Micron Technology's revenue fell 53% year on year to US$3.69 billion in the fiscal second quarter that ended on March 2, 2023, coming within the company's guidance range. The memory chipmaker has also issued a positive remark about customers' inventory levels.
"We now believe that customer inventories have reduced in several end markets, and we see gradually improving supply-demand balance in the months ahead," said Micron president and CEO Sanjay Mehrotra during the company's conference call on March 28. "While our industry faces significant near-term challenges, we believe that the memory and storage TAM will grow to a new record in calendar 2025 and will continue to outpace the growth of the semiconductor industry thereafter."
By the end of calendar 2023, data center customer inventories should be reasonably healthy, Mehrotra indicated. "We continue to see AI as a secular driver of demand growth in the data center." He continued that in the fiscal second quarter, Micron expanded shipments of CXL DRAM samples to OEM customers serving enterprise, cloud, and HPC workloads.
Micron is the industry's leader in DDR5, Mehrotra said. Micron is shipping DDR5 in high volume to data center customers, and has received the first customer qualification for its 1-alpha 24Gb DDR5 product, according to Mehrotra.
Micron has seen inventories held by its PC customers improve "meaningfully," Mehrotra said. The chipmaker is also well positioned for the ongoing industry transition to DDR5 memory. Client DDR5 adoption is anticipated to rise gradually through calendar 2023, with DDR4 to DDR5 mix crossover occurring in early to mid-calendar 2024, Mehrotra noted.
Micron anticipates that mobile customer inventory will improve through the rest of calendar 2023, and that mobile DRAM and NAND bit shipments will increase in the second half of the company's fiscal year compared to the first half, according to Mehrotra.
In addition, Mehrotra stated that the automotive and industrial end markets now account for more than 20% of Micron's total revenue and offer more stable growth. Auto income increased by about 5% year on year in the fiscal second quarter. Several milestones in the fiscal second quarter demonstrated Micron's leadership in automotive, Mehrotra said. "We reached a new record customer quality score, qualified the industry's first 176-layer e.MMC 5.1 automotive product, and began shipping the industry's first 176-layer UFS 3.1 automotive solution." Auto memory demand will continue to rise in the second half of calendar 2023, led by progressively easing non-memory supply constraints and increasing memory content per vehicle, Mehrotra continued.
Inventories at many of Micron's industrial customers have begun to stabilize, and the company expects demand to improve in the second half of its fiscal 2023, Mehrotra said.
Micron has seen 1-alpha represent most of its DRAM bit production, "and we continue to make great progress in initiating our transition to 1-beta," Mehrotra said. As for NAND, 176- and 232-layer now represent more than 90% of Micron's total NAND bit production.
In terms of market outlook, Mehrotra stated that Micron's expectations for calendar 2023 industry bit demand growth have moderated to approximately 5% in DRAM and low-teens percentage range in NAND, which are significantly lower than the expected long-term CAGRs of mid-teens percentage range in DRAM and low-20s percentage range in NAND.
Excluding the impact of inventory write-downs, Micron believes its balance sheet DIO has peaked in fiscal second-quarter 2023, and the company is close to transitioning to sequential revenue growth in quarterly results, according to Mehrotra.
Furthermore, Mehrotra gave an update on Micron's decisive actions in fiscal 2023. The company has reduced its capex plan for fiscal 2023 further, and now expects to invest roughly US$7 billion, a decrease of over 40% from last year, with WFE capex down more than 50%. Micron's WFE capex is anticipated to fall further in fiscal 2024 as the chipmaker ramps 1-beta and 232-layer nodes in a capital-efficient manner. Meanwhile, Micron has further reduced DRAM and NAND wafer starts, which are now down by approximately 25%.
Micron has also made further reductions to its operating expenses beyond the executive salary cuts and suspension of Micron's fiscal 2023 bonuses company-wide. "We now expect our overall headcount reduction to approach 15%," Mehrotra said.
