Micron: Fiscal 1Q23 Financial Results

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Total 1FQ23 revenue was $4.085 billion, down 39% Q/Q and 47% Y/Y, in the low end of guidance ($4.0 billion and $4.5 billion).

The firm explains that the industry is experiencing the most severe imbalance between supply and demand in both DRAM and NAND in the last 13 years.

DRAM
1FQ23 DRAM revenue was $2.8 billion, representing 69% of total revenue, declining 41% Q/Q, with bit shipments decreasing in the mid-20% range and prices declining in the low-20% range.

NAND
1FQ23 NAND revenue was $1.1 billion, representing 27% of total revenue, declining 35% Q/Q, with bit shipments declining in the mid-teens percentage range and prices declining in the low-20% range.

1FQ23 revenue by business unit

Compute and networking business unit revenue was $1.7 billion with weakness across client, data center, graphics, and networking.

Embedded business unit revenue was $1.0 billion with automotive staying stronger than consumer and industrial markets.

Storage business unit revenue was $680 million, while QLC mix increased to a new high.

Mobile business unit revenue was $655 million, a low level partly due to the timing of shipments between 1FQ23 and 2FQ23.

Technology

1fl DRAM node, introduced in 1FQ23, delivers around a 15% power efficiency improvement and more than a 35% bit density improvement vs. 1-alpha. 1fl will be used across firm's product portfolio including DDR5 (D5), LP5, HBM and graphics.

End markets
Across nearly all of our end markets, revenues declined sequentially in 1FQ23 due to weaker demand and steep decline in pricing.

Data Center
In data center, the company expects cloud demand for memory in 2023 to grow well below the historical trend due to the significant impact of inventory reductions at key customers.

In data center SSDs, it is continuing to proliferate its 176-layer SSD, and in 1FQ23, nearly doubling the number of customers qualified. It has also completed qualification of its 176-layer QLC with an important enterprise customer.

Customer inventory, which is impacting near-term demand, is expected to continue improving, and the firm expects most customers to have reduced inventory to relatively healthy levels by mid-calendar 2023.

Consequently, the manufacturer expects 2FH23 revenue to improve vs. 1FH23.

PC
In PCs, it now forecasts calendar 2022 units to decline in the high-teens percentage and expect 2023 PC unit volume to decline by low to mid single-digits percentage, to near-2019 levels. Client D5 adoption is expected to gradually increase through calendar 2023 with crossover in mid-calendar 2024, and the company is well-positioned for this transition with leading D5 products.

Outlook
Micron expects calendar 2022 industry bit demand growth in the low to mid single-digit percentage range for both DRAM and NAND. For calendar 2023, it expects industry demand growth of approximately 10% in DRAM and around 20% in NAND. For both years, demand in DRAM and NAND is well below historical trends and future expectations of growth, largely due to reductions in end demand in most markets, high inventories at customers, the impact of the macroeconomic environment, and the regional factors in Europe and China.

The firm expects revenue to be $3.8 billion, plus or minus $200 million or -2% to -12% Q/Q.

It is taking a number of decisive actions in this environment to align supply with demand and to protect our balance sheet.

First, it is reducing Capex investments to reduce bit supply growth in 2023 and 2024

Second, it has reduced near-term bit supply through a sharp reduction in wafer starts. As previously announced, it reduced wafer starts for DRAM and NAND by approximately 20%.

Third, in response to the decline in expected long-term CAGR for DRAM and NAND bit growth, it is slowing the cadence of our process technology node transitions.

Fourth, it is taking significant steps to reduce costs and operating expenses. It projects spending to decrease through the year, driven by reductions in external spending, productivity programs across the business, suspension of a 2023 bonus companywide, select product program reductions and lower discretionary spend. Executive salaries are also being cut for the remainder of fiscal 2023, and over the course of calendar year 2023, Micron is reducing headcount by approximately 10% through a combination of voluntary attrition and personnel reductions.

NAND revenue only

Earnings call transcript