The price of dynamic random access memory continues to drop sharply, with server prices moving under $100 this quarter. And with prices showing no signs of bottoming this quarter or next, investment firm Citi said Micron Technology ( NASDAQ: MU ) is likely to cut spending by up to 40%.
Analyst Atif Malik noted channel inventory is roughly 10 weeks and some hyperscalers are doing some "opportunistic" buying for the first-half of 2023, but there is weak growth from the smartphone and PC markets, making it likely that Micron ( MU ) cuts spending.
"Assuming 10% DRAM demand bit growth next year, we model DRAM capex cuts ~30% or in-line with [the] 2018/19 correction," Malik wrote in a note to clients.
As such, it's likely Micron ( MU ) guides fiscal 2023 spending to be down between 35% and 40% from $12B in fiscal 2022, Malik added.
Micron ( MU ) has previously said both wafer fab equipment and capex spending would be down "significantly," Malik wrote.
Boise, Idaho-based Micron ( MU ) is slated to report fourth-quarter results next week.
On Wednesday, Mizuho downgraded Western Digital and Micron ( MU ), citing recent checks showing "steepening price declines" heading into the next quarter and first half of next year .
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As DRAM prices plunge, Micron Technology expected to cut spending up to 40%, Citi predicts