Micron Technology

Micron Technology is an American semiconductor device company, mainly DRAM and NAND memory chips.

Performance indicators

2022

Increasing Market Share of Memory Chips

Share of business revenues in China - 11%

Share of U.S. chip supplier revenue from China business

2021: Revenue growth by 30%, to $27.705 billion, profit - $5.861 billion

Micron Technology ended fiscal 2021 with sales of $27.71 billion, almost 30% more than a year ago revenue of $21.44 billion.

Most (about 72%) of the annual turnover of the American company fell on the sale of RAM and products based on it. The producer's earnings in this segment at the end of the 12-month period, which ended on September 2, 2021 of the calendar year, amounted to $20.04 billion against $14.51 billion a year earlier.

Revenues in the NAND flash memory segment increased from $6.13 billion to $7.01 billion, which corresponds to 25% in total revenue. The remaining sources of revenue combined brought Micron about 2% of sales, half the share registered in 2020.

Micron's report also shows that sales of mobile solutions in fiscal 2021 increased by 26% (year-on-year) to $7.2 billion. Embedded chip sales increased 53% to $4.31 billion. The market for products for computing and network equipment registered a 26 percent increase in sales (up to $12.28 billion). Storage sales grew by 6% and reached $3.97 billion.

As for net profit, Micron in 2021 amounted to $5.86 billion, having more than doubled compared to the previous year's profit ($2.71 billion).

According to Bloomberg, Micron expects revenues below analysts' forecasts, which suggests that a decrease in memory demand among PC manufacturers is affecting companies such as Micron. The memory chip market is known for its sharp periods of rise and fall. At the same time, Micron CEO Sanjay Mehrotra assured that wild fluctuations between shortages and oversupply have ceased because the company's chips are used in a wider range of devices.^[1]

2020: Revenue decline to $21.44 billion due to pandemic

In fiscal 2020, Micron Technology received revenue of $21.44 billion against $23.4 billion a year earlier. Most of the sales - 68% or $14.51 billion - came from RAM chips. In this segment, the annual revenue of the American semiconductor manufacturer decreased by 14%.

At the same time, revenues from the supply of flash memory chips (NAND) in 2020 to the financial year rose by 14% and amounted to 29% of the total, that is, about $6.13 billion. The rest of the products brought the company $794 million in revenue, which is 5% higher than the result of the previous reporting year. Micron sales fell largely due to the COVID-19 coronavirus pandemic.

Micron financials

Micron's main source of revenue remains chip sales for computers and network infrastructures, which reached $9.18 billion in 2020, down 8% from a year ago. The implementation of solutions for mobile devices sank even more - by 11% to $5.7 billion. Deliveries of products for embedded systems used in automotive, industrial and consumer equipment turned out to be $2.76 billion, which is 12% more than in fiscal 2019.

The division specializing in the production of solid-state drives and components for storage systems has recorded a 2% decline in annual turnover, to $3.77 billion.

Micron's net profit in fiscal 2020 amounted to $2.71 billion, down from $6.36 billion a year earlier.

Micron CEO Sanjay Mehrotra, commenting on the financial results, noted that the company made money on strong sales of RAM chips for cloud, personal computers and game consoles. In addition, the company was helped by the "extraordinary growth" in sales of QLC NAND chips, which are the most advanced type of NAND flash memory in Micron's range.^[2]

History

2023

Why China's sanctions against US Micron turned into a failure

In early August 2023, it became known that China's initiative to increase demand for chips in memory of local production did not bring success. The ban on the supply of products by the American company Micron led to undesirable consequences.

Initially, it was assumed that memory chips from domestic manufacturers would be used at national facilities of China's critical information infrastructure. However, Chinese suppliers were unable to provide the necessary production volumes, and the technological processes of the PRC plants are inferior to American enterprises.

