S&P Global Ratings on Wednesday raised Micron Technology Inc.'s issuer credit rating to BBB+ from BBB, assigning a positive outlook as AI-driven demand for high-performance memory semiconductors strengthens the company's financial profile.
The upgrade reflects Micron's improved operating performance and reduced leverage, with gross margins expanding to 85% from 39% a year ago. The rating agency noted that approximately half of Micron's revenue is now covered by strategic customer agreements, including contracts that incorporate price floors above prior cycle peaks and price caps near current levels.
Micron expects to collect roughly $18 billion in unrestricted cash customer deposits, which can be deployed for operational needs. During the final two quarters of fiscal 2025, which ended in August, high bandwidth memory accounted for only the low-20% range of DRAM revenue, according to S&P Global's estimates.
The rating agency cited confidence in AI-driven memory demand persisting through 2028, with Micron projecting a supply-demand imbalance to continue beyond 2027 despite planned new capacity additions in 2028. SK Hynix CEO Kwak Noh-Jung recently forecast that memory demand would exceed supply beyond 2030, even amid aggressive fab investments.
S&P Global indicated that a potential downgrade could occur if Micron sustains leverage above 1x. Conversely, the rating agency could consider an upgrade within the next 24 months if long-term demand trends hold and industry volatility subsides.
