Micron Technology (NASDAQ:MU), Inc. reported a robust financial performance in the fourth quarter of fiscal 2023 during its earnings call, with revenue and gross margin surpassing guidance and EPS exceeding expectations. The company anticipates an industry recovery and growth in revenue, pricing, and profitability throughout 2024.
Key takeaways from the call include:
- Micron achieved several milestones, including record annual automotive revenue, record NAND QLC bit shipments, and record revenue share in data center and client SSDs.
- The company introduced 1-beta DDR5 and LP5X DRAM products, and 232-layer NAND SSD products.
- Micron's end markets, including PCs, mobile, auto, and industrial, are showing signs of recovery, with growth expected in these areas.
- The company's market outlook predicts mid-single-digit percentage growth in DRAM bit demand and high teens percentage growth in NAND demand for calendar 2023.
- Micron plans to decrease its bit supply growth in fiscal 2024 to be well below demand growth for both DRAM and NAND, and will decrease its days of inventory.
- The company expects its fiscal 2024 CapEx to be slightly higher than fiscal 2023 levels, with WFE CapEx decreasing and Assembly and Test CapEx doubling.
Despite near-term demand challenges in China, Micron remains focused on maintaining its global market share. The company projects robust year-over-year bit demand growth in calendar 2024 driven by improving end-market demand, normalized customer inventory levels, content growth, and AI growth.
Micron's fiscal 2024 financial outlook includes a projected gross margin improvement as prices increase and period costs decrease. Operating expenses are expected to increase sequentially, and the company estimates its fiscal 2024 taxes to be under $200 million. Despite expecting free cash flow to remain significantly negative in the first half of the fiscal year, Micron forecasts an improvement in the second half.
The company ended the fiscal year with $10.5 billion in cash and investments and had $13 billion of liquidity. In Q1, Micron expects record DRAM bit shipments and a decline in NAND bit shipments. The company projects a revenue of $4.4 billion, a gross margin of negative 4%, operating expenses of approximately $900 million, a tax expense of approximately $80 million, and an EPS loss of $1.07.
During the call, Micron's CEO, Sanjay Mehrotra, outlined the company's strategy to improve gross margin, which includes shifting equipment from older nodes to ramp up production of newer technologies, resulting in a net reduction in overall wafer capacity. This approach, along with underutilization in legacy nodes, is expected to balance industry demand and supply, strengthening demand-supply fundamentals in fiscal year 2024 and calendar year 2024.
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