Micron posted Q2 FY2019 revenues of $5.84bn, a whopping fall compared with $7.35bn for the same period last year. This is also down on the $7.91bn for the last quarter and the $8.44bn covering the fourth quarter of 2018.
However, CEO Sanjay Mehrotra was upbeat, saying the company had delivered solid results and healthy levels of profitability despite a challenging industry environment – net income was $1.62bn in the quarter. He expects demand to start rising again in the second half of the year once the big server makers soak up all their surplus inventory.
Micron will idle about five per cent of its DRAM wafer starts and reduce NAND Flash wafer starts by five per cent, largely affecting legacy process nodes. This will save about $500m.
Micron forecasts revenue $4.6bn- $5bn for fiscal third quarter.
A wee DRAM
The latest figures highlight weak DRAM and NAND Flash demand trends, according to Wells Fargo analyst Aaron Rakers. He said investors appear to have reacted positively to Micron’s continued commitment to supply-side rationalisation.
Mehotra said DRAM prices fell more than anticipated, due to greater levels of customer inventory affecting demand at several enterprise OEM server makers. But he expects customer inventories to normalise by mid-year when shipment growth is likely to increase again.
NAND markets remain oversupplied, which Mehotra attributes to the acceleration in bit growth driven by the industry transition to 64-layer 3D NAND. Nevertheless, he similarly expects growth in demand for NAND products in the second half of the calendar year.
Fourth generation 3D NAND
Mehrotra said Micron is making good progress on its fourth generation 3D NAND, which uses replacement gate technology – understood to be a variation of a charge trap cell design. This offers limited cost reductions, so Micron plans to use this only for select NAND products at first. It will convert the rest of its portfolio at a later date to the second node of replacement gate technology.
Mehotra re-iterated the company’s commitment to 3D XPoint, and said the technology will be a key enabler for numerous new applications, particularly in artificial intelligence and data analytics.
In January this year, Micron exercised its option to acquire Intel’s interest in the former joint-venture IMFT manufacturing facility in Lehi, Utah, and Micron expects to make customer 3D XPoint samples available before the end of the calendar year.
In SSDs, Micron said it is making progress on transitioning to NVMe while continuing to improve costs in SATA products, where it introduced consumer and client SSDs based on 96 layer 3D NAND during Q2. Micron intends to introduce cloud and enterprise NVMe SSDs later in this calendar year.
