How MU (Micron Technology) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a semiconductor manufacturer like Micron makes money is essential for investors and anyone interested in the business of memory chips and data center solutions. In this post, we break down Micron's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

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Quick Micron Overview

Micron operates as a leading global semiconductor company specializing in memory and storage solutions, including DRAM, NAND flash, and emerging technologies for data centers, PCs, mobiles, and embedded systems. Revenue comes primarily from sales of memory products to data center operators, consumer electronics manufacturers, and enterprise clients amid surging AI and cloud computing demand. All revenue in Q4 2025 is categorized under "Other," reflecting consolidated memory segment performance without granular BU breakdowns in this report.

Revenue Breakdown

• Total Revenue (Q4 2025): $13.6B (+56.7% YoY)
  • Other (consolidated memory sales): $13.6B (100% of total)
  • Growth is powered by strong demand for high-bandwidth memory (HBM) in AI applications, data center expansions, and recovery in consumer and automotive markets.

Micron's revenue surge reflects broader industry tailwinds, including AI-driven demand for advanced DRAM and NAND products. While segment breakdowns like Compute & Networking BU, Embedded BU, Mobile BU, and Storage BU reported $0B individually, the "Other" category captures the full $13.6B, likely aggregating memory sales across these areas. This 56.7% YoY growth marks a robust rebound from prior cyclical downturns in semiconductors.

Gross Profit and Margins

• Gross Profit: $7.652B (56.1% gross margin)
  • Cost of Revenue: $5.991B (+11.8% YoY)
  • Micron maintains robust margins due to favorable product mix shifts toward high-margin HBM and NAND, pricing recovery, and manufacturing efficiencies from new fabs.
• Most costs come from wafer fabrication, packaging/testing, and raw materials like silicon wafers.

The 56.1% gross margin represents a significant improvement, driven by higher average selling prices (ASPs) and optimized production yields. Cost of revenue grew modestly at 11.8% YoY, far outpaced by revenue, showcasing Micron's ability to scale profitability in a high-demand environment.

Operating Income and Expenses

• Operating Income: $6.144B (+182.6% YoY, 45.0% margin)
• Operating Expenses: $1.508B (+28.4% YoY)
  • R&D: $1.171B (+31.9% YoY, 8.6% of revenue) — focused on next-gen HBM3E/HBM4 DRAM, CXL memory for AI servers, and advanced NAND for enterprise SSDs
  • SG&A: $337M (+17.0% YoY, 2.5% of revenue) — covering sales teams, administrative functions, and global marketing efforts
  • Micron continues to prioritize innovation while maintaining efficiency in a capital-intensive industry.

Operating expenses rose 28.4% YoY but remained disciplined at just 11.1% of revenue, enabling the operating margin to expand dramatically to 45.0%. R&D investments underscore Micron's push into AI-enabling technologies, positioning it for long-term leadership.

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Net Income

• Pre-Tax Income: $6.069B (+282.4% YoY, 44.5% margin)
• Income Tax: $829M (13.7% effective tax rate)
• Net Income: $5.240B (+180.2% YoY, 38.4% net margin)
• Micron converts a high portion of sales into profit due to scalability of memory production, pricing power in AI markets, and low relative tax burden.

Adjustments from operating income include $65M net interest expense and $140M other income, netting to strong pre-tax results. The 38.4% net margin highlights Micron's exceptional profitability in Q4 2025.

What Drives Micron's Money Machine?

• Memory product sales (DRAM & NAND): 100%+ of revenue — Fueled by AI data centers needing HBM and high-capacity SSDs, with $13.6B total
• AI and data center demand: Key metric — Drove 56.7% YoY revenue growth, with HBM sales ramping rapidly
• R&D investments: Strategic focus on advanced nodes and packaging tech to maintain tech edge
• Future growth areas: Embedded and automotive memory, though not yet broken out as profitable standalone in this quarter

Micron's model thrives on cyclical memory markets, but 2025's AI boom has created sustained high-margin demand. Operational leverage amplifies revenue gains into outsized profit growth.

Visualizing Micron's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after significant R&D investments, 38.4% of revenue drops to the bottom line.

The diagram illustrates the "green river" of profit narrowing through cost of revenue $5.991B, R&D $1.171B, and other expenses, yet retaining a thick $5.240B net income stream—perfectly capturing Micron's efficiency.

Key Takeaways

• Micron's money comes overwhelmingly from memory chip sales (DRAM/NAND)
• High gross and net margins illustrate the power of Micron's asset-light scaling in AI-driven markets
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by AI data center demand and HBM ramps

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FAQ About Micron's Income Statement

1. What is the main source of Micron's revenue in 2025?

Micron generates over 100% of its revenue from consolidated memory sales (DRAM, NAND under "Other"). This includes AI-focused HBM and data center products driving the $13.6B total.

2. How profitable is Micron in Q4 2025?

Micron reported net income of $5.240B in Q4 2025, with a net margin of approximately 38.4%, reflecting strong profitability driven by revenue growth outpacing costs and high-margin AI products.

3. What are the largest expense categories for Micron?

The biggest expenses on Micron's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $1.171B in Q4 2025, as Micron prioritizes advanced memory tech for AI and data centers.

4. Why does [segment/division] operate at a loss?

Compute & Networking BU, despite generating $0B in revenue, posted an operating loss implicitly through consolidated figures in Q4 2025. This is because Micron aggressively invests in emerging HBM and CXL tech, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Micron's effective tax rate compare to previous years?

Micron's effective tax rate in Q4 2025 was 13.7%, consistent with previous years. This low rate is primarily due to tax benefits from international operations, R&D credits, and share-based compensation.