Micron Technology (MU) shares climbed about 3% in premarket trading after the memory chip maker said it entered a long-term supply agreement with Ford NYSE:F focused on automotive memory and storage products.
Micron said the arrangement is intended to support increasing technology requirements inside modern vehicles as automakers add more software-driven features and data-intensive systems. The company continues expanding production capabilities aimed at supporting long lifecycle automotive programs.
Micron said growth in advanced memory demand, including products tied to artificial intelligence applications, has increased the need for additional manufacturing capacity. The company recently expanded advanced DRAM production at its facility in Manassas, Virginia, which contributed to supporting the agreement.
The Ford agreement follows another recently disclosed strategic customer arrangement involving General Motors (GM). Micron said these long-term agreements are becoming a larger part of its business model.
During its latest quarterly update, Micron said strategic customer agreements represented about 40% of revenue and may eventually account for roughly half of its business.