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
- cost A buyer signing a Micron-style agreement puts up cash deposits at prices that, by Micron's own account, already reflect the shortage.
- 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.
- constraint Earlier shortages ended when aggressive capacity expansion brought oversupply and falling prices, and this cycle has no comparable capacity increase.
- 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.
"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 [16].
By Musk's standard, an 81% gross margin counts as reasonable [5]. The gain over a year is 41 points [9]. The segment lines matter more to a buyer. Micron's mobile and client unit sold $13.114 billion at a 90% non-GAAP margin [11]. Its core data center storage business sold $18.002 billion, also at 90% [12]. 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 [14]. That holds on margin against the cloud memory unit, which sold $16.283 billion at 83% [13]. It fails in dollars against core data center. At the listed margins, client yields about $11.8 billion of gross profit [15] and core data center about $16.2 billion [17]. 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 [10]. 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 [22]. The same report says supply still lags demand and will for years [23]. 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
- Evidence55
- Adoption60
- Hype gap+20
- Incentives55
- Confidence55
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]
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.
- [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]
Micron's GAAP gross margin rose 41 percentage points year over year.
- [10]
The $32 billion in commitments averages about $1.23 billion per agreement across 26 agreements.
- [11]
Micron's mobile and client revenue was $13.114 billion with a non-GAAP gross margin of 90%.
- [12]
Micron's core data center storage business sold goods worth $18.002 billion with a 90% gross margin.
- [13]
Micron's cloud memory unit earned $16.283 billion, with a non-GAAP gross margin of 83%.
- [14]
Tom's Hardware says Micron earned higher profit selling memory and storage for client devices than it did selling memory solutions for data centers.
- [15]
At the listed 90% margin, Micron's client revenue of $13.114 billion implies about $11.8 billion of gross profit.
- [16]
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.
- [17]
At the listed 90% margin, Micron's core data center storage revenue of $18.002 billion implies about $16.2 billion of gross profit.
- [18]
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.
- [19]
Samsung's reported coverage leaves 20% to 25% of its planned 2027 output outside long-term contracts.
- [20]
Manufacturers have raised memory prices severalfold without comparable increases in production capacity.
- [21]
Historically, memory makers responded to strong demand and rising prices with aggressive capacity expansions, which eventually led to oversupply and falling prices.
- [22]
Market insiders and analysts expect memory supply shortages to persist through at least 2028.
- [23]
Supply still lags behind demand and will continue to do so for years to come.
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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
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