Micron will reduce memory chip supply in 2023 to free up excess inventory amid slumping demand
Micron said on Wednesday that it will reduce memory chip supplies and cut more of its capital spending plan, as the semiconductor company struggles to clear excess inventory due to slumping demand. .
The company’s shares fell 5.8% to $59.44 (about Rs 4,900) in afternoon trading.
Micron was the first major chipmaker to sound the alarm about falling demand for personal computers and smartphones earlier this year due to decades of high inflation.
Chipmakers and electronics companies, which have been prepared to sustain a surge in demand caused by the pandemic and have struggled for a long time with supply constraints, have I soon found myself having too much inventory.
The broader weakness has spread across the industry and is now affecting all end markets from personal electronics to data centers to industrial. The Philadelphia SE Semiconductor index is down more than 31% this year.
“In order to significantly improve the total inventory… DRAM bit supply will need to shrink and NAND Bit supply growth will need to be significantly lower than previously estimated,” the company said.
Wedbush Securities analyst Matt Bryson wrote in a note on Wednesday that widespread supply and capital cuts often signify a memory industry bottom and are a good sign.
But he said it’s likely demand will last longer, which will likely affect the broader tech space.
Micron said it is reducing DRAM and NAND wafer starts — or the initial process in semiconductor manufacturing — by about 20% compared to the fourth quarter ended September 1.
In 2023, the company expects year-over-year bit supply growth to be negative for DRAM and in the single-digit percentage range for NAND.
Micron’s outlook may “weigh into the perception that component suppliers/resellers have introduced adverse conditions into their outlook, effectively putting the stock at risk,” Bryson said.
© Thomson Reuters 2022