Micron Technology (MU.US) announced its fourth quarter results for fiscal year 2023 ending August 31, 2023. Data show that Micron Technology’s Q4 revenue was US$4.01 billion, a year-on-year decrease of 40%, the fifth consecutive quarter of decline, but better than the market expectation of US$3.93 billion; excluding certain items, the loss per share was US$1.07, which was also better than the market expected loss of US$1.18.
In terms of profit expectations that are most concerned by the market, Micron Technology predicts that the loss per share excluding some projects in the first quarter of fiscal year 2024 will be up to US$1.14, but the market expectation is a loss of US$0.96 per share. But on the bright side, the company's revenue is expected to recover during this period, which is the second half of the year. Micron Technology expects Q1 revenue to be US$4.2 billion to US$4.6 billion, compared with market expectations of US$4.21 billion.
2023 will be a difficult year for Micron and its competitors Samsung Electronics and SK Hynix. PC and smartphone makers, the companies' main customers, have slashed orders in response to sluggish demand and excess parts inventories. Micron Technology's earnings report suggested that investor optimism about a rebound in profitability may be premature.
Micron Technology CEO Sanjay Mehrotra said the company has taken decisive action on supply and costs. The CEO said these moves will benefit Micron Technology as the memory chip market fully recovers in 2024 and then reaches record sales levels again in 2025.
Mehrotra said in an interview that the burden of excess inventory has now been significantly reduced, and that Micron's customer base, in addition to data center server manufacturers, now has ordering levels that reflect consumer demand for its products. In some areas, some device manufacturers are now increasing the memory size and storage of each product.
Micron Technology expects the industry's prospects to be much brighter by 2025, especially as artificial intelligence systems require new, more expensive memory chips.
In the meantime, the outlook remains mixed. Mehrotra said demand for traditional servers remains "sluggish." Micron Technology said that both personal computers and smartphones will resume growth next year, and sales growth will be in the low to mid-single digits.
In response to slowing demand, Micron and its peers have curbed production and sharply reduced supply, helping prices bottom out. The company expects production to remain "significantly" below its 2022 peak for the foreseeable future. The company plans to continue operating the plant at less than full capacity until 2024. Micron Technology will further cut spending on new equipment next year.
Micron, whose chips are used to store information in computing devices, is particularly vulnerable to fluctuations in demand because memory products are directly interchangeable and traded like commodities. Rapid fluctuations in the balance of supply and demand can cause manufacturers to sell memory products below their manufacturing costs.
According to TrendForce's latest research report, in response to the continued weakening of demand, Samsung recently announced that it would expand production cuts to 50% starting in September. Other suppliers are expected to follow suit and expand production cuts in the fourth quarter in order to accelerate inventory depletion. As a result, the average price of NAND Flash is expected to remain flat or rise slightly in the fourth quarter, with the increase estimated to be about 0~5%.
As of press time, Micron Technology fell 3.97% after hours to $65.50.
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