Micron Technology executives reached out to investors this week, promising to increase dividends and share buyback costs, outlined a downtrend in PC market reliance and talked about experimenting with a new breed of long-term contracts. Overall, the vision for the future turned out to be optimistic, the price of the company’s shares rose slightly by one percentage point.
In the period up to 2025, the supply of DRAM memory will grow by 17-19% annually, in the NAND segment it will be 28-29%. By the end of the decade, Micron forecasts that the memory chip industry will have total sales of $330 billion, up from $161 billion in 2021. Already, memory chips account for 30% of total semiconductor industry sales, although at the beginning of the Century was content with 10%.
The data center segment generated $50 billion in storage revenue last year. By mid-decade, memory shipments in this segment will grow at an average rate of 28% per year for DRAM and 33% per year for NAND.
The automotive market didn’t surpass $4 billion last year, but demand for DRAM memory in this segment should grow 40% annually through the middle of the decade, and in the case of NAND, that figure will reach 49%. A fully autonomous car requires 30 times more DRAM and 100 times more NAND than a driver-only car.
Micron is gradually reducing its dependency on the PC and smartphone market. While both segments accounted for about 55% of the company’s sales last year, their share will decline to 38% by mid-decade. By then, the data center segment will increase its share from 30% to 42%, and the combined share of the automotive, industrial and telecom segments will increase from 15% to 20%.
As an experiment, Micron secured a long-term storage supply deal with one of its top 10 customers, providing annual revenue replenishment of more than $500 million for more than three years. In this case, the customer is given a priority right to receive products under conditions of scarcity, and the pricing policy is adjusted to the decreasing costs of the manufacturer. At the same time, the price of the contracted products is not subject to fluctuations inherent in the short-term market.
At the same time, Micron announced its intention to increase dividend levels by 15% and provide capital returns to investors of up to 100% of free cash. Now this value does not exceed 50%.