U.S. memory semiconductor company Micron posted a loss in the second quarter due to inventory valuation losses. The economic downturn has delayed inventory stabilization, and the outlook for the third quarter is also not optimistic.
On the 28th (local time), Micron announced its earnings, reporting that sales for the second quarter of fiscal year 2023 (December 2022 to February 2023) were $3.69 billion (approximately 4.8 trillion KRW), down 53% compared to the same period last year. This slightly missed the market expectation of $3.71 billion.
The net loss was $2.3 billion (approximately 3 trillion KRW), turning from a net profit of $2.26 billion in the same period last year. The net loss per share was $1.91, which was also a larger loss than the market expectation of a 67-cent loss.
The U.S. financial media MarketWatch analyzed that Micron's turnaround to a loss was due to an inventory valuation loss of $1.43 billion.
Micron also forecasted that sales in the third quarter (March to May this year) would be between $3.5 billion and $3.9 billion (approximately 4.55 trillion to 5.06 trillion KRW), a 60% decrease compared to the same period last year.
Micron stated that this would be the steepest sales decline since 2001 due to the continued oversupply of semiconductors.
Micron also announced plans to maintain capital expenditures at $7 billion (approximately 9.1 trillion KRW) for this fiscal year (September last year to August this year), but this is at the lower end of the previously announced investment range.
Additionally, the company decided to increase the scale of layoffs this year from the initially planned 10% of total employees to 15%. Matt Bryson, a semiconductor analyst at Wedbush Securities in the U.S., evaluated that the reduction in capital expenditures would accelerate the timing of performance improvement and increase the recovery magnitude, which is positive for investors.
Sanjay Mehrotra, CEO of Micron, expressed optimism about the long-term outlook during a conference call after the earnings announcement, saying, "Inventory is gradually decreasing, and supply-demand conditions are showing signs of improvement." He also predicted that the semiconductor industry would have a record year in terms of market size in 2025.
He emphasized, "The future is AI, and the future of AI is the future of semiconductors, and Micron is well-positioned to respond to the growing opportunities in terms of technology and product roadmap."
Analysts also analyzed that the spread of generative AI could trigger demand for computer storage. In this regard, Sumit Sadana, Micron's Chief Business Officer (CBO), explained that a typical AI server requires eight times the DRAM and three times the NAND flash memory compared to a general server.
CBO Sadana stated that although the market conditions are difficult in the short term, new factories in Idaho and New York will be started as planned this year and next year, respectively.
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