MU - Artificial Intelligence Is Ending Micron's Downturn
2023-08-29 07:50:00 ET
Memory chip manufacturer Micron (NASDAQ: MU) has been stumbling for multiple quarters through the worst downturn since the financial crisis. Memory chips are generally commodity products, with pricing dictated by supply and demand. With PC shipments falling off a cliff in the post-pandemic period, smartphone shipments slumping, and server shipments weakening, demand for dynamic random access memory (DRAM) and NAND chips has fallen far short of supply.
On top of this demand shortfall, the Cyberspace Administration of China has banned operators of key domestic infrastructure from buying Micron's chips in a retaliatory move. Micron said in June that roughly half of its revenue from China-based companies could be affected, which amounts to more than 10% of its total revenue.
Micron's revenue was down 57% year over year in its fiscal third quarter, which ended on June 1. The good news was that revenue was up slightly compared to the previous quarter, an indication that demand may have bottomed out. The bad news was that pricing remained weak. Average selling prices for DRAM slumped 10% sequentially, while ASPs for NAND tumbled by a mid-teens percentage.
For further details see:
Artificial Intelligence Is Ending Micron's Downturn