Microns revenue plummeted 21 as the company is forced to

Micron’s revenue plummeted 21% as the company is forced to scale back memory production volumes

Back in August, Micron Technology management had to warn investors that earnings for the final fiscal quarter of 2022, the results of which were announced last night, would come in below the estimated $6.8 billion. In practice, the corresponding figure exceeded Amount 6.64 billion US dollars no. nearly $2 billion below market expectations. Micron will reduce capital expenditures by 30% over the next year and is already reducing utilization of manufacturing facilities.

    Image source: Micron Technology

Image source: Micron Technology

Year over year, Micron Technology’s total revenue decreased 21% to $6.64 billion, down 23% in a row. Yield fell from 47.9% to 40.3% year-on-year, gradually falling from 47.4% to 40.3%. Earnings per share did not exceed $1.35 compared to $2.39 a year ago. In a presentation dedicated to the release of fourth-quarter fiscal 2022 results, Micron’s management mentioned “Sharp drop in demand and significant inventory adjustments by customers in all target markets” as the main reason for the decline in sales.

Last quarter, 72% of Micron’s revenue came from DRAM chip sales, volume shipments were down 10% sequentially, and average selling price was down 10-12%. This resulted in a 23% sequential and 21% year-on-year decline in DRAM sales. Overall, RAM accounted for 73% of the company’s revenue for the fiscal year, and core revenue even grew 12%.

In the fourth quarter, which is already ending on Micron’s calendar, NAND solid-state memory accounted for about 25% of total revenue, while its core share declined 26% sequentially and 14% year-over-year. A quarter of the company’s annual revenue was driven by NAND shipments, and it grew 11% for the full year. For the past quarter, real shipments of solid-state storage declined 20-22% sequentially and the average selling price declined 15-19% sequentially.

In terms of the dynamics of revenue changes in specific market segments, Micron’s management highlighted only two areas of activity where demand was trending positively. On the one hand, this is the market of cloud solutions, where there is a long-term trend towards the development of artificial intelligence systems and digitization of the economy. At the end of fiscal 2022, Micron’s core revenue grew more than 30%. Second is the automotive market, where core sales records have been updated for both the quarter and the full fiscal year. Year over year, Micron’s automotive sales grew 30%. But even in these two areas, the company’s sales suffered from the presence of excess customers.

Now forced to reduce the load on existing production lines, Micron Technology is poised to reduce capital expenditures by 30% to $8 billion in the coming fiscal year, while reducing the cost of purchasing production equipment by 50% over what it was Previous year. The hiring of staff has also been suspended, but existing staff positions will not be cut. At the same time, the cost of constructing manufacturing facilities will at least double over the next year as Micron expects demand to grow in the second half of this decade.

In the current quarter, Micron expects to generate between $4.0 billion and $4.5 billion and maintain profit margins between 24% and 28%. The company’s management expects that the situation on the memory market will improve only in the second half of next year. According to the results of the current calendar year, the range of memory chips in the PC segment should be reduced by 15-19%, and in the smartphone segment by about 8-9%. Next year’s PC sales will be at or slightly below year-to-date levels, according to Micron, and the smartphone market is expected to stabilize by the end of calendar 2023. If this year the growth in storage supply exceeds the growth rate in demand, these trends should reverse next year.

About the author

Dylan Harris

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

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