Micron Technology’s shares are expected to decline following the release of weak financial results for the latest quarter. Although the company reported revenue of $4.01 billion, down 40% from the previous year, it surpassed its own forecast. Micron also provided revenue guidance for the November quarter that exceeded Wall Street estimates. The company anticipates revenue of $4.4 billion and a non-GAAP loss of $1.07 per share. Micron’s CEO, Sanjay Mehrotra, expressed optimism for market recovery in 2024, driven by increasing demand and disciplined supply. Despite the loss, Micron sees growth potential in DRAM and NAND memory chips, particularly in AI-enabled PCs and AI servers.
However, the weak performance of Micron’s memory chips in its core end markets, such as PCs, mobile phones, and data centers, has impacted the company’s financials. The company previously projected low-to-mid single-digit growth for DRAM and high single-digit growth for NAND in 2023, but these projections fell short. Micron attributes the lower demand to normal inventory levels across customers and an improvement in data center customer inventory. Nonetheless, Micron expects demand to strengthen and pricing to inflect as the market recovers. The company’s focus on AI-enabled PCs and AI servers is driven by their higher profitability and greater technology complexity.
To adapt to the softer demand, Micron has been cutting spending. Its capital expenditure for the year was $7 billion, down over 40% from the previous year, with a significant reduction in wafer fabrication equipment spending. The company remains cautious about wafer fab equipment spending in fiscal year 2024. Despite the current challenges, Micron is confident in its long-term growth prospects and expects total server unit growth to resume in 2024 to meet increasing workload demand.