Micron "Weak Market Outlook Next Year... 20% Reduction in DRAM and NAND Production"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] US memory semiconductor company Micron announced that it will reduce DRAM and NAND flash production by 20% as the semiconductor market outlook for next year is weakening.

On the 16th (local time), Micron announced in a press release titled "Additional Measures to Address Market Conditions" that it plans to reduce current DRAM and NAND production by about 20% compared to the fourth quarter of fiscal year 2022 (June 3?September 29). Micron explained that the production cuts will be implemented across all technology processes.

Micron also revealed plans to cut capital expenditures next year. Earlier, during the earnings announcement in September, it had stated that capital expenditures for fiscal year 2023 would be reduced by 30% from the original plan to about $8 billion (approximately 10.7 trillion KRW), and now it intends to reduce this further.

The reason Micron issued a separate statement about cutting production and capital expenditures is due to the worsening market conditions. Since the beginning of this year, semiconductor demand has declined amid rising inflation and recession concerns, leading to a downturn in the industry. Micron estimated that the market outlook for next year is weakening, with DRAM bit growth (shipment growth rate converted to bit units) expected to be negative, and NAND growth projected to be only in the single digits.

Sanjay Mehrotra, CEO of Micron, said, "Micron is taking strong and aggressive actions to reduce bit growth in order to limit our inventory levels," adding, "We will continue to monitor industry conditions and make additional adjustments if necessary." He emphasized, "Despite short-term (market) cycle issues, we have demand drivers in the market, and in the long term, memory and storage revenue growth will outpace other semiconductor industries."

Following the announcement, Micron's stock price fell 6.7% in a single day. The stock price has dropped nearly 37% compared to the beginning of this year. Micron holds the third-largest market share in the DRAM market and the fifth-largest in the NAND market.