Micron Sold Its Own Ceiling — And a 7x P/E Is the Price Tag
Micron Technology (NASDAQ: MU)'s Strategic Customer Agreements (SCAs) are running an unprecedented price-band experiment in the memory semiconductor industry — simultaneously setting a ceiling and a floor on chip pricing for the first time in the sector's history. The cumulative revenue at minimum prices over the remaining term of 14 out of 16 SCAs reaches approximately $100B, backed by non-cancelable, take-or-pay terms and nearly $18B in cash deposits already physically in Micron's hands. The ceiling is set near Q2 2026 (calendar year) market rates, capping upside during memory price surges, while management argues the floor guarantees gross margins higher than any peak quarterly margin from any past cycle. At an approximate current price of $1,075 and a forward P/E of roughly 7x on FY2027 consensus EPS of $156.53, the market appears to be pricing in the upper-tail profits structurally cut off by the ceiling — but may not yet be fully pricing the value of the lower tail that is also being cut. SK Hynix made the diametrically opposite call in the same AI boom, reportedly removing price caps from long-term agreements entirely, creating a natural experiment whose results will define memory industry contract strategy for years. With Q4 FY2026 earnings due September 30, the SCA disclosures — not the headline revenue figure — are the real data point that will confirm whether Micron's band model is actually working and expanding.