Micron's revenue has surged, reflected in AI

Memory chip manufacturer Micron Technology's total revenue in the third quarter of fiscal year 2024 was 6.811 billion US dollars, a year-on-year increase of 81.5%, slightly better than market expectations; During the same period, a net profit of 332 million US dollars was achieved.

Micron expects its sales to range from $7.4 billion to $7.8 billion this quarter, with an average analyst estimate of $7.58 billion, but some predict it will exceed $8 billion. Excluding specific projects, the EPS is approximately $1.08, with a market estimate of $1.02.

Micron is one of the few manufacturers that supply the most advanced AI systems using high bandwidth memory chips (HBMs), and can seize the opportunities brought by the booming development of AI applications to the memory industry.

Micron stated that HBM CAGR will exceed 50% in the coming years; As the company increases its HBM portfolio in the future, HBM will have a positive impact on the company's performance and profit margin. The company's current production capacity for 2025 has been sold out and pricing has been locked in, which is beneficial for the company to achieve its established goals. The company expects to reach DRAM share at some point in the next 25 years. The company is in contact with a wider customer base and plans to ship to more customers next year. However, due to the complexity of HBM, qualification certification will also be more complex. However, the company has achieved a 30% lower power consumption performance compared to competitors on the customer side, which reflects the company's base advantage.

Micron CEO Sanjay Mehrotra believes that the market share of high profit products such as Micron's high bandwidth memory (HBM) continues to rise, and data center SSD revenue reaches a historic high, demonstrating the strength of the AI product portfolio in the DRAM and NAND fields.

Sumit Sadana, the head of Micron's business, said that 2024 will mark a rebound in the chip industry, and 2025 can create record sales levels. AI will drive demand for expensive chips, which are more difficult to manufacture and will occupy a significant portion of production resources, and should reduce the risk of future inventory surplus.

Although the AI computing boom has boosted Micron, demand in traditional markets such as personal computers (PCs) and smartphones remains sluggish. Micron's outlook shows that these areas have not recovered as quickly as some people expected after experiencing a historic decline last year.

Micron stated that PC sales will continue to maintain a low single digit growth in 2024, while the growth rate of smartphone sales will be as low as the middle single digit. In 2025, AI features will help stimulate demand for both smartphones and PCs.

Looking ahead to 2025, the demand for AI PCs and AI smartphones, as well as the continuous growth of data center AI, have created a favorable environment, giving Micron confidence to contribute substantial revenue records in the fiscal year 2025 and significantly improve profitability driven by the continuous shift in product portfolio towards higher profit products.