Micron's 86% Margin Floor Now Hangs on a Taiwan Strike Vote
Micron's fiscal-first-quarter guide steps gross margin down to about 86.25%, a dip attributed to higher pay, on a quarter management calls the year's floor. The Taiwan workers whose pay it is just voted 1,994 to 14 to authorize a strike.
Vincent Jiang · 3 min read
The vote landed on a number already printed
Workers at Micron's−0.64% — Micron, down 0.64 percent today Taoyuan site in Taiwan voted 1,994 to 14 on October 7, 99% in favor, to authorize a strike over how record profits are split; no walkout has been called and no date set 12. The same day, D.A. Davidson's Gil Luria lifted his price target to a Street-high $3,000 8.
Taiwan produced a majority of Micron's DRAM output in 2025, and its two unions cover more than 80% of the island's roughly 15,000 workers 1.
A record quarter with one soft line
Fiscal Q4 revenue was $54.23 billion, up 379% from $11.32 billion a year earlier, on $37.70 billion of GAAP net income and an 87% non-GAAP gross margin 34. The fiscal-Q1 guide: revenue of $61.5 billion plus or minus $1.5 billion, EPS of $38.15, and gross margin of about 86.25%, a dip attributed mostly to higher pay, on a quarter management called the year's floor 34.
Revenue has run from $4B to $41B in three fiscal years
Data
| Micron revenue | |
|---|---|
| Q3 '23 | $4.01B |
| Q4 '23 | $4.73B |
| Q1 '24 | $5.82B |
| Q2 '24 | $6.81B |
| Q3 '24 | $7.75B |
| Q4 '24 | $8.71B |
| Q1 '25 | $8.05B |
| Q2 '25 | $9.3B |
| Q3 '25 | $11.32B |
| Q4 '25 | $13.64B |
| Q1 '26 | $23.86B |
| Q2 '26 | $41.46B |
The stakes reach past Micron's $1.22 trillion market value 5: Micron and Nvidia−0.47% — Nvidia, down 0.47 percent today together are expected to deliver more than a third of the S&P 500's third-quarter earnings growth 6.
The floor is a bill nobody has signed
The floor assumes the labor bill is final. It is not. Taiwan production staff earned 35 to 68 months of base pay for fiscal 2026; the union wants a permanent formula paying 15% of operating profit, and talks broke down on September 21 7. Samsung set the regional price of peace in May 2026, at 10.5% of chip-division operating profit 12.
Run both numbers on fiscal-2026 non-GAAP operating income of $101.2 billion and the spread is roughly $4.5 billion a year, against $33.2 billion of adjusted free cash flow in the September quarter alone 3.
The guide prices a raise management has decided to pay. It cannot yet price the formula the union wants instead.
Micron's first guided margin dip of the boom lands on pay, not prices
- Micron gross margin
- Estimate
Data
| Micron gross margin | |
|---|---|
| Q4 FY23 | -10.8% |
| Q1 FY24 | -0.7% |
| Q2 FY24 | 18.5% |
| Q3 FY24 | 26.9% |
| Q4 FY24 | 35.3% |
| Q1 FY25 | 38.4% |
| Q2 FY25 | 36.8% |
| Q3 FY25 | 37.7% |
| Q4 FY25 | 44.7% |
| Q1 FY26 | 56% |
| Q2 FY26 | 74.4% |
| Q3 FY26 | 84.6% |
| Q4 FY26 | 86.8% |
| Q1 FY27 guide (estimate) | 85.95% |
The case that this settles cheaply
A strike is not obviously bearish: when memory is tight, lost output lifts prices for every seller, and at 87% margins a bigger payout is cheap and hard to refuse publicly 1. The margin dip reads as benign because it is compensation, not softening average selling prices 4. Both arguments assume the bill is knowable. The larger Taichung union, about 11,000 members, has not voted; it returns to mediation on October 22 17.
December stacks the triggers
Buyers have paid for visibility: 26 strategic customer agreements, up from 16, most locking price bands with floors and ceilings; about 75% of expected 2027 output is already committed 45. CFO Mark Murphy on the September 30 call: "Even at floor prices, we expect margins meaningfully above any prior cycle peak margins" 5.
The bulls underwrite the rest: FactSet consensus carries $128 billion of fiscal-2027 free cash flow, and the CHIPS Act curb on buybacks eases in December 4. Luria's Street-high $3,000 leans on a stock near six times forward earnings: "If you don't buy it, they will" 8.
Four dates between now and December
The calendar: a Taipei rally on October 19 that the union says is not a strike, Taichung mediation on October 22, a fiscal-Q1 print that tests the 86.25% floor, and the December buyback window 14.
Memory prices have contract floors through 2030, with one-year extensions to 2031 4. The cost of the people who make the chips still has none.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
