Micron: Mobile lets the side down in bumper Q2

Micron mobile
Micron mobile

Mobile devices was the one weak spot in Micron‘s second quarter of fiscal 2022 ended 3 March – datacenter, automotive, and storage DRAM and NAND all grew briskly otherwise

Revenues for the quarter jumped 25 percent year-on-year to $7.79 billion, and Micron reported a profit of $2.26 billion compared to a loss $603 million a year earlier. DRAM contributed the bulk of revenue, at $5.72 billion, 29 percent up on the year, with NAND at $1.84 billion and growing at 19 percent.

In his prepared remarks, president and CEO Sanjay Mehrotra opined: “Micron delivered an excellent performance in fiscal Q2 with results above the high end of our guidance.” He added: “We saw broad-based demand for our products, with our SSD products achieving record revenue, and our auto market revenue also reaching an all-time high.”

Of course there were supply chain issues, due to COVID-19 and Russia’s invasion of Ukraine, but Micron sees no impact from these it can’t handle. “We currently do not expect any negative impact to our near-term production volumes because of the Russia-Ukraine war,” the CEO said.

Mehrotra said Micron is well placed in the market. “Demand for memory and storage is broad, extending from the datacenter to the intelligent edge and to a growing diversity of user devices. Memory and storage revenue has outpaced the rest of the semiconductor industry over the last two decades, and we expect this trend to continue over the next decade, thanks to ongoing advancement of AI, 5G and EV adoption” – EV meaning electric vehicles.

He said the AI trend is also a positive for the company. “Memory and storage share of server BOM costs already exceeds 40 percent and this number is even higher for servers optimized for AI/ML workloads.”

Micron has four business units. The largest is compute and networking, which pulled in $3.46 billion, up 31 percent year-over-year, as servers needed more DRAM and NAND. Micron says its 1z and 1α DRAM represented the majority of its DRAM bit shipments, while 176-layer NAND accounted for the majority of its flash. It also leads the industry, it claims, with DDR5 memory.

The next largest BU is mobile and this looked stagnant in comparison – $1.875 billion in revenue, up just 4 percent annually. Weaker results in China and some increased phone vendor inventories were mentioned as contributing to this.

The embedded unit, mostly automotive sales, rose 37 percent to $1.277 billion, while the storage unit’s revenues rose 38 percent to $1.71 billion. In the storage unit Micron is making good progress in its qualifications of 7450 NVMe SSD with datacenter customers, “which has contributed to a doubling of our fiscal Q2 data center SSD revenues year over year.”

Micron forecast a boom in the automotive and industrial embedded market, with Mehrotra saying: “The automotive and industrial segments are expected to be the fastest-growing memory and storage markets over the next decade.” Automotive sales of both DRAM and NAND set a new record for Micron in the quarter.

“We expect over 100 new EV models to launch worldwide in this calendar year alone. These new EVs include advanced ADAS and in-vehicle infotainment features that have significantly higher memory and storage requirements. In fact, some of these level-3 autonomous EVs have about $750 in memory and storage content, which is 15 times higher than the average car.”

There was 60 per cent year-over-year growth in industrial IoT with demand for factory automation and security systems.

The outlook for the next quarter is revenues of $8.7 billion, plus or minus $200 million, a Micron record for quarterly revenues, and a 17.3 percent year-over-year increase. Mehrotra said: ”We are on track to deliver record revenue and robust profitability in fiscal 2022 and remain well positioned to create significant shareholder value in fiscal 2022 and beyond.”

One thing to note: Wells Fargo analyst Aaron Rakers told subscribers Micron thinks it can meet the bit capacity demands out to 2025 for DRAM and NAND with DRAM node and NAND layer count transitions, at which point new fab capacity could be needed.