A circuit board with resistors microchips and electronic components (Courtesy of Getty Image)
Micron Technology Inc. on Wednesday delivered stronger-than-expected quarterly results and gave a bullish outlook for the current quarter, shrugging off Morgan Stanley’s downbeat report that forecasts oversupply and price falls in the semiconductor sector.
The US chipmaker posted a 93% revenue growth on-year in the June-August quarter, driven by soaring demand for data center DRAMs and high-bandwidth memory (HBM) crucial for AI applications.
Revenue for both data center memory and NAND chips were record-high in its fiscal fourth-quarter ended in August.
“We are entering fiscal 2025 with the best competitive positioning in Micron’s history. We forecast record revenue in fiscal Q1 and a substantial revenue record with significantly improved profitability in fiscal 2025,” said Micron President and CEO Sanjay Mehrotra in its earnings statement on Wednesday.
He added that the company has already sold all the HBM it plans to make in both 2024 and 2025.
“Demand from data center customers continues to be strong and customer inventory levels are healthy,” Mehrotra was quoted as saying on a conference call with analysts by Reuters after the earnings release.
Its revenue from computing and network divisions in charge of AI chips skyrocketed 152% on-year and rose 17% on-quarter in its fiscal fourth quarter
SK Hynix recently began mass producing the world’s first 12-layer HBM3E with 36 gigabyte
Micron is one of the world’s three providers of HBM chips along with SK Hynix and Samsung Electronics Co. HBM is a high-performance, high-capacity memory designed to process vast amounts of data at a fast speed.
Micron expects to report record revenue of about $8.7 billion, plus or minus $200 million, in the first quarter and forecast a jump in gross margin to about 39.5% for the same period.
Its earnings guidance slightly beat analyst expectations, according to Reuters and contrasted Morgan Stanley’s views on the semiconductor industry.
On Sept. 13, the US brokerage house said the DRAM and HBM markets would enter a downturn next year due to softening demand and oversupply. It forecast that HBM supply would more than double in 2025, downgrading SK Hynix to “underweight” from a “top pick.”
SAMSUNG FORESEES BALANCED SUPPLY AND DEMAND
Samsung Electronics Co., the world’s No. 1 memory chipmaker, also painted a bright outlook for the HBM market. It expects the HBM demand and supply will be balanced at 25.0 gigabytes in 2025.
Samsung expects HBM to make up 28% of DRAM sales by 2025 from the estimated 16% in 2024 in terms of wafer input. It also forecast customized AI memory market to expand to 229.4 GB by 2028 from 12.9 GB in 2023.
Semiconductor wafers
“As the semiconductor market is transitioning into a customized market where server DRAMs and HBM account for half of DRAM demand, the era is coming where manufacturers are gaining the upper hand in pricing negotiations,” said Kim Sun-woo, a Meritz Securities analyst.
TOO MUCH FACILITY INVESTMENTS?
Semiconductor industry observers said concerns about heavy facility investments are overdone. Capital expenditures are focused on increasing production of high-value chips such as HBM and converting outdated production lines to sophisticated ones. Thus, their facility investments will unlikely result in a supply glut, they noted.
Samsung Electronics’ NAND flash chip
Google, Microsoft and other Big Tech firms are investing heavily in AI servers. Nvidia is slated to mass-produce next-generation AI processors around the end of this year, which are expected to generate $10 billion in revenue in the fourth quarter of this year.
Its forthcoming AI processors will be equipped with some eight HBM chips per each. AI servers will fit with AI processors and solid-state drives.
Bain and Company, a global consultancy, echoed the optimistic view bout the semiconductor market, warning of AI chip shortages in a report published on Wednesday.
It forecast the demand for HBM and NAND to increase 60-65% and 30-35% by 2026, respectively, compared with 2023.
By Jeong-Soo Hwang and Eui-Myung Park
hjs@hankyung.com
Yeonhee Kim edited this article
