[News] Micron’s Financial Report Reveals High Demand for HBM in 2025, Capacity Nears Full Allocation

2024-03-22 Semiconductors editor

Micron, the major memory manufacturer in the United States, has benefited from AI demand, turning losses into profits last quarter (ending in February) and issuing optimistic financial forecasts.

During its earnings call on March 20th, Micron CEO Sanjay Mehrotra stated that the company’s HBM (High Bandwidth Memory) capacity for this year has been fully allocated, with most of next year’s capacity already booked. HBM products are expected to generate hundreds of millions of dollars in revenue for Micron in the current fiscal year.

Per a report from Washington Post, Micron expects revenue for the current quarter (ending in May) to be between USD 6.4 billion and USD 6.8 billion, with a midpoint of USD 6.6 billion, surpassing Wall Street’s expectation of USD 6 billion.

Last quarter, Micron’s revenue surged 58% year-on-year to USD 5.82 billion, exceeding Wall Street’s expectation of USD 5.35 billion. The company posted a net profit of USD 790 million last quarter, a turnaround from a loss of USD 2.3 billion in the same period last year. Excluding one-time charges, Micron’s EPS reached USD 0.42 last quarter. Mehrotra reportedly attributed Micron’s return to profitability last quarter to the company’s efforts in pricing, product, and operational costs.

Over the past year, memory manufacturers have reduced production, coupled with the explosive growth of the AI industry, which has led to a surge in demand for NVIDIA AI processors, benefiting upstream memory manufacturers.

Mehrotra stated, “We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multiyear opportunity enabled by AI.”

The projected growth rates for DRAM and NAND Flash bit demand in 2024 are close to 15% and in the mid-teens, respectively. However, the supply growth rates for DRAM and NAND Flash bits in 2024 are both lower than the demand growth rates.

Micron utilizes 176 and 232-layer processes for over 90% of its NAND Flash production. As for HBM3e, it is expected to contribute to revenue starting from the second quarter.

Per a previous TrendForce press release, the three major original HBM manufacturers held market shares as follows in 2023: SK Hynix and Samsung were both around 46-49%, while Micron stood at roughly 4-6%.

In terms of capital expenditures, the company maintains an amount of USD 7.5 to USD 8 billion (taking into account U.S. government subsidies), primarily allocated for enhancing HBM-related capacity.

Micron stated that due to the more complex packaging of HBM, it consumes three times the DRAM capacity of DDR5, indirectly constraining the capacity for non-HBM products, thereby improving overall DRAM market supply.

As per Micron’s report, regarding growth outlooks for various end markets in 2024, the annual growth rate for the data center industry has been revised upward from mid-single digits to mid-to-high single digits, while the PC industry’s annual growth rate remains at low to mid-single digits. AI PCs are expected to capture a certain market share in 2025. The annual growth rate for the mobile phone industry has been adjusted upward from modest growth to low to mid-single digits.

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(Photo credit: Micron)

Please note that this article cites information from Micron and Washington Post.