Micron's India Facility Opening Adds to Capex Amid Unresolved HBM Pricing Risks

What happened

Micron Technology celebrated the opening of its first semiconductor assembly and test facility in Sanand, Gujarat, India, as per a recent press release, expanding its global manufacturing footprint. This move aligns with Micron's strategy to enhance its presence in emerging markets and support India's semiconductor ecosystem development. However, the DeepValue report highlights that Micron is already engaged in aggressive capital expenditure, with FY26 capex estimated at ~$20 billion to ramp high-value products like HBM. The report warns that such elevated investment increases sensitivity to cycle risks, particularly as HBM contract prices are expected to decline year-over-year and capacity may reallocate from HBM to DDR5. This new facility represents additional capital commitment without addressing critical uncertainties, such as disclosed HBM revenue mix or extended pricing coverage beyond CY2026.

Implication

The India facility opening adds to Micron's already elevated capex, which the DeepValue report identifies as a risk factor that could exacerbate downside if memory pricing inflects downward before investments pay off. This expansion does not provide new data on HBM revenue contribution or CY2027+ pricing agreements, leaving the core earnings driver thesis unvalidated and non-falsifiable. Investors should monitor for early warning signals, such as HBM ASP declines or capacity reallocation to DDR5, as these could trigger margin compression and validate the bear case. While the move supports long-term geographic diversification, it fails to mitigate the cyclical exposure highlighted in the report, where oversupply risk looms if demand softens. Consequently, the news underscores growth ambitions but does not alter the fundamental investment risks, maintaining the need for a defensive stance.

Thesis delta

The India facility opening reinforces the DeepValue report's concern about Micron's rising capex and potential for oversupply, as it adds to capital commitments without addressing HBM pricing durability. However, it does not shift the core thesis, as key variables like HBM ASP trends and capacity allocation remain unchanged, and the lack of disclosed mix metrics continues to undermine confidence in the bullish narrative.