Unlike analysts, memory manufacturers are less prone to ostentatious pessimism, and there is something to worry about. Starting around the third quarter of 2018, the DRAM memory market began to quickly enter the overproduction stage. Moreover, this process accelerated long before the start of post-New Year's apathy, which is usually characteristic of the first quarter of each new year. Server manufacturers and cloud service operators stopped purchasing and using memory as early as the fourth quarter of 2018. The situation was aggravated by the shortage of Intel desktop processors, which further increased the level of memory stocks. Memory turned out to be not needed in the volumes in which it was produced, and DRAM chip manufacturers began to suffer significant losses.
According to analysts, memory may become cheaper before the end of the year or even longer. Memory manufacturers are trying to turn the tide and are cutting back on investment in production. At least in the first half of 2019, the purchase of industrial equipment for the production of DRAM chips will be significantly reduced. Some of the manufacturers go further and, for example, Micron, stop part of the production lines. This is called the release of products in accordance with market expectations. These practices and other developments promise to bring demand back into the memory market. According to Micron management, the memory market will stabilize in the period from June to August of this year. If such a scenario becomes a reality, it is better to deal with the modernization of PC memory subsystems before mid-summer.
Micron's cautious optimism immediately after the company's report on the work in the second quarter of fiscal 2019, which for it ended on February 28, caused the company's shares to rise by 5%. The same news pushed up the shares of SK Hynix and Samsung. Shares of the first company rose by 7%, and the second - by 4,3%. This is not yet the second wind of memory manufacturers, but already something positive.
However, you cannot feed an investor with forecasts alone. Micron posted quarterly revenue that beat analysts' expectations. In the period from December 2018 to February 2019, inclusive, experts expected revenue of $5,3 billion from Micron. In fact, Micron earned $5,84 billion. This is less than in the same quarter of the last financial year (it was $7,35 billion) , but still better than the forecast of independent observers. Micron was able to achieve such a high result with the help of the strictest economy and thanks to the optimization of capital costs. The company also promises to continue the share repurchase program and is ready to buy 2 million securities for $702 million. In total for fiscal 2019, Micron will reduce capital expenditures by at least $500 million from $9,5 billion to $9 billion or slightly lower.
In the next fiscal quarter, which will cover March, April and May of this year, Micron expects to earn between $4,6 billion and $5 billion. Market watchers are hoping to see Micron's slightly higher revenue at $5,3 billion.
Source: 3dnews.ru