Micron Technology, a U.S. memory semiconductor corporation ranked third in the world, exceeded market expectations for the first quarter of fiscal year 2025 (September to November 2024) due to strong demand for artificial intelligence (AI). Micron predicted that the demand for high bandwidth memory (HBM) would remain strong next year, leading to a shortage of advanced DRAM supply. However, due to the slowdown in demand for general-purpose memory in mobile phones and PCs, Micron's forecast for the second quarter (December to February) fell significantly short of market expectations. As a result, Micron's stock price dropped more than 15% in after-hours transactions.
◇ Micron expresses confidence, stating, “HBM business is on track and a key pillar of performance.”
On the 18th (local time), Micron announced that its revenue for the first quarter of fiscal year 2025 was approximately $8.71 billion (about 12.65 trillion won), an increase of about 85% from the same period last year. Operating income was $2.4 billion (about 3.49 trillion won), marking a turnaround from the previous year. The gross profit margin, calculated as the profit margin after deducting manufacturing expenses from sales, was 39.5%. The earnings per share, excluding certain items, were reported at $1.79, surpassing Wall Street's expectations ($8.688 billion in sales, $1.73 earnings per share).
Sales of data center products, including HBM, surpassed half of Micron's total revenue for the first time. Sanjay Mehrotra, Micron's Chief Executive Officer (CEO), stated on the conference call following the earnings announcement, “Data center revenue grew more than 400% year on year, achieving an all-time high,” and added, “HBM shipments exceeded our plans, and HBM revenue increased more than twofold for two consecutive quarters.” He noted that sales of solid-state drives (SSDs) for data centers also reached a record high. Furthermore, CEO Mehrotra disclosed that revenue from the company's largest data center customer accounted for about 13% of total revenue.
Micron is confident that demand for HBM will continue to exceed supply next year, showing confidence in this business. Micron supplies HBM 5th generation (HBM3E) to NVIDIA, following SK hynix. CEO Mehrotra remarked, “Demand for DRAMs for data centers, including HBM, remains vigorous; thus, the supply of advanced DRAMs is still insufficient,” adding, “Micron has achieved its HBM goals and is on track to significantly improve company profitability throughout 2025.” He predicted that the maximum market size for HBM, estimated at $16 billion (about 23.23 trillion won) this year, would grow fourfold by 2028 and exceed $100 billion (about 145.22 trillion won) by 2030.
◇ Despite strong HBM business, outlook lowered due to general memory market recession.
Despite strong data center demand, Micron lowered its shipment forecast for the second quarter of fiscal year, citing that inventory adjustments by general memory customers are taking longer than expected. CEO Mehrotra noted, “The trend of customers reducing stock levels in consumer-oriented product lines continues, and this impact is becoming more pronounced.”
The ongoing trend of recession in the general memory market was also observed this quarter. Looking at the performance by institutional sector, revenue from the Computing and Networking division, which handles HBM and related products, reached $4.4 billion (about 6.39 trillion won), a 46% increase from the previous quarter. However, revenues from the Mobile division and the Embedded division, which mainly focus on general-purpose memory products, fell by 19% and 10%, respectively, compared to the previous quarter.
Accordingly, Micron expects to record approximately $7.9 billion (about 11.46 trillion won) in revenue and earnings per share of $1.53 for the second quarter of fiscal year. Compared to Wall Street's expectations of $8.99 billion (about 11.46 trillion won) in revenue and earnings per share of $1.92, this outlook is significantly lower. In response, CEO Mehrotra commented, “The ongoing adjustment period for customer inventory (for general products) is still expected to be relatively short,” and added, “We expect customer inventory to reach healthy levels by spring, and more bit shipments will be possible in the second half of next year.” Initially, the market had expected that the general inventory adjustment would conclude by the end of this year.