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Micron will increase share of long-term contracts with customers

Micron will increase share of long-term contracts with customers

Micron Technology's management spoke to investors this week, promising to increase dividends and share repurchase costs, outlining a trend of decreasing dependence on the PC market and talking about an experiment with a new type of long-term contract.
The picture of the future, in general, turned out to be optimistic, the company's share price rose by a small percent.Image source: Micron TechnologyIn the period up to 2025 the supply of memory type DRAM will grow by 17-19% annually, in the segment of NAND this figure will reach 28-29%.
By the end of the decade, Micron predicts that the total turnover of the memory chip industry will reach $330 billion versus $161 billion in 2021.
Already, memory chips account for 30% of the semiconductor industry's total turnover, though at the beginning of the century they settled for 10%.The data center segment provided $50 billion in memory revenue last year.
Until the middle of the decade, memory shipments in this segment will grow at an average annual rate of 28% for DRAM and 33% per year for NAND.Automotive market turnover last year did not exceed $4 billion, but demand for DRAM type memory in this segment until the middle of the decade should grow at 40% annually, and in the case of NAND this figure will reach 49%.
A fully autonomous driven car will require 30 times more DRAM type memory, and 100 times more NAND type memory, than a driver-only driven car.Micron is gradually reducing its reliance on the PC and smartphone markets.
While both segments accounted for about 55% of the company's revenue last year, their share will drop to 38% by mid-decade.
By then, the data center segment will increase its share from 30% to 42%, and the combined share of the automotive, industrial and telecom segments will increase from 15% to 20%.As an experiment, Micron has signed a long-term memory supply agreement with one of its ten largest customers, which provides an annual revenue supplement of more than $500 million for more than three years.
The customer in this case gets the priority right to receive products in short supply, and the pricing policy is adjusted as the manufacturer's costs decrease.
At the same time, the price of the contract is not subject to fluctuations which are typical for the short-term market.
At the same time, it was announced about Micron's intention to increase the amount of dividends by 15% and provide up to 100% of the available funds for the return of capital to investors.
Now this value does not exceed 50%.

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