Micron Technology (MU) shares fell on Monday after South Korea unveiled plans for a massive new semiconductor investment program.
Shares of Micron were down about 1% at $1,117.19 after declining 6.7% on Friday.
The pullback came as South Korea’s industry minister said Samsung Electronics and SK Hynix plan to spend a combined 800 trillion won, or approximately $518.6 billion, to develop new semiconductor manufacturing hubs in the country’s southwest region.
South Korea doubles down on memory chips
The announcement underscores the intensifying race among the world’s leading memory-chip producers to capture a larger share of the booming artificial intelligence market.
Micron, Samsung, and SK Hynix are the dominant suppliers of high-bandwidth memory (HBM) chips, a critical component used in advanced artificial intelligence systems developed by companies such as Nvidia.
Investors initially appeared concerned that the massive spending commitments could eventually increase competition in the sector.
However, the long-term impact may be limited in the near future. Large semiconductor fabrication facilities typically require years to construct and ramp into production.
Micron’s own $100 billion semiconductor manufacturing project in New York, announced in 2022, is not expected to begin production until 2030.
AI demand continues to drive growth
The selloff also comes despite Micron recently delivering one of its strongest earnings reports on record as demand for AI-related memory products continues to accelerate.
Last week, the company reported fiscal third-quarter revenue of $41.46 billion, more than four times higher than the $9.3 billion generated in the same period a year earlier.
Revenue exceeded analyst expectations of nearly $36 billion, according to LSEG consensus estimates.
Management also provided a strong outlook, forecasting revenue of approximately $50 billion for the current quarter, compared with $11.3 billion during the same quarter last year.
The results reinforced investor confidence that supply constraints and growing AI infrastructure spending continue to support pricing across the memory market.
Analysts raise price targets
Following the earnings report, several Wall Street analysts raised their forecasts for Micron shares.
Among the most bullish was Barclays analyst Thomas O’Malley, who increased his price target by 70% to $2,000 from $1,175 while maintaining a Buy rating.
The revised target was based on a higher earnings outlook for fiscal 2027.
O’Malley raised his fiscal 2027 earnings-per-share estimate to $166.74 from $106.77 previously.
A key factor behind the upgrade was Micron’s expanding use of supply agreements, or SCAs.
According to O’Malley, Micron disclosed stronger-than-expected details about these agreements, including both customer participation and revenue commitments.
The analyst said Micron has signed agreements with 16 customers across data center, consumer, and automotive markets, including four large customers and three medium-sized customers.
Most agreements run for five years between 2026 and 2030, while automotive contracts generally span three years.
O’Malley noted that the agreements typically include fixed pricing or pricing ranges, while still allowing for higher pricing on new product launches.
Currently, the signed agreements represent roughly 20% of Micron’s DRAM volume and approximately 33% of NAND volume.
Micron expects more than half of its future revenue to eventually come from these agreements once the program is fully implemented.
According to O’Malley, 14 of the 16 signed agreements carry cumulative minimum revenue commitments totaling approximately $100 billion over their duration, with the potential for additional upside if industry supply remains constrained.
The analyst argued that the agreements provide meaningful downside protection while preserving exposure to further gains from continued AI-driven demand and favorable memory pricing conditions.
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