I tried to warn people. The guidance is far worse than analysts predicted
Micron FQ4 2022 Results
Micron reported results today for FQ4. The results were
inline with the previously lowered expectations.
The guidance was not expected by most analysts. Micron forecast
FQ1 earning per share with a loss in GAAP and expectation of 0.04/share Non-GAAP
(not accepted accounting principles). This is one of the largest drop offs in micron
history.
As presented to our clients in presentations over the past
month, the price drops and inventory adjustments are far worse than Micron and
others predicted
As mentioned before, every company claims to have long term
agreements… but these do not affect actual pricing or prevent crashes. They are
mostly a sales pitch to analysts. Micron is not seeing stability.
Micron is on leading edge with technology currently but
will drastically slow ramps of new technology. This is very wise and is the BEST way to control bit growth. This is
not good for equipment companies.
Micron cited numerous macro events. But inventory adjustment happens every 4 years regardless of news and the claimed shortages in chips caused un-necessary inventory build ups at end customers. The cause of this was the boom of the past 12 months. It will happen again in 4 years regardless of the world news.
Micron predicted strong second half of F2023. There is no data
to support this but historically we expect 3 quarters of downside to get to
target inventory, 2-3Q of average after inventory is corrected and then “the good
times” with price increases and a boom.
How to see when this will turnaround and how you can monitor?
1)
Look at inventory for suppliers and customers.
Suppliers report their inventory
2)
While Micron and Hynix are nice companies, the fact
is that pricing and inventory is dominated by Samsung. Check Samsung models and
Samsung capacity actions
3)
Look at pricing models. We can provide inputs on
pricing. If pricing drops, there is excess supply. It is a commodity market and
differentiation is minimal.
4)
As in the past, customers will run their
inventory too low and then there will be a shortage and the upturn will happen
(in 2024 timeframe)
5)
In the last upturn, MU Price increased months
before the market recovered …. It anticipated the recovery…. But this made it
difficult to set a target price AFTER the market recovered. End result was sell
side analysts having targets of $130+ when all of the good news was fully
booked in at $95. We expect the same overstatement of price targets to happen
again in late 2023 into 2024
6)
We provide monthly updates on DRAM and NAND both
from markets and from technologies and costs. Contact us for more information
Mark Webb
