Micron Technology (MU) shares fell more than 1.8% on Friday, trading around $872, after Citi lowered its price target on the stock and SK Hynix unveiled a major new investment in South Korean chip manufacturing.

Citi reduced its Micron price target to $1,150 from $1,400 while maintaining its Buy rating. The bank cut the valuation multiple to 8x from 10x based on revised calendar-year 2027 earnings estimates.

"We trim MU TP to $1,150 from $1,400 based on 8x P/E vs prior 10x times revised C27 EPS to reflect lower market multiples on mixed memory peer results," the Citi analyst wrote.

The target revision followed meetings with memory supply chain participants at the "Future of Memory and Storage" conference. The core takeaway from those discussions was that pricing momentum in DRAM and NAND is genuine but fading, a shift that matters for a business like Micron’s because memory pricing can move quickly from strength to pressure when supply and demand expectations change.

Citi now expects both DRAM and NAND prices to decelerate quarter-over-quarter over the next four quarters, peaking in Q2 2027. For the second half of 2027, the bank projects DRAM prices declining 3% half-over-half, compared with a previously flat outlook. NAND prices are projected to fall 5% over the same period. Citi also trimmed its FY27 and FY28 EPS estimates for Micron by 1% and 2%, respectively.

Margins Under Pressure

Citi anticipates that Micron's gross margins will decline from the current mid-80s range and settle in the mid-70s next year. Approximately 40% of Micron's DRAM volume is tied to long-term pricing agreements, offering some cushion but not enough to fully offset the projected pricing downturn.

Micron shares have declined roughly 9% over the past month, though the stock remains up more than 660% over the trailing 12 months.

SK Hynix Investment Adds Supply Concerns

On Friday, SK Hynix announced that its board approved 54.3 trillion won ($38.15 billion) in new chip fabrication investments in South Korea. This follows a combined 800 trillion won ($518.58 billion) commitment made earlier this year by SK Hynix and Samsung to build new semiconductor manufacturing hubs.

New supply is not expected to arrive quickly, as large fabs typically take years to construct. Micron's own $100 billion New York manufacturing project, announced in 2022, is not expected to begin production until 2030. No major new memory capacity is slated to come online until approximately next year, with further additions planned for 2028.

Samsung reported DRAM average selling prices up roughly mid-40% quarter-over-quarter in Q2, exceeding consensus. SK Hynix posted DRAM ASPs up 30% quarter-over-quarter and disclosed a five-year, $500 billion long-term supply agreement with Nvidia. Sandisk, by contrast, missed its September-quarter revenue guidance amid softer pricing — a data point Citi cited when trimming its own estimates.

China Capacity Expansion Flagged as Key Risk

Citi identified China's memory capacity expansion as the largest structural risk to its investment thesis. YMTC plans to add 50,000 to 60,000 wafer starts to its existing 200,000-unit capacity next year, with the goal of claiming the top position in global NAND production by 2030. DRAM producer CXMT intends to expand from 350,000 to roughly 400,000 wafers next year, targeting 600,000 wafers by 2030.

"While US government is unlikely to allow made in China memory sales to US, sales to data centers in other regions like Europe could indirectly impact Micron," Citi analysts wrote.