Thanks for the memory as Micron revenues get big DRAM bump

Micron delivered a 28 per cent revenue jump in its second fiscal 2021 quarter and 7.5 per cent increase in net income as it benefited from DRAM price rises.

Revenue for the quarter ended March 4, 2021, was $6.24bn, up from $4.87bn a year ago, and net income of $603m, compared the year-ago $405m. DRAM accounted for 71 per cent of total revenues and was up 44 per cent Y/Y. NAND was 26 per cent of revenues and grew 9 per cent Y/Y, with the Storage business unit seeing a 2 per cent decline in revenues Y/Y.

Sanjay Mehrotra.

In the earnings call President and CEO Sanjay Mehrotra said: “Micron delivered strong FQ2 results above our original projections, driven by solid execution and higher than expected demand across multiple end markets. The DRAM market is in severe shortage and the NAND market is showing signs of stabilisation in the near-term.”

Financial summary:

  • Gross margin – 32.9 per cent
  • Adjusted free cash flow – $174m – compared to year-ago $101m
  • Total liquidity – $11.1 bn
  • Net cash – $1.95 bn at quarter end vs $2.7 bn a year ago

Business unit summary:

  • Compute and Networking BU – $2.6 bn – up 34 per cent Y/Y
  • Mobile – $1.8 bn – up 44 per cent
  • Embedded – $935m – up 34 per cent
  • Storage – $850m – down 2 per cent

An earthquake in Taiwan earlier this year caused little disruption to Micron and the company has secured extra supplies of water for its plants in central Taiwan, which is currently experiencing a drought.

Micron is four times blessed. First, the data centre market wants more SSDs and memory, with new server CPUs having more memory channels and new workloads generally needing more memory and storage. Second, the relatively new automotive market for DRAM and NAND is growing as vehicles need more computing for electric vehicles driver assistance aids and vehicle management. Micron set revenue records for automotive products in the quarter. Thiryd mobile phone memory and demand is strong with revenue records set for mobile multi-chip package memory products.

And the fourth blessing is that pandemic-induced remote working is driving up desktop and laptop computer demand for both DRAM and NAND.

Nevertheless Storage BU revenues declined, due to some customers reducing higher than average inventory levels, Mehrotra said: “We are continuing to expand our data centre NVMe SSD portfolio with internally developed controllers and have new product introductions planned in the coming quarters.”

Micron expects storage revenues to grow when 176-layer client SSDs are introduced in the next two fiscal quarters. Micron is, like SK hynix, singing the disk drive replacement song. Mehrotra said the company is “driving an increased mix of QLC NAND, which helps to make SSDs more cost effective and accelerates the replacement of HDDs with SSDs.”

Micron anticipates $7.1 bn revenue at the midpoint next quarter, which is 30.5 per cent high than the year-ago $5.4bn. The company confirmed it expects to complete the sale of its Lehi 3D XPoint fab by the end of the year and reiterated a commitment to developing CXL-facing memory products.

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