Holding Samsung or SK hynix makes growing HBM shipments sound like a reason to expect more profit. Yet Micron's Cloud Memory gross margin stayed at 83% even as its HBM mix increased. Separating profit dollars from profit per dollar of sales helps me read the next results of the company I own.
The company margin rose; Cloud Memory stayed flat
Micron's September 30 release, US date, covered its fiscal fourth quarter ended September 3. Non-GAAP gross margin rose from 84.9% to 87.0% company-wide while Cloud Memory stayed at 83%. Gross margin is revenue minus cost of goods sold, divided by revenue; it differs from operating margin. See the previous-quarter release and latest results and business-unit table.
The company said a higher HBM mix in Cloud Memory offset higher pricing. More shipments and more profit per dollar of sales had different conditions. See page 7 of the prepared remarks.
Cloud Memory revenue increased from $13.769 billion to $16.283 billion. A larger revenue base can produce more gross profit even at an unchanged margin. The business-unit figure is distinct from the margin of the HBM product alone.
The pricing power behind the HBM news
Micron's DRAM prices rose by a high-teens percentage quarter over quarter; NAND prices rose about 30%. DRAM includes HBM. Pricing, volume and product mix all belong in the explanation of these results. See page 7 of the prepared remarks.
For Samsung, read the other side of higher component prices too. Its second-quarter DS division reported revenue of KRW 127.5 trillion and operating profit of KRW 89.2 trillion. DX, which includes smartphones and home appliances, reported KRW 48 trillion in revenue and an operating loss of KRW 0.8 trillion. The company described higher component costs in DX. A business selling memory can benefit while a business buying it faces higher costs. See Samsung's July 30 results.
| Company and period | What affects profit | What a holder should separate |
|---|---|---|
| Micron: fiscal Q4 ended Sep 3 | Pricing, volume and product mix | Company, business unit and HBM product margins |
| Samsung: Jul 30 release; Apr–Jun calendar quarter | DS memory, System LSI and foundry; DX input costs | DS results versus HBM alone; a DS boom versus every business improving |
| SK hynix: Jul 29 release; Apr–Jun calendar quarter | DRAM and NAND pricing; HBM, server DRAM and eSSD mix | HBM4 volume shipments versus HBM4E sample shipments |
SK hynix's second-quarter consolidated revenue was KRW 79.3187 trillion and operating profit was KRW 60.5426 trillion. HBM4 volume shipments began in Q2; HBM4E samples shipped in the first half. These were the company's preliminary results at that time. The Korean companies' April–June quarters and Micron's September-ending quarter do not establish a directly comparable winner ranking. They do help identify which products my company sells and at which stage. See SK hynix's July 29 release.
Contract cash and cash earned are different
Operating cash of $43.97 billion minus net capital expenditures of $10.77 billion equals adjusted free cash flow of $33.20 billion. These are rounded amounts from the release summary; net capital expenditures and adjusted free cash flow are Micron non-GAAP measures. See the quarterly cash-flow figures and reconciliation.
Customer deposits of $12.3 billion entered through financing activities and were excluded from adjusted free cash flow. Adding them to the calculation above mixes different kinds of cash. See pages 8–9 of Micron's remarks.
Samsung's August 21 shareholder-return disclosure also deducts deposit-like advances under long-term memory contracts from the free cash flow used for its return policy. Counting a large contract payment as profit or a confirmed dividend can inflate expectations. See Samsung's shareholder-return disclosure.
If 2027 pricing changes, revisit this conclusion
Micron said higher HBM prices in 2027 would narrow the gross-margin gap with conventional DRAM. Different future prices and costs can produce different margins from the same product mix. See page 4 of the prepared remarks.
Separate the expectations in the next results. If higher HBM contract prices reach recognized revenue and gross margins also improve after costs and mix, the case for keeping more of each sales dollar strengthens. If revenue grows while the margin stays flat, distinguish profit-dollar growth from margin improvement. For Samsung, read DX's input-cost burden alongside DS's gains, and count large contract payments separately from operating cash. Expanding HBM supply is the start. Check what lets the company you own retain more of that revenue.