【MU】Micron and General Motors sign long-term chip supply agreement

U.S. memory chip maker Micron (Micron, NYSE: MU) and General Motors (U.S.: GM) signed a long-term supply agreement on Wednesday (July 1) to provide memory and storage solutions for General Motors’ next-generation vehicle platforms.

GM Locks In LPDRAM, NOR, and UFS NAND

The agreement covers LPDRAM, NOR, and UFS NAND products, supporting General Motors’ next-generation automotive platform. The two sides will also carry out engineering collaboration on future technologies, including memory roadmaps, as well as validation and certification work.

Micron said AI in-cabin experiences, advanced driver-assistance systems (ADAS), and autonomous driving functions are driving up demand from automakers for memory and storage solutions.

General Motors: Reducing Supply-Chain Risk

Jeff Morrison, GM’s Senior Vice President of Global Purchasing and Supply Chain, said advanced chips are at the core of future vehicle functions, and the strategic agreement with Micron helps the company provide innovative technology to customers while also reducing key supply-chain risks.

General Motors said the agreement is intended to secure the semiconductor supply chain in advance and is not in response to any ongoing operational disruptions.

Capacity Supported by U.S.-Made Production

The agreement will be supported by Micron’s continuously expanding U.S. manufacturing footprint, including its memory chip facility in Manassas, Virginia, where modernization upgrades were recently completed.

Micron invested $2 billion to modernize its Manassas plant, which began production earlier this year, helping support the supply stability needed for longer lifecycle automotive products.

GM Is One of 16 Strategic Customer Agreements

The General Motors agreement is one of 16 strategic customer agreements mentioned by Micron in its third fiscal quarter. Micron disclosed when it released its third fiscal quarter results last week that the 16 agreements cover the data center, consumer, and automotive markets, and that customers committed a total of $22 billion to secure memory chip supply.

Some agreements include “take-or-pay” commitments, cash deposits, and price floors to lock in supply and protect profit margins. Micron also disclosed at the time that remaining performance obligations were about $100 billion.

DRAM Prices Up About 70% Since December Last Year

A report from S&P Global Mobility said DRAM prices have risen by about 70% since December last year. A surge in demand from AI data centers has tightened memory chip supply; automakers are also looking to strengthen the semiconductor supply chain to support the increasingly high computing demands of modern vehicles.

Memory chips have become an important component in automobile production and can be used in advanced driver-assistance systems and high-power in-vehicle entertainment information systems.

Micron Up More Than 3x This Year

Micron’s stock has risen more than 3 times year-to-date, and its market value has at one point surpassed $1 trillion. On Tuesday, shares fell back roughly 13% following the broader market.