Recently, storage industry giant Micron Technology (NASDAQ: MU) released its first quarter performance report for the 2024 fiscal year. Data shows that as of November 30, 2023, its revenue was $4.73 billion, exceeding market expectations of $4.58 billion, a year-on-year increase of 16%; The net loss was 1.23 billion US dollars, which is a convergence from the net loss of 1.43 billion US dollars in the same period last year, with a loss of 0.95 US dollars per share.
Semiconductor industry analyst Wang Zhiwei told China Business News that as major manufacturers adjust their production capacity and inventory reduction in various links of the industry chain approaches completion, storage chip prices are beginning to rebound and are expected to enter a new round of upward trend. In terms of market share, Micron Technology is the third largest storage chip giant in the world, second only to Samsung and SK Hynix in South Korea, and is expected to benefit in the new industry cycle.
Narrowing losses
Starting from the beginning of 2022, the storage chip market has entered a downward cycle due to factors such as slowing demand, increasing supply, and intensifying price competition. Storage giants have all experienced significant performance declines or even losses.
From a global perspective, the market is mainly dominated by major manufacturers such as Samsung, SK Hynix, Micron Technology, Armor, and Western Digital, with a combined market share of nearly 98% worldwide. Among them, Samsung Electronics' 2023 third quarter report shows that the company's storage chip business achieved a revenue of 10.53 trillion Korean won, a year-on-year decrease of 31%. The semiconductor business unit (DS department), including the storage chip business, suffered a net loss of 3.75 trillion Korean won in the third quarter; SK Hynix achieved a revenue of 9.0662 trillion won, an operating loss of 1.79 trillion won, and a net loss of 2.19 trillion won in the third quarter of fiscal year 2023; According to data from the fourth quarter of the 2023 fiscal year, Micron Technology achieved a revenue of $4.01 billion, a year-on-year decrease of 39.64%, and a net loss of $1.43 billion.
According to the CFM flash memory market statistics, the total losses of the five storage giants have been narrowing this year, converging from a loss of $10 billion in Q1 to a loss of $8.5 billion in Q2, and then to a loss of $6.5 billion in Q3, with a cumulative loss of $25 billion.
In addition, although Micron is still in a loss making state, both revenue and gross profit margin exceeded expectations. Previously, analysts had an average expectation of $4.64 billion in revenue for the quarter, with a loss per share expectation of $0.97. Micron's actual loss per share is $0.95.
According to the latest financial report, DRAM and NAND remain the most important sources of revenue for Micron Technology, with a combined proportion of 98%. Among them, DRAM is the largest source of revenue, accounting for 69% of total revenue. DRAM business revenue rebounded to $3.427 billion, a year-on-year increase of 21.2%. NAND is the second largest source of revenue for the company, accounting for 29% of total revenue. NAND's business revenue was $1.23 billion, an increase of 11.5% year-on-year.
Sanjay Mehrotra, President and CEO of Micron Technology, said, "We expect business fundamentals to improve in 2024, and industry TAMs are expected to achieve breakthroughs in 2025. Our high bandwidth memory for data center AI applications demonstrates the strength of our technology and product roadmap, and we are fully prepared to seize the huge opportunities that artificial intelligence brings to the terminal market."
Looking ahead to the second quarter of the 2024 fiscal year, Micron Technology expects revenue to reach $5.1 billion to $5.5 billion (currently approximately RMB 36.414 billion to RMB 39.27 billion), higher than analysts' expectations of $4.99 billion.
Significant improvements will be made in 2024
In fact, not only Micron Technology, but many companies in the storage industry expect 2024 to be a year of rebound in the storage industry. According to data released by TrendForce, the total revenue of the DRAM industry in the third quarter of 2023 reached 13.48 billion US dollars, with a quarterly growth rate of about 18.0%. In the fourth quarter, the attitude of original factory price increases was clear, and it is estimated that DRAM contract prices will increase by about 13% to 18%; The shipment volume of NAND Flash increased by 3% month on month, and the overall consolidated revenue reached 9.229 billion US dollars, an increase of about 2.9% month on month. Looking forward to the fourth quarter, NAND Flash products may also increase in both quantity and price.
Western Data predicts that NAND growth will reach 55% in the coming quarters. On December 5th, Western Data issued a price increase notice to customers, predicting that NAND and HDD will experience floating price increases. Among them, NAND is expected to experience cyclical price increases in the coming quarters, with a cumulative increase of up to 55%; HDD will adopt a weekly price review, and it is expected that the price increase will continue into the first half of 2024.
Wang Zhiwei analyzed: The semiconductor industry is expected to rebound comprehensively from 2024. Under the influence of factory production cuts, the trend of rising wafer prices has formed. However, although there is currently a certain recovery in downstream market demand for memory procurement, the magnitude and frequency of subsequent price increases still depend on whether downstream terminal demand can form sustained support, and it is necessary to continue to pay attention to the macroeconomic recovery situation. If the smartphone market can achieve comprehensive recovery, it is expected that the macroeconomic recovery will continue There will be a shortage of DRAM and NAND chip supply in some markets
CFM also made an analysis that although the original factory drove up NAND Flash prices strongly in the fourth quarter through controlling goods and being reluctant to sell, the current product prices have not reached the breakeven line due to the previous deep decline and the greater cost pressure caused by production cuts. Therefore, it can be seen that the original factory will still be committed to improving profits in the future, and the continued upward trend in prices is necessary, but the speed of the increase still depends on the situation of each application market.
In addition to overseas manufacturers, many domestic listed companies also believe that the global chip market is gradually recovering. Baiwei Storage (688525. SH) stated in a survey conducted by institutions on December 12th that from the demand side, the demand in the field of artificial intelligence has increased. Driven by the large-scale shipment of new smartphones by major manufacturers, the market situation has improved, and the fluctuations in storage prices are gradually transmitted downstream, which has stimulated customers to actively stock up.
Previously, Jiang Bolong (301308. SZ) also stated in a survey that "the semiconductor storage market has a specific price transmission mechanism, and there is a time difference in the process of market price transmission, so there is also a certain time difference in its impact on the company's operations. Currently, the original factory strictly controls the shipping pace, and downstream manufacturers are actively stocking up. From the market perspective, the current price transmission mechanism is relatively smooth."