Ban on the supply of products of the American company Micron led to undesirable consequences

It is noted that Micron occupied about 15% of the server memory market DRAM in. China After the sanctions against it, South Korean suppliers won - and. Samsung SK Hynix The latter specializes specifically in the production of semiconductor memory - DRAM and NAND.

Chinese-made memory chips are suitable for consumer electronics, it says. But their capabilities are not enough for use in servers and equipment that is used to solve problems related to artificial intelligence. Meanwhile, big tech Chinese firms - from Baidu and Alibaba Group Holding to Tencent Holdings and JD.com - are looking to develop generative AI models amid the rapid development of the relevant market. At the same time, "black" deliveries of Nvidia accelerators such as the A100 and H100 are formed. The observed situation, as noted, may negatively affect the national security of the PRC.

If China insists on using domestic products for security reasons, it will mean a compromise on server quality, says Brady Wang, deputy director of research firm Counterpoint.[3]

China chip sales ban

On May 21, 2023, the State Office of Internet Information of the PRC (CAC), Internet China the central regulatory authority in, announced that the products of the American company Micron Technology had not been tested for compliance with local security requirements. And therefore, operators of the key Chinese information infrastructure are prohibited from purchasing products from this manufacturer.

According to the Air Force, this decision was the first serious measure by China against a chip manufacturer from the United States. Tensions between Beijing and Washington are growing: for example, in early October 2022, the United States limited access to chips manufactured using American technologies around the world to about three dozen Chinese IT companies. The CAC does not specify which security issues are identified in Micron chips and which products will be affected.

The audit showed that Micron products have serious risks in terms of network security. And this poses a significant threat to China's critical information infrastructure and affects the country's national security, the CAC said in a statement.

Jefferies analysts believe that the ban on the PRC authorities will not hit Micron's business in the Chinese market too much. The fact is that the main customers of this company's memory chips in China are manufacturers of electronics such as smartphones and personal computers, and not suppliers of equipment, including servers, for critical information infrastructure.

Micron confirmed receipt of CAC's notice to conduct the review and said it hoped to continue discussions with Chinese authorities about the supply of its products. China provides Micron with about 10% of total revenue. It is not clear how the local government's decision will affect shipments of the company's products to non-Chinese customers in this country.^[4]

Increase layoff program to 15% of state

In mid-February 2023, it became known that Micron Technology had expanded its staff reduction program. If earlier it was planned to lay off about 10% of employees, now it is said that 15% of workers will be on the street.

Micron CEO Sanjay Mehrotra announced an additional wave of cuts in an internal email. A representative of Tate Tran (Tate Tran) clarified that all layoffs will be carried out during 2023. As of the end of 2022, Micron had approximately 49 thousand employees. Thus, taking into account the expanded program around the world, about 7,300 employees will be laid off.

Micron CEO Sanjay Mehrotra

The company operates dozens of offices, production and research centers on a global scale. Some units will be hit harder than others, Tran said. It's not clear how many people will leave Micron's headquarters in Boise, Idaho: More than 5,000 of the company's employees are employed here, according to the state Department of Labor.

As Tran noted, restructuring began in February 2023. It is carried out in the form of actual layoffs and natural reductions (a decrease in the number of employees as a result of retirement or dismissal of their own free will without the subsequent hiring of new employees). Payments of allowances and bonuses to employees are suspended. The company said executives have gone to reduce their wages to stabilize their financial position amid plummeting demand for DRAM chips and other products. {{quote | In the long term, Micron still sees strong continued demand for products in the global market and will continue to invest in the development of critical technologies and products, "said Tran.^[5]

2022

10% staff reduction

On December 21, 2022, American semiconductor and memory chip maker Micron announced a 10% reduction in headcount. Thus, about 5 thousand people will be dismissed.

Micron employed about 48,000 people. The company's management said it would achieve the reduction target through voluntary care as well as layoffs.

One of the world's largest manufacturers of memory chips Micron cuts 10% of the state due to the crisis

Micron said a $30 million charge is expected in the fourth quarter of 2022 related to the restructuring, which will also include a reduction in investment in manufacturing facilities and cost-cutting programs.

