To The Moon

$Micron Technology(MU)$ Micron will be releasing its 1Q23 financial results tonight after market, and the Company is most likely delivering disappointing performance in terms of revenue and profits.

Due to the oversupply situation across all end markets, memory chip prices has fallen at alarming rate! Based on DRAMeXchange contract and spot price for DRAM and NAND, it is most likely the ASP for both DRAM and NAND to decline by another 20-25% q-o-q, despite ASP already falling >20% q-o-q in the last quarter.

In the last quarter, the only segment that did well for Micron is the automotive segment. Micron achieved a new high in revenue from automotive memory solutions during the quarter but saw a q-o-o decrease in revenue from other memory-related applications, including NAND Flash solutions for data centers and industrial IoT. As a result, Micron's overall NAND Flash revenue experienced a significant QoQ drop of 26.2%.

Micron’s operating margin for NAND is not very high in the first place. I will not be surprised if NAND’s ASP dropped below its unit cost of production per NAND in Oct-Dec 2022. Other large memory players such as SK Hynix, Kioxia and Western Digital would have likely suffered operating losses for their NAND business in 3Q22, and Micron is able to survive better due to its technology edge in 176-layer NAND technology. Micron has started shipping 232-layer NAND SSD to clients, so hopefully this would create some buffer for the ASP decline.

Moreover, Samsung Electronics has publicity stated that it will not cut production for DRAM and NAND to gain market shares. Their large-scale production will lead to oversaturation of the market, which will drive down prices for all memory chip manufacturers.

Micron's management team will most likely provide cautious guidance for the future, and I predict these financial results will be met with negative sentiment and concerns about the company's future prospects.

@Daily_Discussion