Storage market "adding insult to injury"? Micron will exit the "consumer storage business" and focus on AI storage chips

Storage chip giant Micron Technology announced that it will exit the consumer storage business and instead fully invest in the production of advanced storage chips HBM required for AI data centers. This strategic adjustment comes at a time when the global supply of storage chips is tight, which may further exacerbate supply shortages in the consumer electronics market.

On Wednesday, Micron announced that it will stop selling its "Crucial" brand consumer products through retailers, e-commerce platforms, and distributors globally, but product shipments through consumer channels will continue until February 2026. The company's Chief Business Officer Sumit Sadana stated that the growth of AI-driven data centers has led to a surge in demand for memory, and Micron made this difficult decision to improve supply and support for larger strategic customers.

On the day the news was announced, Micron's stock price fell by about 3%, but the stock has still gained 178% year-to-date. Analysts indicated that the boom in AI infrastructure construction is causing shortages of key products, including storage, while several leading companies plan to invest hundreds of billions of dollars in building large data centers over the next few years, further driving up demand.

According to data from market research firm TrendForce, Micron is the third-largest DRAM supplier in the world, following Samsung and SK Hynix, with the three companies collectively holding 92% of the DRAM market share. Micron holds a 13% market share in the NAND flash memory sector used for SSDs. Micron's exit will leave a significant gap in the consumer storage market, and amid warnings from analysts that memory shortages could last for years, it remains unclear whether any company can fill this gap.

Consumer Business Gives Way to HBM Business

Micron will continue to ship products through consumer channels until February 2026, but will completely shut down the Crucial brand business that has been operating for nearly 30 years. The brand's products include NVMe solid-state drives, external storage devices, and DDR4 and DDR5 memory modules, which are commonly used upgrade components for PC users.

Micron has long been transitioning to the HBM (High Bandwidth Memory) business, which has become the most competitive field among the world's three major memory suppliers—Micron, South Korea's SK Hynix, and Samsung. HBM is a type of dynamic random-access memory that reduces power consumption by vertically stacking chips, helping to process large amounts of data, and is essential in AI development. These chips are priced significantly higher than consumer storage, typically yielding substantial profit margins.

Micron CEO Sanjay Mehrotra revealed in September that in the August quarter, Micron's HBM revenue grew to nearly $2 billion, equivalent to an annualized figure of about $8 billion. In contrast, the company's Crucial consumer business has never been separately listed in its financial reports. Summit Insights analyst Kinngai Chan stated that the consumer storage business is not a significant driver of Micron's overall business In contrast, Micron's cloud storage business segment achieved a year-on-year growth of 213% in the latest quarter, reflecting strong momentum in AI data center demand. Goldman Sachs analysts raised Micron's stock price target from $180 to $205 on Tuesday, maintaining a hold rating, but stated that due to the "sustained price momentum" of memory, they expect Micron's quarterly results, to be announced in two weeks, to "healthily exceed market expectations."

AI Chips Trigger Storage Supply Tightness

This decision highlights that the AI infrastructure construction boom is causing shortages of key inputs such as storage chips. A few companies have committed to investing hundreds of billions of dollars in building large data centers over the next few years, leading to a global tightening of storage supply.

AI chips produced by companies like NVIDIA and AMD require a large amount of cutting-edge storage chips. For example, the current generation NVIDIA GB200 chip is equipped with 192GB of memory per graphics processor, and Google's latest AI chip Ironwood TPU requires 192GB of high-bandwidth memory. AMD's current AI chip MI350 is equipped with 288GB of high-bandwidth memory.

In contrast, the storage specifications used in mobile phones and computers are much lower and in far fewer quantities—many laptops are only equipped with 16GB of memory. This difference in demand has prompted Micron to shift its limited capacity towards the more profitable AI data center market.

Consumer Market Faces Supply Gap

Micron's exit will have a significant impact on the consumer storage market. According to TrendForce data, Micron holds a 13% market share in the NAND flash memory sector used for solid-state drives. In the DRAM market, Micron is the third-largest supplier, and its exit has left PC assemblers without a trusted Crucial brand option.

In addition to Samsung and SK Hynix, Micron also supplies GDDR7 memory for NVIDIA's RTX 5000 series graphics cards. According to TrendForce data, shipments for both consumer and enterprise systems have already declined.

Reports indicate that Samsung and SK Hynix are also prioritizing profitability over risky capacity expansion. Against the backdrop of ongoing tightness in the global memory supply chain, where advanced high-bandwidth memory used in everything from smartphone flash chips to AI data centers is facing supply constraints, Micron's exit may further exacerbate supply pressures in the consumer market.