The employee cuts came after Micron's financial analysts reported results for the first quarter of fiscal 2023, in which they missed earnings and revenue experts' expectations and forecast a large loss per share than previously expected in early 2022. The company's revenue in the first financial quarter fell to $4.09 million from $7.69 million. Micron's loss was $195 million.

Micron CEO Sanjay Mehrotra said in a prepared speech that the memory supply for December 2022 is too large and demand is insufficient due to the crisis, which has led to the company storing more stock and losing price power. Since the beginning of October 2022, Micron has seen a sharp drop in product demand in the global market. Mehrotra told investors it expects the company's margins to "remain in doubt" through the end of 2023, with revenues and free cash flow recovering later in 2023.

Micron's restructuring comes after other semiconductor companies announced a suspension of hiring or layoffs. In the summer of 2022, Nvidia and Qualcomm announced a reduction in hiring, and in October 2022, Intel announced that it was laying off employees as part of a $10 billion cost-cutting plan.^[6]

Japan allocated Micron $320 million for the production of promising chips in Hiroshima

On September 30, 2022, Japan's Minister of Trade and Industry announced that the country would provide Micron Technology with a subsidy of up to 46.6 billion yen ($322 million) to support its plan to produce modern memory chips at the Hiroshima plant.

The announcement of subsidies for the largest American chipmaker comes after a visit by US Vice President Kamala Harris to Japan, during which the two countries strengthened cooperation to expand the production and supply chains of critical materials.

Japan allocated Micron $320 million for the production of promising chips in Hiroshima

I hope that the agreement will further enhance cooperation between Japan and the United States in the field of semiconductors, "said Japanese Minister of Trade and Industry Yasutoshi Nishimura. He added that the government had approved the deal under a law relating to economic security.

Micron said in a statement that the company will use the subsidy to strengthen production capacity and accelerate the development of 1-beta DRAM - random access dynamic memory chips that are key to modern data processing systems - as well as technologies to modernize 5G networks and advance artificial intelligence. The chips will be manufactured at a factory in Hiroshima.

Micron appreciates the support provided by the Japanese government and is proud to act as a global partner in Japan's push to expand semiconductor production and promote innovation, Manish Bhatia, Micron's executive vice president of global operations, said in a news release.

The United States is seeking to strengthen technological cooperation with Japan, South Korea and Taiwan while trying to boost domestic semiconductor production, amid China's own investment in computer chips.

Japan has allocated 476 billion yen ($3.3 billion) in subsidies for a new plant in southern Kumamoto Prefecture, which is being built as part of a partnership between Taiwan Semiconductor Manufacturing, Sony and Denso.

Japan will also provide up to 92.9 billion yen ($644 million) to another facility in the central Japanese prefecture of Mie, built jointly by Western Digital and Kioxia.^[7]

2021

Investing $150 billion in the development and production of semiconductor products

On October 20, 2021, Micron Technology announced an investment of $150 billion in the development and production of semiconductor products. The only major memory manufacturer in the United States has proposed to the American authorities, who complain that foreign chip production poses a threat to national security, to create incentives to preserve this production within the country.

The announced budget will be spent on building new plants and expanding existing chip factories. With these investments, designed for the next 10 years, the American company intends to meet the growing demand for semiconductor products and eliminate its shortage.

Micron invests $150 billion in memory production

The R&D budget and capital spending represents an increase from Micron Technology's historic levels and is needed to meet demand for chips that help process and store data in phones and computers, the company said. The company has not yet decided exactly where the construction of future factories will be.

As The Wall Street Journal writes in an article dated October 20, 2021, in recent years, sales of memory chips have increased sharply, because they account for 30% of the $460 billion semiconductor industry, while in 2011 this figure was about 10%.

