Micron, known as a memory semiconductor barometer, has released its disappointing earnings outlook for next year, negatively impacting the outlook for Samsung Electronics and SK Hynix. As the average selling price (ASP) of DRAM is exhibiting weaker-than-expected trends, the 'DRAM dumping' by Chinese corporations is accelerating, and the generic memory market is expected to suffer. High Bandwidth Memory (HBM) shows a steady trend, but there are predictions that the launch delay of NVIDIA's Blackwell will prevent it from contributing to earnings as expected.
On the 18th (local time), Micron predicted that its revenue for the second quarter of the fiscal year 2025 (December to February) would be $7.9 billion, with diluted earnings per share, excluding certain items, expected to be $1.53. Revenue is significantly lower than Wall Street's forecast ($8.99 billion), and diluted earnings per share also fall far short of market expectations ($1.92).
In particular, the price of generic products, which account for the majority of DRAM sales, plummeted by 35% from September to November, raising concerns about 'red flags' for earnings in the first quarter of next year. According to market research firm DRAM Exchange, the average spot price of DDR4 8Gb 1G×8 used for PCs dropped from $2.10 in July to $1.35 in November, a decline of 35.7% over four months.
During the earnings conference call, Micron also hinted at the seriousness of DRAM dumping originating from China. The actual price of generic DRAM is dropping as China's Changxin Memory Technologies (CXMT) significantly increases production, and the negative impact has been acknowledged by Samsung Electronics and SK Hynix during their earnings conference call for the third quarter.
CXMT is a DRAM corporation based in Hebei, China, which has begun supplying legacy products like DDR3 and DDR4 DRAM this year, selling them at half the previous price. This has led to a decline in profitability for Samsung Electronics and SK Hynix in the DDR4 market. Recently, CXMT has also begun mass production of DDR5, entering the high-performance DRAM market, which is predominantly controlled by Samsung, SK Hynix, and Micron.
Recently, domestic securities firms have been reducing their earnings forecasts for Samsung Electronics and SK Hynix in succession. Hanwha Investment & Securities downgraded its forecast for Samsung Electronics’ semiconductor (DS) division’s operating profit next year from 25.6 trillion won to 16.7 trillion won. Researcher Kim Gwang-jin noted, "If there is no change in demand next year, DRAM prices will face downward pressure from the third quarter, and NAND flash prices will start to decline from the first quarter."
Earlier, Kiwoom Securities also revised down its forecast for Samsung Electronics’ DS division operating profit to 19.2 trillion won, lower than previous estimates. As a result, the consensus forecast (average forecast from securities firms) for Samsung Electronics’ total operating profit next year has plummeted from over 63 trillion won three months ago to around 39 trillion won.
In the case of SK Hynix, the decline is less severe due to the advancement in the HBM business, but the earnings outlook remains disappointing. Hanwha Investment & Securities slightly reduced its forecast for SK Hynix's operating profit next year from 31.7 trillion won to 29.1 trillion won. Additionally, the initial production scale of NVIDIA's next-generation graphics processing unit (GPU) Blackwell, the largest customer for HBM, is reportedly smaller than expected, which could negatively affect HBM sales growth.
Meanwhile, the industry anticipates that Samsung Electronics' supply of the fifth-generation HBM product, HBM3E, to NVIDIA could affect the overall earnings next year. The HBM proportion of total revenue must increase to offset the sluggish performance of generic chips. Notably, NVIDIA plans to launch the next-generation GPU 'Rubin,' which will be equipped with eight units of the sixth-generation HBM product, HBM4, next year, making the production timing of HBM4 highly anticipated. Samsung Electronics and SK Hynix are expected to begin mass production of HBM4 next year.
Micron also expressed confidence in the mass production of HBM4. Previously, Micron began mass production of 24GB (gigabyte) 8-layer HBM3E in February, skipping HBM3. In September, it initiated sample shipments of the 12-layer products. Both products are reportedly being supplied to NVIDIA first. The full-scale mass production expansion of the next-generation HBM product, HBM4, is planned for 2026. To this end, Micron is preparing for development with multiple customers and is collaborating with Taiwan Semiconductor Manufacturing Company (TSMC).