Micron turned to profit over the past quarter thanks to rising memory demands driven by AI. The company expects AI momentum to continue, constraining supplies for non-HBM products like DRAM.
On March 20, Micron released its fiscal second-quarter results, which ended in February. The company revealed significant growth with revenue reaching US$5.82 billion, marking a 58% increase compared to the previous year and surpassing the US$5.35 billion estimated by Bloomberg.
Operating income reached US$191 million, a significant turnaround from a loss of US$2.30 billion last year. Net income grew by 134.3% to US$793 million.
According to Micron's statement, the company delivered results with revenue, gross margin, and EPS well above the high-end of its guidance range, adding that Micron is one of the biggest beneficiaries in the semiconductor industry of the multi-year opportunity enabled by AI.
According to Micron, thanks to AI, server demand, a healthier demand environment in most end products, and supply reductions across the industry, the supply-demand balance had tightened, leading to its decision to raise product prices. Micron said AI server demand is driving rapid growth in HBM, DDR5, and data center SSDs, and the company expected DRAM and NAND prices to increase further through calendar 2024.
By end markets, Micron said total industry server unit shipments are expected to grow in mid-to-high single digits in calendar 2024, driven by AI and a return to modest growth for traditional servers. PC shipment volume are expected to increase modestly in the low single-digit range, with AI PC unit growth to account for a meaningful portion only in 2025.
Smartphone shipments may increase by low-to-mid single digits in calendar 2024. Memory demands in automotive and industrial applications are likely to be stronger than PCs and mobile.
Outlook and Capex
As to the financial guidance, Micron anticipates revenue for the current quarter to range between US$6.4 billion and US$6.8 billion. Additionally, GAAP operating expenses are projected to range from US$996 million to US$1.26 billion.
Micron predicts that the bit demand growth in 2024 will align closely with the long-term Compound Annual Growth Rate (CAGR) for DRAM and will be approximately in the mid-teens for NAND. Over the medium term, Micron expects bit demand growth CAGRs of mid-teens in DRAM and low-20s percentage range in NAND.
In 2024, the demand for DRAM and NAND is expected to exceed the available supply, and Micron anticipated that its production growth won't keep up with the demand for DRAM and NAND, adding that the company is fully utilizing its high-volume manufacturing capabilities. Meanwhile, Micron said HBM3E requires about three times the wafer supply compared to DDR5 to produce the same number of bits, and Micron expects the ratio to be even higher for HBM4.
Despite rising demands, Micron did not change its Capex plan for fiscal 2024, which remains at US$7.5-8 billion, and spending on wafer fab equipment will be down from fiscal 2023.
Micron financial results (US$M) | ||||||
Financial | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Sales | 3,693 | 3,752 | 4,010 | 4,726 | 5,824 | 57.70 |
Gross profit | -1,206 | -668 | -435 | -35 | 1,079 | 189.47 |
Operating income | -2,303 | -1,761 | -1,472 | -1,128 | 191 | 108.29 |
Net income | -2,312 | -1,896 | -1,430 | -1,234 | 793 | 134.30 |
Source: Micron, March 2024
Micron sales by segment (US$m) | ||||||
Segment | 2QFY23 | 3QFY23 | 4QFY23 | 1QFY24 | 2QFY24 | YoY for 2QFY24 (%) |
Compute and Networking (CNBU) | 1,375 | 1,389 | 1,200 | 1,737 | 2,185 | 58.91 |
Mobile (MBU) | 945 | 819 | 1,211 | 1,293 | 1,598 | 69.10 |
Embedded (EBU) | 865 | 912 | 860 | 1,037 | 1,111 | 28.44 |
Storage (SB&) | 507 | 627 | 739 | 653 | 905 | 78.50 |
All Other | 1 | 5 | 0 | 6 | 25 | 2,400.00 |
Source: Micron, March 2024
