Micron Technology ended the quarter with a loss and announced

Micron Technology ended the quarter with a loss and announced a 10% workforce reduction

Many memory manufacturers have entered a difficult time for themselves, and only Micron Technology now has the opportunity to speak on the subject, having just released earnings results for the first fiscal quarter. Sales fell 47%, net losses reached $195 million, capital expenditures will have to be cut, and staff will be reduced by 10%. Micron does not expect the situation to improve any time soon.

    Image source: Micron Technology

Image source: Micron Technology

December 1 ended the first fiscal quarter of 2023 on the Micron Technology calendar. Three months ago the company had about 48,000 employees, now they have to reduce their number by about 10%. Management salaries will be reduced by 5 to 20% and bonuses will be eliminated. Last month, the company announced plans to reduce the number of silicon wafers processed each month by 20%. Micron Enterprises will continue to operate in this mode indefinitely until the storage demand situation begins to recover.

From 2020 to early 2022, stockpiles of memory chips increased as demand increased. This year, a combination of unfavorable factors has pushed the supply/demand gap to its highest level in 13 years. Inventories will peak in the current quarter and then begin to decline. Micron management expects revenue to grow beginning in March 2023, with customer bases gradually normalizing beginning in mid-2023. All of this doesn’t make Micron expect a quick return to profitability, and all of 2023 will be difficult from that standpoint.

According to CEO Sanjay Mehrotra, when the industry crisis is over, the artificial intelligence and industrial automation segments will be the profit engines for memory manufacturers. For the current fiscal year, which ends in September, Micron expects to reduce capital expenditures to $7 billion, compared to the $8 billion previously planned and the $12 billion spent in fiscal 2022. The cost of purchasing manufacturing equipment will more than halve sequentially. They will also be lower in fiscal 2024 than in 2023. Micron will be forced to slow down its process migration and EUV lithography adoption due to new market conditions. In the past quarter, the company’s capital expenditures were $2.47 billion.

Storage demand in the server segment will remain below historical levels throughout 2023. According to the results of the current calendar year, the capacity of the PC market will decrease by 18-19% in real terms, and by another 2-5% next year. Ultimately, Micron says this market will return to 2019 levels by 2024. This contradicts the forecasts of many market participants who believe that the pandemic has brought the PC market to a new level of demand that will continue in one form or another in the future. The smartphone storage segment will shrink by 10% this year and flatten or grow slightly next year if demand in the Chinese market improves.

The automotive segment saw memory demand surge 30% last quarter, and even if macro uncertainty persists, it could see noticeable growth through the end of fiscal 2023. In the current calendar year, demand for both DRAM and NAND memory chips will increase by 2-5%. Next year it will grow by 10% in the first case, and by 20% in the second. At the same time, storage demand will remain below historical trends for two consecutive years as the impact of regional geopolitical factors in Europe and China will add to the overall unfavorable macroeconomic environment.

Micron’s revenue was $4.09 billion for the most recent quarter, down 47% from the year-ago period and down 38% from the prior-quarter revenue. The return fell short of our own forecasts, falling to 22.9% from the 26% target. The company ended the quarter with $1.8 billion in cash. Losses were estimated at $195 million on a GAAP basis and $39 million on a non-GAAP basis. Operating losses in the first case reached $209 million, and in the second – $65 million. In the current fiscal quarter, Micron expects revenue of $3.6 billion to $4 billion The release of the financial statements caused the company’s share price to fall by a few percent after the main trading session ended. Year-to-date, Micron stock is down 45%.

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Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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