Micron 1Q 2010 Financial Report and Other’s Forecasts Show Health in Semiconductor Memory Markets

Just before Christmas, Micron Technology (a major DRAM and NAND Flash vendor) announced some pretty positive financial results for the first quarter of the 2010 fiscal year. Micron had net income attributable to Micron shareholders of $204 million (23 cents per diluted share) on net sales of $1.74 billion compared to a loss of $100 million (a loss of 12 cents per diluted share) on net sales of $1.3 billion for the fourth quarter of fiscal 2009 and a loss of $718 million (a loss of 93 cents per diluted share) on net sales of $1.4 billion for the first quarter of fiscal 2009.

Profit can be a great indicator of industry health and Micron achieved these numbers with a mix of cost cutting and improved sales. In fact, DRAM and NAND Flash memory sales improved both in sales volume and in average sale price. Both are good news if these numbers can be extrapolated to the rest of the semiconductor industry. Quoting from Micron’s quarterly report:

“Revenue from sales of DRAM products increased 50 percent in the first quarter compared to the fourth quarter due to a 25 percent increase in sales volume and a 21 percent increase in average selling prices. Revenue from sales of NAND Flash products increased 21 percent in the first quarter compared to the fourth quarter due to a 16 percent increase in sales volume and a five percent increase in average selling prices. The company’s gross margin on sales of memory products improved from 12 percent in the fourth quarter of fiscal 2009 to 27 percent in the first quarter of fiscal 2010 due primarily to the increases in average selling prices.”

These numbers do seem to correlate well with the DRAM pricing graphs we published last week from DRAM Exchange (see “DRAM Exchange Calls for DRAM Shortage, Puts Lump of Coal in Your Stocking, Makes DDR3 Predictions”) and they track semiconductor consultant, gadabout, and blogger Daniel Nenni’s 2010 Semiconductor Forecast. (Nenni is a consultant and expert in strategic semiconductor foundry relationships and he’s a very active blogger for the semiconductor industry. His blog self-describes him as “intelligent, clever, charming, humble, and a pleasure to work with.” Gotta love a guy like that.)

Here’s what Nenni’s forecast had to say about the memory sector of the larger semiconductor industry:

“DRAM supply was already lagging demand when Windows 7 came out and [Windows 7] put even more pressure on PC and laptop users to upgrade. Micron Technology, the DRAM bellwether, is now profitable for the first time in three years. Expect increased pricing, long lead times, and continued DRAM allocation in 2010.”

AgigA Tech designs and sells bulletproof server memory DIMMs based on DRAM and NAND Flash devices. In a sense, we don’t like to see memory prices going up because there are implications with respect to component costs for our own products. But clearly, semiconductor memory companies need to stay in business, which means they must ultimately make a profit, so Micron’s latest results are clearly encouraging for the industry as a whole.

Tuesday, December 29th, 2009 at 17:51
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