Is Micron Technology the Next Taiwan Semiconductor Manufacturing?

Micron Technology (NASDAQ: MU) has been an incredible investment over the past few years. The memory chip maker has seen huge demand, thanks to artificial intelligence (AI). Its stock has risen over 40% since 2026 began, and is up nearly 400% since 2025. Few stocks have delivered that level of return, but we can't go back and capture those returns now; there's only the future.

Micron's success has drawn comparison to several companies, among them Taiwan Semiconductor Manufacturing (NYSE: TSM). So, could Micron be the next Taiwan Semiconductor? Let's take a look.

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Micron and Taiwan Semiconductor operate in two separate areas

Although Micron and Taiwan Semiconductor are both chipmakers, they don't compete against each other. That's because Micron is making memory chips, while Taiwan Semiconductor is making logic chips. Both of these chips are necessary in computing applications, but the reason Micron's stock has surged so much recently is the dwindling supply of its products.

In the logic chip market, there are design advantages that can provide an edge to fabricators and chip designers. This makes the field more competitive, as a new technology or design could drive massive market share gains. The memory market doesn't display the same dynamics. Instead, memory technology is mostly the same and has become commoditized as a result. So, the price of a memory chip is tied directly to demand, and when demand is high and supply is low, the price skyrockets. When memory prices are high, companies like Micron do well.

The memory business is cyclical, and eventually demand for memory chips will decline, but the question is, will that be in one year or one decade? If it's the latter, then Micron's stock has a ton more room to run. If it's the former, then the stock could be headed for a massive fall in the near future.

Most of the commentary surrounding the AI build-out claims that heavy AI spending will continue through 2030, although there's the possibility it could last for much longer. That gives Micron plenty of time to thrive on these high chip prices and build more capacity to meet demand. However, the memory chip makers must be careful not to overbuild, as the market will be filled with excess supply following the AI boom's completion.

The same dynamics are also at play in the logic chip realm, but the severity of the boom and bust cycle is less due to there being more differentiating technologies. So, I don't think Micron is the next Taiwan Semiconductor; it's its own business playing in a similar industry, but with far greater perils. But is it still worth buying at today's prices?

Micron's stock looks cheap

With most big tech stocks trading for forward earnings in the mid-20s range, it may seem like a no-brainer to buy Micron's stock at 12 times forward earnings. However, the reason Micron trades for such a deep discount is its cyclical nature. Investors don't want to own a high-priced Micron stock because eventually the cycle will flip and cause earnings to tumble. As a result, the stock is deceptively cheap.

MU PE Ratio (Forward) data by YCharts

But if the AI build-out lasts for a few years, this price may be worth paying, as it may be a few years before memory prices come under control. Micron is already working on increasing its production capacity, with its Idaho facility coming online in mid-2027. Its New York facility is expected to be up and running by 2030. There are also other competitors working to increase supply, which will decrease memory prices as a result.

So, even if the AI boom lasts for a long time, the new capacity will reduce the price of memory and harm Micron's stock. For me, there is just too much risk of the stock plummeting due to supply and demand. I'd much rather invest in a company like Taiwan Semiconductor that has a tangible advantage, and will be able to deliver strong returns thanks to its dominance in its corner of the chip market.

Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Micron Technology and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.