Disappointing News for Investors
Investors looking to Micron Technology Inc. for a much-needed boost were met with disappointment during a recent call with Wall Street analysts. Executives from Micron revealed that they anticipate a net loss in the fiscal first quarter, dashing hopes that their AI-focused memory chips would provide immediate relief to the company. This is a significant blow for the memory-chip giant, especially considering the 40% drop in revenue to $4 billion and a net loss of $1.43 billion in the fiscal fourth quarter. Furthermore, Micron has experienced a setback due to a government ban, resulting in the loss of about half of its sales in China.
Hopes Pinned on HBM3 Memory Chip Family
The introduction of Micron’s forthcoming memory-chip family, known as HBM3 (high-bandwidth memory), was expected to help offset declining sales. However, with both PC and smartphone memory-chip sales slowing down this year, the industry still faces the challenge of excess inventory. Micron’s free cash flow has suffered as well, reaching negative $758 million.
CEO’s Perspective
Micron Chief Executive Sanjay Mehrotra acknowledged the difficult year for the memory and storage industry, with revenue reaching a multi-year low and severely impacting financial performance. Despite the current setbacks, Mehrotra expressed confidence that pricing has reached its lowest point.
It remains to be seen whether Micron Technology Inc. can navigate through these challenges and leverage the anticipated AI boom to restore profitability.
Micron, a leading semiconductor company, is set to make significant advancements in its HBM3 chip family. The company recently allowed customers to test its first HBM3 Gen 2 memory chips, which boast a host of design improvements specifically targeted for artificial intelligence applications. The new chips are expected to greatly enhance the efficiency and performance of large language models such as GPT-4, reducing training times and opening up new possibilities in the field of AI.
Sanjay Mehrotra, CEO of Micron, emphasized that the increase in revenue resulting from the new chips will become apparent from early 2024. While the bulk of revenue is anticipated to come later in the year, Mehrotra confirmed that they are on track to achieve meaningful revenue of several hundred million dollars in fiscal year 2024.
Despite exciting prospects for the company, Micron anticipates another net loss in the first quarter. However, it remains optimistic about the pricing momentum picking up in the second half of the year.
Analyst Angelo Zino from CFRA Research underscores the promising outlook for Micron’s AI server business. He highlights how the HBM technology enables a significant content boost of up to six to eight times compared to traditional servers. However, Zino also acknowledges that the ongoing slowdown in consumer markets for PCs and smartphones is currently impacting Micron’s performance.
Investors showed some concern as Micron’s shares fell by nearly 4% in after-hours trading. Nevertheless, they remain hopeful for a rebound in revenue growth and a return to profitability in the future. Micron’s continued focus on innovation and technological advancements positions them well for success in an increasingly AI-driven market.
Summary:
- Micron expects significant revenue growth with its HBM3 chip family.
- The first HBM3 Gen 2 memory chips have been made available for testing.
- These chips offer design improvements optimized for artificial intelligence.
- Improved training times for large language models like GPT-4 are anticipated.
- Revenue increase is expected to begin in early 2024, with significant growth later in the year.
- Another net loss is predicted for the first quarter, but pricing momentum is expected to strengthen in the second half.
- The AI server sector presents significant opportunities for Micron’s HBM technology.
- Slowdown in consumer markets for PCs and smartphones is currently impacting Micron’s performance.
- Investors eagerly await a rebound in revenue growth and return to profitability.
