Micron now prioritizes long-term customer agreements over cost reductions, signaling a strategic pivot in its business model.
Micron Technology (MU) has abandoned its long-standing focus on cost-cutting, instead emphasizing $100 billion in contracted minimum revenue from 16 take-or-pay customer agreements. The shift marks a departure from its traditional operating discipline, where cost reductions were a key performance metric.
Previously, management targeted low-to-mid teens percentage cost reductions for NAND in fiscal 2025. Now, blended DRAM costs per bit are expected to rise due to a product mix shift toward higher-performance, pricier components. The new strategy covers nearly 20% of DRAM volume and a third of NAND, with deposits and commitments totaling $22 billion.
The company expects these contracts to account for half or more of future revenue, reflecting a bet on stable demand over cost efficiency.