We're looking at various locations in the U.S. and also obviously looking at existing locations for overall expansion as well. Most of Micron Technology's production is in Japan, Singapore and Taiwan. In the 1970s, the United States was home to most memory chip manufacturers, but now accounts for only 2%. If the US government helps us, and grants or at least tax breaks are provided that will reduce by 45% the higher cost of creating a chip factory in the country, then our company, or in cooperation with another business, is ready to fulfill this mission without unnecessary talk, "said Micron Technology Business Director Sumit Sadana.

Chip shortages have demonstrated to governments across countries that semiconductors have become more critical to their economies, prompting them to try to secure supplies, often offering subsidies to attract investment. In June 2021, the US Senate passed a law to increase government spending on research and development in the field of technology, which includes $52 billion to stimulate the production of semiconductors.^[8]

Sale of Texas Instruments chip plant for $1.5 billion

At the end of June 2021, Micron Technology announced the sale of its plant located in Lehigh (Utah, USA). This company, specializing in the production of 3D XPoint memory, is bought by Texas Instruments. The transaction value is estimated at $1.5 billion.

Under the terms of the agreement, Micron will receive $900 million from the buyer. The seller hopes to save another $600 million by reusing equipment and some property related to this enterprise. Part of this property will be sold, Micron hopes to use the rest for its needs at other factories.

Micron sold a chip factory to Texas Instruments and will make $1.5ml from it

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It is planned to close the deal by the end of 2021. As for the employees of the sold enterprise, Texas Instruments promises to offer them work after the change of ownership of the enterprise. For what purposes the American company bought this object is not specified, but it is known that it will be repurposed. When you consider that by mid-2021 there is a shortage of many electronic components, the additional production space of Texas Instruments will definitely not hurt.

This investment... are part of our long-term capacity planning, "said Texas Instruments CEO Rich Templeton, quoted by the press service.

Micron announced plans to sell the factory in Lihai in March 2021. At the same time, the company announced its intention to stop producing 3D XPoint memory. Micron plans to shift its efforts to the development of Compute Express Link technology, an open protocol for high-speed intra-system connections, which was developed by Intel.

On the day the Utah plant was announced, Micron shares were down 2% and Texas Instruments was flat.^[9]

2020: UMC to pay $60 million for industrial espionage against Micron Technology

At the end of October 2020, Taiwanese chipmaker United Microelectronics Corp (UMC) pleaded partially guilty in the case of theft of trade secrets from the American company Micron Technology, agreed to pay a fine of $60 million and assist law enforcement agencies in the proceedings with Fujian Jinhua.

2019

Among the largest companies in the semiconductor industry by revenue

Крупнейшие компании в индустрии semiconductors by revenue in 2019

Entering the top 100 fastest growing companies in the world

In September 2019, Micron Technology was among Fortune's top three fastest growing companies. The company is increasing sales by 38% per year, and profit - by 173%.

2018

Revenue growth by 50% to $30.39 billion

On September 20, 2018, Micron Technology released its fiscal year report, which ended on August 30. Thanks to successes in the final quarter, one of the leading memory chip manufacturers recorded significant revenue and profit growth in the 12-month period. The high demand for RAM contributed to the financial upsurge.

Micron's annual revenue rose 50% to $30.39 billion against the $20.32 billion recorded in the past to the year. In addition, the company reported a net profit of $14.14 billion. A year ago, Micron's profit was just over $5 billion.

Micron financials

In a press release distributed by the company, Micron CEO Sanjay Mehrotra noted the exceptional results of the final quarter, which challenged the company to end the fiscal year on a major note and win the title of the second largest semiconductor manufacturer in the United States.

"In the fourth quarter, we set revenue records in all of our major markets, from the automotive sector and industry to the mobile device and data center industry," it said in a statement.[10]

Speaking at a conference on quarterly and annual results, Sanjay Mehrotra said that more than a third of the revenue in 2018 was provided by products for data centers and graphic memory.

