Micron Technology, a major player in the memory semiconductor industry, announced its first quarter (September to November) performance for the 2024 fiscal year on December 12th. 18 (local time). The performance for this quarter is relatively good, with sales reaching $8.71 billion and earnings per share of $1.79 in the first quarter, generally exceeding market expectations. However, the problem lies in the performance of the second quarter (December to February). During this period, Micron expects sales of $7.9 billion and earnings per share of $1.53, which are 12% and 26% lower than market expectations (sales of $9 billion and earnings per share of $1.92), respectively. As a result, Micron Technology's stock price plummeted by about 14% in after hours trading immediately after the financial report was released.
The prediction in the NAND field is particularly pessimistic. Micron Diagnostics states that even enterprise grade solid state drives (eSSD) leading the memory market alongside HBM2 are experiencing a slowdown in demand. Although they pointed out that the slowdown in eSSD demand is a short-term issue, considering various uncertainties, the semiconductor industry expects the market situation to be difficult to be optimistic. Micron announced today that it will reduce wafer investment in the NAND field by about 10%.
Lee Jae hyuk, a member of the Semiconductor Special Committee of the National Academy of Engineering of South Korea, pointed out in his keynote speech in December. On the 18th, an article titled "The Future of Korean Semiconductors" stated that "the technological gap between semiconductor companies in the NAND field has almost disappeared.
At the same time, Kioxia Holdings, the world's third-largest NAND company, announced its "market expansion" plan and announced its entry into competition. After successfully listing on the Japanese stock market in December. On the 18th, Kaixia announced that it will invest the funds raised from its IPO in expanding production facilities and developing next-generation products.
In an already challenging profit environment, Japan's announcement of a certain "chicken eating game" has put Samsung Electronics and SK Hynix on high alert. Due to the continuous decline in prices of general-purpose memory such as NAND during the global economic recession, increased supply may directly affect the two market leaders. A semiconductor industry official explained that "Samsung still has a dominant production advantage in the NAND field, but it is worth noting whether they will further reduce production and restructure the market around their dominant products, or engage in comprehensive competition." However, Samsung, which recently announced an additional 10 trillion Korean won ($7.5 billion) stock buyback plan to defend its stock price, may no longer have the endurance to engage in similar chicken eating games as before. People are also concerned about whether SK Hynix, which indirectly holds about 14% of the shares of Kaixia, will sell its shares, and how the proceeds will be utilized if sold.
According to reports, Chinese memory companies have successfully mass-produced advanced DDR5 DRAM, which has intensified competitive pressure. According to Chinese IT media IT Home on December 12th, on December 18th, Chinese enterprise Guangwei Technology released 32GB DDR5 DRAM on an e-commerce platform the day before. This product consists of two 16GB modules, with a pre order price of 499 yuan. Although neither manufacturer has disclosed their suppliers or production processes, the product descriptions include the phrase 'domestically produced DDR5 chips'. Industry insiders believe that these modules are all equipped with China's own memory products.
Local Chinese media emphasized that the release of DDR5 in China not only marks a technological breakthrough, but also indicates that the core competitiveness of Chinese technology has once again been enhanced Indeed, DDR5 memory itself is a leading product group, and stacking this type of memory can create HBM2, indicating that China's pursuit in the advanced memory market has begun to take seriously. Of course, according to the diagnosis of the Korean semiconductor industry, China's DDR5 technology still lags behind Samsung and SK Hynix's products by more than three years. However, the market is concerned about whether China can quickly catch up with the technological gap with its huge financial resources.
The current situation of the memory semiconductor market is characterized by intensified competition and uncertainty. With major manufacturers such as Micron, Samsung, SK Hynix, and Kaixia moving forward in a challenging environment, and emerging Chinese companies making significant progress, the industry is expected to achieve significant development in the near future.
Micron predicts a 'memory recession' next year
American memory manufacturer Micron has significantly lowered its expectations for next quarter's performance. Due to the overall sluggish demand for IT, excluding artificial intelligence, it is expected that NAND shipments will particularly decline. We also plan to conservatively implement facility investments next year.
On the 19th, Micron announced that its sales for the first quarter of fiscal year 2025 (September 2024 to November 2024) reached $8.7 billion.
This sales revenue increased by 84% year-on-year and 12% month on month. This is consistent with Micron's forecast and securities consensus proposed in the previous quarter. Earnings per share were $1.79, which is roughly consistent with the initial forecast.
According to the sales ratio by product, DRAM is approximately $6.4 billion and NAND is approximately $2.2 billion. For DRAM, ASP (average selling price) rises to high single digits, but for NAND, it falls to low single digits.
However, Micron expects a significant decline in sales for the next quarter (December 2024 to February 2025) compared to the previous quarter, to $7.7 billion to $8.1 billion. This prediction is significantly lower than the widely expected $8.99 billion in the securities market. The earnings per share forecast is between $1.33 and $1.53, lower than the stock market consensus of $1.92.
Micron lowered its performance expectations for the beginning of next year due to sluggish demand. In this financial report, Micron expects the demand for DRAM and NAND in data centers to continue to grow, but expects relatively low demand in certain industries such as PC and automotive.
Especially the NAND business is expected to perform weakly. Micron has lowered the growth rate of NAND bit total (capacity growth rate) for fiscal year 2025 from the previous 10% to a low growth rate of 10%. The continuous adjustment of consumer SSD inventory is considered the main factor.
Correspondingly, facility investment policies will also focus on investment in the conversion of cutting-edge DRAM and HBM (high bandwidth memory). The total investment scale for the fiscal year 2025 is expected to be between 13.5 billion and 14.5 billion US dollars.
Micron stated, "We are reducing investment in NAND facilities and carefully managing the speed of NAND process transition." "We will prioritize investments that can support long-term demand growth for DRAM and HBM
