According to Shenwan Hongyuan, Micron Technology (MU, Financial) has reported better-than-expected results for FY24 Q4 (June-August) and provided an optimistic outlook for the next quarter. The company also forecasts the HBM market to exceed $25 billion by 2025, with increased production of HBM3E12H starting early next year. Record-breaking data center revenue in FY24 is expected to grow significantly in FY25. Server shipments are predicted to see mid to high single-digit growth in CY24, with strong growth in AI servers and modest growth in traditional servers. HBM, high-capacity DDR5 and LPDDR5, along with data center SSDs, are expected to generate billions in revenue in FY25. For CY25, the storage supply-demand landscape looks favorable, with additional capital expenditures allocated to HBM and new wafer fabs.
Micron’s FY24 Q4 performance exceeded expectations: Revenue reached $7.75 billion, a 93% year-over-year increase and a 14% quarter-over-quarter rise, surpassing market expectations of $7.66 billion. Non-GAAP gross margin was 36.5%, an 8.4 percentage points quarter-over-quarter increase, exceeding market expectations of 34.7%. Non-GAAP net income stood at $1.34 billion, above the expected $1.25 billion. Non-GAAP EPS was $1.18 per share, surpassing the anticipated $1.12 per share. For FY25 Q1, revenue is projected between $8.5 billion and $8.9 billion, with a midpoint growth of 84% year-over-year and 12% quarter-over-quarter, surpassing the market expectation of $8.32 billion. Non-GAAP gross margin is expected to be between 38.5% and 40.5%, with a market expectation of 37.6%. Non-GAAP EPS is projected to be between $1.66 and $1.82 per share, higher than the market expectation of $1.52 per share.
Micron forecasts the HBM market to exceed $25 billion by 2025, with increased production of HBM3E12H beginning early next year. The market size for HBM is expected to grow from approximately $4 billion in CY2023 to over $25 billion by CY2025, with HBM’s share of total DRAM capacity rising from 1.5% in CY2023 to about 6% in CY2025. For FY25, HBM, high-capacity DDR5 and LPDDR5, and data center SSDs are each expected to generate billions in revenue. The HBM3E12H, with 36GB capacity, will offer 50% more capacity and 20% lower power consumption compared to competitors’ solutions. The company plans to ramp up HBM3E12H production in early CY2025, increasing the proportion of 12H products throughout the year.
Data center DRAM and NAND revenues reached a new quarterly high. FY24 data center revenue hit a record and is expected to grow significantly in FY25. Server shipments are projected to grow by mid to high single digits in CY24, driven by strong AI server growth and modest traditional server growth. High-capacity DDR5, LPDDR5, and data center SSDs are anticipated to each generate billions in revenue in FY25. PC shipments are expected to see seasonal growth in the second half of CY24, with PC OEMs’ inventory normalizing by the spring of CY25. PC shipments are projected to grow by a low single digit in CY24, continuing into CY25, driven by factors such as AIPC upgrades and the end of support for Windows 10 and the launch of Windows 12. Smartphone inventory dynamics are similar to PCs, with CY24 smartphone shipments expected to grow by a mid to low single digit, continuing into CY25. Android OEMs have released AI phones with 12-16GB DRAM, compared to last year's 8GB flagship models. In the automotive sector, storage capacity is increasing due to infotainment systems and ADAS, with automotive business growth expected to resume in the second half of FY25.
The storage supply-demand outlook for CY25 appears favorable, with new capital expenditures directed towards HBM and constructing new wafer fabs. For CY24, DRAM bit demand is expected to grow by a high-teen percentage, while NAND bit demand is expected to grow by a mid-teen percentage. The growth in bit demand for both DRAM and NAND is projected to be in the teens for CY25. FY24 capital expenditures amounted to $8.1 billion, with significant increases projected for FY25, reaching approximately 35% of revenue, primarily for HBM and new wafer fabs.
This week, U.S. stock indices saw slight gains, with the Philadelphia Semiconductor Index rising by 4.3%. Micron (MU, Financial) shares rose by 18.3%, Intel (INTC) by 9.5%, AMD (AMD) by 5.4%, and NVIDIA (NVDA) by 4.7%. Cloud stocks remained stable, with META up 1.1%, Google up 0.2%, Microsoft down 1.7%, and Amazon down 1.9%.
Potential risks include uncertainties in the macro environment, slower-than-expected AI technology development, the company’s inability to adapt quickly to the AI era, and the adverse impact of antitrust litigations.