It is also known from the report that at the end of the 2018 financial year, about 70% of Micron's total sales came from DRAM chips, and NAND's share in revenue was about 26%. A year earlier, the ratio of these types of products looked like 66% to 30%.

Along with the financial results, Micron revealed its investment plans for the 2019 fiscal year. The planned investment volume is $10.5 billion plus or minus 5%. The company intends to allocate funds to reduce the technological lag from competitors in the DRAM industry.^[11]

Micron buys out Intel's stake in IM Flash Technologies for $1.5 billion

On October 18, 2018, Micron Technology announced a $1.5 billion buyout of Intel's stake in IM Flash Technologies. This deal indicates Intel's desire to abandon memory production. Read more here.

China chip sales ban

In early July 2018, Micron was banned from selling chips in China due to patent infringement belonging to the Taiwanese company United Microelectronics Corporation (UMC). This decision, made by a Chinese court, could hurt the business of the American company.

According to Reuters, citing a statement by UMC, a court in Fuzhou imposed a temporary ban on Micron from selling about 26 types of chips in China, including DRAM and NAND memory chips.

Micron banned from selling chips in China and left without half of revenue

Micron said it has not received a notice of business restrictions and is not going to comment until they review the case file.

The patent proceedings between Micron and UMC began in December 2017, when the U.S. company sued UMC in a California court, accusing the competitor of violating its intellectual property rights. The Taiwanese chipmaker has filed a counterclaim in China and is seeking that the court ban Micron from producing, importing and selling products that violate UMC patents, and ordered the destruction of all stocks of released products and ordered compensation to be paid.

In 2017, Micron also accused UMC and its Chinese partner Fujian Jinhua Integrated Circuit Co. of stealing memory chip manufacturing secrets.

Closing the Chinese market for Micron is extremely unprofitable for a company that receives about half of its revenue in the country.

After the announcement of the ban on the sale of Micron chips in the Celestial Empire, the company's quotes fell by 5.5%, while UMC shares rose by more than 3%.

Micron and other U.S. chipmakers are finding it increasingly difficult to operate in China amid worsening trade relations between Washington and Beijing. In addition, China is investigating Micron's possible involvement in collusion with South Korean competitors over price fixing. The check began after a sharp and ongoing rise in the price of RAM chips.^[12]

2015: Falling profits due to cheaper memory for computers

On October 1, 2015, Micron Technology released its annual financial report. The company's profit fell 5% due to the cheaper computer memory, which the American manufacturer specializes in.

According to data published on the Micron website, in the 2015 fiscal year closed on September 3, 2015, the company's net profit amounted to almost $2.9 billion against $3.1 billion a year earlier. Revenue for the same period decreased by 2%, reaching $16.2 billion.

Micron year results: profit collapse due to cheaper PC memory

The chipmaker's operating profit fell from $3.1 billion in fiscal 2014 to $3 billion a year later, and gross margin decreased from 32.8% to 26.9%.

Micron's revenues are shrinking due to falling demand for personal computers, which negatively affects chip sales and leads to cheaper chips. In July-September 2015, compared to the previous three months, the average cost of DRAM memory chips decreased by 7%, and their implementation at Micron ceased to grow, the vendor said.

Analysts Gartner expect global computer shipments to fall 7.3% in 2015, although they previously predicted a 4.5 percent decline. Due to such a decline, the situation in the memory market is unlikely to improve. Micron hopes for a market recovery in 2016.

Commenting on the released results of fiscal 2015, Micron CEO Mark Durcan said he was pleased with him and added the following:

"While continued weakness in the PC sector has impacted fourth quarter results, we believe the fundamentals of the memory industry will remain favorable over the long term."

After Micron reported annual results, the company jumped 8.3% during its extended exchange session on October 1, 2015. Since the beginning of the year, the value of securities of a semiconductor manufacturer has decreased by 57%. According to Wedbush Securities analyst Betsy Van Hees, the further dynamics of Micron's stock fluctuations will depend on the strength of demand in all end markets, not just computer.^[13]

Notes