MU - The Worst May Be Over for Micron But Pandemic-Era Profits Aren't Coming Back
2023-04-13 07:10:00 ET
The memory chip market is in an extreme state of oversupply. There's too much supply of DRAM and NAND chips floating around, and inventory levels of the products that use those chips are also elevated. The PC market, for example, is in disarray. Global PC shipments plunged 29% year over year in the first quarter, dropping below pre-pandemic levels.
This supply-demand mismatch has driven per-bit memory chip prices down far faster than manufacturers can reduce costs. For Micron (NASDAQ: MU) DRAM average selling price tumbled 20% in its latest quarter on a sequential basis, while NAND average selling price dropped approximately 25%.
Micron's revenue was more than cut in half compared to the same period last year, and the company reported a staggering loss. On $3.7 billion of revenue, Micron managed a net loss of $2.3 billion. Inventory write downs totaled $1.43 billion, and free cash flow for the prior six months turned deeply negative.
For further details see:
The Worst May Be Over for Micron, But Pandemic-Era Profits Aren't Coming Back