In NVIDIA's footsteps: Micron warns shareholders about decline in revenues due to falling demand for memory

American company Micron Technology Inc.
said that the revenue for the current quarter may be lower than previously forecasted.
The announcement comes as demand for memory chips continues to fall.Image source: MicronIn an official statement, Micron said demand for dynamic random access memory (DRAM) and NAND flash memory has continued to steadily decline since the last forecast.
The company expects challenging conditions to continue over the next two quarters - at least until the end of this year.A month and a half ago, Micron expected revenue of $6.8 billion to $7.6 billion for the next three months versus $8.6 billion in the previous quarter.
Analysts had forecast revenue in the $7.28 billion range, but now the company has warned that revenue will be near the lower end of the estimate, closer to $6.8 billion.The company also intends to cut some costs in response to the situation, noting that the amount of capital spending in fiscal 2023 will fall significantly compared to the previous year.Micron announced a lower quarterly revenue forecast a day after NVIDIA reported that quarterly sales would be well below expectations.
In addition, last week AMD reported a decline in graphics gas pedal sales.
As for Micron, today it announced its intention to invest $40 billion in memory production in the U.S.
by the end of the decade.

Western Digital's flash memory business may become independent

More than six years ago, U.S.
hard drive maker Western Digital Corporation acquired the assets of solid-state memory maker SanDisk, which produced the respective chips in partnership with Toshiba, which later transferred the business to Kioxia.
Now, under pressure from investors, WDC is considering how to structurally separate the solid-state memory business from its drives.Image source: Western Digital CorporationAccording to Bloomberg, citing company representatives, the author of the idea is Elliott Investment Management, which represents the interests of several institutional investors.
The Board of Directors of Western Digital has considered the strategic alternatives for both of its key units, as a result of business for the production of solid state drives can be separated structurally, and its development will attract additional capital.
Analysts have long convinced the WDC administration that the two businesses separately are worth much more than the capitalization of a single company.Representatives Elliott explained that Western Digital is ready to decide to completely separate the flash memory business, and investors may provide financial resources for the development of a future independent company, without specifying the scale of the proposed investment.
By the end of 2023, investors expect the separation of the \"solid-state assets\" will allow Western Digital to raise the price of the main company's shares to $100 from the current $60.32.
The company's shares have lost 7.5 percent since the beginning of this year, and the news of the impending restructuring boosted the price by one percent at most.Elliott owns a 6 percent stake in WDC and also intends to provide $1 billion for the restructuring, which will be used to develop its solid-state memory business.
The new company's capitalization could reach $17 billion to $20 billion, according to investors.
That's about as much as the entire Western Digital has now.
Negotiations with Elliott are in full swing right now, and WDC management can't yet say exactly what the chosen strategic alternative will be.
The parties are bound by a non-disclosure agreement regarding public discussions of the decisions made.

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%.