Micron saw revenues for its DRAM and NAND grow year-over-year as datacenter servers used more high-bandwidth memory but sales outside the datacenter market turned down with buyers using up inventories.
Revenues in the quarter ended December 31, 2024, were $8.05 billion, up 38 percent year-on-year but down 8 percent quarter-on-quarter after seven consecutive growth quarters. There was a $1.58 billion GAAP profit, virtually doubling the year-ago $793 million profit.
CEO Sanjay Mehrotra stated: “Micron delivered fiscal Q2 EPS above guidance and datacenter revenue tripled from a year ago” with record DRAM sales. He added in the earnings call: “Micron is in the best competitive position in our history, and we are achieving share gains across high-margin product categories in our industry.”
Financial summary
- Gross margin: 36.8 vs 18.5 percent a year ago
- Operating cash flow: $3.94 billion vs $1.2 billion a year ago
- Free cash flow: $857 million vs -$29 million last year
- Cash, marketable investments, and restricted cash: $9.6 billion vs $9.7 billion a year ago
- Diluted EPS: $1.41 vs 0.71 a year ago
Micron has two main tech segments, DRAM and NAND. DRAM revenues of $6.1 billion were up 47 percent year-on-year but down 4 percent quarter-on-quarter, with high-bandwidth memory (HBM) driving the growth.
Mehrotra said: “We expect a strong ramp of HBM throughout calendar 2025. As noted before, HBM3E consumes three times the amount of silicon compared to D5 to produce the same number of bits. Looking ahead, we expect the trade ratio to increase with HBM4 and then again with HBM4E when we expect it to exceed 4-to-1.” HBM DRAM commands a premium over conventional DRAM.
NAND revenues were $1.9 billion, up 18 percent year-on-year and down 17 percent quarter-on-quarter. Mehrotra said: “In calendar Q4 2024, based on industry analyst reports, Micron achieved yet another record high market share in datacenter SSDs with revenue growth in each category, including performance, mainstream, and capacity SSDs.”
“In NAND, we continue to underutilize our fabs, and our wafer output is down mid-teens percentage from prior levels,” he said. However, a rebound is coming with Micron saying that demand moderated in fiscal Q2 due to short-term customer inventory-driven impacts. It sees a return to bit shipment growth in the months ahead and expects to generate multiple billions of dollars in datacenter NAND revenue and grow its datacenter NAND market share in calendar 2025.
There are four business segments:
- Compute & Networking revenues were $4.6 billion, up 47 percent year-on-year and down 4 percent quarter-on-quarter
- Storage revenues were $1.4 billion, up 54.7 percent year-on-year and down 20 percent quarter-on-quarter with low datacenter sales
- Mobile revenues dropped 32 percent year-on-year and 30 percent quarter-on-quarter to $1.1 billion as customers used up inventories
- Embedded market revenues went down 10 percent year-on-year and 3 percent quarter-on-quarter as automakers used up inventory
Sequentially, only the compute and networking segment revenues grew; the HBM effect in action. AI training needs GPU servers, which require HBM and SSD storage but the AI Inferencing market is still nascent. That is affecting NAND growth in datacenters and workstations, much of Micron’s storage market. The mobile and embedded markets seem to be stalled.
HBM is increasingly important to Micron, with HBM DRAM representing a significant growth opportunity for market leader SK hynix and Samsung. Mehrotra said: “We expect multibillion dollars in HBM revenue in fiscal 2025 … As noted before, HBM3E consumes three times the amount of silicon compared to D5 to produce the same number of bits. Looking ahead, we expect the trade ratio to increase with HBM4 and then again with HBM4E when we expect it to exceed 4-to-1.”
Micron is enthusiastic about its coming HBM4, which will ramp in volume in calendar 2026. It aims to deliver “the best HBM4 products to the market across power efficiency, quality, and performance.” And it expects to gain HBM market share compared to SK hynix and Samsung.
PC demand for DRAM will be driven by PC refreshes for AI-capable systems and the Windows 10 end-of-life in October this year. AI PCs require a minimum of 16 GB of DRAM versus the average 12 GB PC content last year.
Smartphone unit volume growth looks to be in the low single-digit percentage area, and, with inventories emptying, Micron expects mobile DRAM and NAND bit shipment growth in the current quarter. AI-capable phones will need more DRAM and NAND but demand for such devices is low presently. The embedded market is still affected by automotive OEMs, industrial, and consumer-embedded customers adjusting their inventory levels.
On tariffs, Micron says it “serves as the US importer of record (IOR) for a very limited volume of products that would be subject to newly announced tariffs on Canada, Mexico, and China … Where tariffs do have an impact, we intend to pass those costs along to our customers.”
Concerning next quarter’s outlook, Mehrotra said: “We expect fiscal Q3 revenue to be another record for Micron, driven by shipment growth across both DRAM and NAND.” The actual revenue outlook is a record $8.9 billion ± $100 million, a 30.7 percent year-on-year increase at the mid-point. That’s a rebound from the current quarter’s sequential decline.
