86%, continuing to exceed market expectations
• EPS guidance: $31.00 (midpoint), higher than market expectations of approximately $25.31-$25.72