On December 19th Beijing time, Micron Technology (MU. O) released its financial report for the first quarter of 2025, ending on November 28th of this year. Although the demand for storage by AI remains strong, Micron Technology has lowered its performance expectations for the second quarter of 2025 due to factors such as the sluggish consumer market. After the market closed, Micron Technology's stock price fell by over 16%.
Micron Technology is the third largest semiconductor memory company in the world, mainly providing high-performance DRAM (dynamic random access memory) and NAND (a non-volatile memory) products, widely used in fields such as mobile phones, computers, servers, AI, automotive, industrial, medical, etc., headquartered in the United States.
The latest financial report shows that the company achieved revenue of $8.7 billion in the previous fiscal quarter, a year-on-year increase of 84% and a month on month increase of 12%. The gross profit margin is 40%, with a month on month increase and a significant year-on-year increase. Net profit of 2 billion US dollars, converted to profit year-on-year, with a month on month increase of 52%.
From the perspective of product structure, Micron Technology's DRAM revenue and NAND revenue accounted for 73% and 26% respectively in the previous fiscal quarter. The two major categories are showing a trend of mutual growth, with DRAM revenue and shipments both increasing, while NAND revenue and shipments both declined. And in terms of average selling price (ASP), DRAM shows an increase in high single digit percentage, while NAND shows a decrease in low single digit percentage. It can be seen that in the past two fiscal quarters, the market has attached greater importance to Micron Technology's DRAM than its NAND products.
Last quarter's capital expenditure was $3.1 billion, Micron Technology expects capital expenditure to be approximately $3 billion for this quarter, and $14 billion for fiscal year 2025. The company stated that the capital expenditure for this fiscal year will mainly be invested in HBM (high-performance DRAM memory for AI computing) research and development, and will also support factory construction, research and development investment, and other aspects. In addition, Micron Technology has reduced NAND capital expenditures and cautiously controlled the pace of NAND technology node advancement to manage product supply.
At the financial report meeting, Micron Technology gave a lower than expected performance for this quarter compared to the first quarter, with revenue and net profit for the second quarter expected to be lower than the first quarter: revenue is expected to be $7.9 billion ($8.7 billion in the first quarter), diluted earnings per share of approximately $1.43 ($1.79 per share in the first quarter). Micron Technology explained that the reason for the lowered expectations for the second fiscal quarter was due to adjustments in consumer terminal market inventory, seasonal factors, and the impact of a pullback in data center business after several consecutive quarters of rapid growth.
Micron Technology stated that the consumer market has remained sluggish recently, but it is expected to rebound in the second half of the company's 2025 fiscal year. In addition, the current demand in the industrial and automotive markets is also relatively weak. Sanjay Mehrotra, CEO of Micron Technology, said at the earnings conference, "The demand for smartphones in the market is still not high, and we estimate that their shipments will rebound in the middle and later stages of this fiscal year." CFO Mark Murphy added, "Our smartphone customers are still improving the health of our inventory, so we have shifted our product supply focus to data center customers
Despite the sluggish consumer market, the demand for Micron Technology's memory by AI remains strong. This fiscal quarter, its data center revenue exceeded 50% of overall revenue for the first time, with a year-on-year growth of 400%. Micron Technology's HBM revenue has almost doubled compared to the previous quarter, and the company expects HBM to create billions of dollars in revenue for Micron Technology in the fiscal year 2025.
Micron Technology, along with Samsung Electronics (005930. KS) and SK Hynix (000660. KS), is known as one of the world's top three memory manufacturers. According to TrendForce, in the two main memory markets of DRAM and NAND, Samsung Electronics, SK Hynix, and Micron Technology rank first, second, and third in market share, respectively.
In the DRAM market, as the hottest category in DRAM, HBM is highly favored by AI chips for high-performance storage. Samsung Electronics, SK Hynix, and Micron Technology have respectively developed and sold the 12 layer HBM3E (the fifth generation HBM product), which is currently the most powerful product in the field. The competition among the three companies is fierce, and Hynix has a first mover advantage and is now in a leading position. SK Hynix announced in September this year that it would be the first to mass produce the HBM3E 12 layer product and supply it to Nvidia in bulk. According to market research firm Counterpoint, SK Hynix currently holds the majority of HBM's market share.
Samsung Electronics lags behind its competitor SK Hynix in this regard, but is actively catching up. It stated in its third quarter financial report as of September this year that its HBM3E was in mass production and on sale. However, at that time, HBM3E accounted for less than 10% of HBM's revenue, and sales will increase in the fourth quarter. Micron Technology revealed at this earnings conference that its HBM3E has successfully supplied multiple customers and is expanding into more markets, with the potential for further increase in market share.
Regarding the future price changes of HBM, Counterpoint told reporters that with the maturity of technology and the improvement of yield, the price of HBM will decrease, but the manufacturing cost is high and the demand is strong, so the price decrease is not significant. In the short term, due to supply shortages, HBM prices may even remain high
HBM is the high-speed storage for AI chips, while NAND is the massive storage for AI computing. Currently, 2D NAND is developing towards 3D NAND, which is popular among downstream customers as a high-capacity memory for AI computing. Samsung Electronics, SK Hynix, and Micron Technology are competing in the NAND field in terms of technology, products, and market, respectively. Counterpoint believes that the three companies have different layouts in this field: Samsung Electronics has the most complete NAND product line, covering mid to low end product lines and leading market share; SK Hynix focuses on innovative architectures including QLC technology, with a focus on data center applications; Micron Technology places greater emphasis on high performance and reliability, specializing in the enterprise storage market.