Micron posted record DRAM and data center revenue in the third quarter of fiscal 2025, fueled by strong HBM demand and AI-driven growth. The company expects fourth-quarter fiscal 2025 revenue to rise 15% sequentially to a record US$10.7 billion while expanding US manufacturing and shifting focus toward high-value, AI-centric memory markets.
Record performance drives guidance boost
On June 25, 2025, Micron released its latest financial results. The company reported record DRAM revenue in the third quarter of fiscal 2025, driven by nearly 50% sequential growth in HBM. Data center revenue more than doubled year-over-year, reaching an all-time high, while consumer-oriented markets showed strong sequential growth. Looking ahead to the fourth quarter, Micron expects a 15% sequential rise in revenue to a record US$10.7 billion at the guidance midpoint, supported by robust demand across key segments, particularly AI.
Strategic reorganization targets AI growth
Micron has recently reorganized its business units around high-growth markets such as AI and plans to leverage its advanced 1-gamma technology across its DRAM portfolio. The company also reaffirmed its long-term strategic commitment to US-based manufacturing, announcing an expanded investment of US$200 billion over the next two decades. This includes a US$30 billion increase over previous plans, with a second memory fab planned for Boise, Idaho, expanded facilities in Virginia, and new advanced packaging capabilities to support future HBM growth. The first Idaho fab, ID1, is expected to start producing wafers in the second half of 2027.
Market outlook shows continued expansion
Micron projects continued memory content growth driven by AI adoption across servers, PCs, smartphones, and vehicles. It expects mid-single-digit growth in the 2025 server market, low-single-digit growth in PC and smartphone units, and increasing demand for AI-enabled automotive applications.
Regarding supply and inventory, Micron said customer inventories remain healthy, with some potential tariff-related pull-ins. The company expects calendar year 2025 industry DRAM bit demand to grow in the high teens and NAND in the low double digits, with its own supply growth remaining below industry demand outside of HBM.
DRAM ASP decline driven by product mix, not HBM pricing pressure
During the conference call, Micron clarified that the reported decline in average DRAM pricing during its third quarter fiscal 2025 was not due to pressure on HBM prices, but rather a shift in product mix toward lower-cost mobile memory. Executive vice president and CBO Sumit Sadana explained HBM pricing has remained stable, while a rebound in shipments to consumer markets—such as smartphones—following inventory normalization contributed to a lower overall average selling price (ASP).
Sadana emphasized that the increase in lower-priced consumer DRAM products diluted the overall ASP, even as HBM unit pricing held steady or improved. He noted that the shift reflected broader market dynamics and product transitions rather than volatility in HBM pricing. The surge in mobile memory shipments came after excess inventory in late 2024 was cleared, leading to strong demand in the third quarter of 2025.
Improved margins seen as pricing and mix shift favorably in DRAM
Micron also raised its gross margin outlook for the fourth quarter, citing stronger-than-expected pricing and a more favorable product mix. Sadana said the gross margin in the third quarter of fiscal 2025 came in at 39%, beating the company's earlier guidance of 36.5%. He attributed the upside to robust DRAM demand—particularly from data center customers—and better pricing leverage than initially anticipated.
For the August quarter, Micron now expects gross margin to range between 39% and 42%, underpinned by continued strength in data center DRAM shipments and a strategic tilt toward higher-value applications. Sadana stressed that the improved mix away from lower-margin consumer products is a key driver of the company's optimism for margin expansion in the near term.
Article edited by Jerry Chen
