Micron reports ‘extraordinary’ growth in QLC shipments

Micron’s latest quarterly results show it climbing out of a revenue trough, on the back of strong sales of quad-level flash. But the pandemic and the US trade ban on Huawei are expected to put a crimp on growth next quarter

The US chipmaker reported revenues of $6.06bn for the fourth fiscal 2020 quarter, up 24.4 per cent on the year-ago $4.87bn. Net income was $988m, up 76 per cent on last year’s $561m.

Sanjay Mehrotra

Micron CEO Sanjay Mehrotra noted “strong DRAM sales in cloud, PC and gaming consoles and an extraordinary increase in QLC NAND shipments.”

In the earnings call he said “economic recovery from the sharp recession in calendar Q2 is under way, but the pace has been limited by the continuation of the pandemic. … our short-term outlook has weakened due to a combination of factors.”

He cited the pandemic and US government restrictions on exports to Huawei, which had accounted for 10 per cent of Micron’s Q4fy20 sales. 

Micron sees the market improving throughout calendar 2021, driven by 5G, cloud and automotive industry growth, but its own revenue growth is almost slowing to a halt next quarter. It thinks it will see revenues of $5.2bn plus or minus $200m – up one per cent.

Also Micron said there was a risk of NAND over-supply in 2021 as suppliers could build too much manufacturing capacity.

By the numbers

Full fy2020 revenues were $21.4bn, compared to fy19’s $23.4bn, down 8.5 per cent, with profits of $2.69bn, down 57.4 per cent on the year-ago’s $6.3bn.

Financial summary:

  • Gross margin: 34.9 per cent
  • Free cash flow: $111m
  • Operating cash flow: $2.27bn vs $2.23bn a year ago.
  • Net cash: $2.613bn
  • CAPEX: $2.16bn vs $2.23bn a year ago

Micron has two basic product lines; DRAM and NAND. DRAM revenues in the quarter were $4.37bn, up 29 per cent from the year-ago $3.39bn.  NAND revenues of $1.53bn, up 27 per cent Y/Y.

There are four business units selling DRAM and NAND and Wells Fargo senior analyst Aaron Rakers provided numbers to his subscribers;

  • Computer and Networking BU – $3.02bn revenues up 59 per cent Y/Y with greater than doubled bit shipments to the cloud customers as on-premises demand declined with weak enterprise server demand.
  • Mobile BU – $1.46bn revenues up 4 per cent Y/Y. 5G phone adoption will drive the market higher.
  • Embedded BU – $654m revenues down 7 per cent Y/Y with a predicted recovery in the automotive market coming. 
  • Storage BU – $913m revenues, up 8 per cent Y/Y as consumer SSD sales grew to a record and data centre SSD revenue grew strongly.

The pandemic appears to have cut car sales which affecte revenues for Micron’s embedded BU.

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