Micron doubles production as sales slump • The Register
Micron Technology is making deeper production cuts for 2023 amid fears the economy could worsen, continuing a significant reversal from strong demand that made chip shortages the norm in the first two years of the coronavirus pandemic. COVID.
The U.S. chipmaker said on Wednesday it was cutting DRAM and NAND wafer production by about 20% from its fiscal 2022 fourth quarter, which ended Sept. 1. This will impact all of Micron’s manufacturing nodes and result in lower DRAM supply and single-digit growth for NAND supply in 2023, according to the company.
Micron said it also plans to cut capital spending, going beyond the 30% cut in production capex in 2023 it announced in September.
The chip sector is taking action as a slowdown in demand for Micron’s memory and storage chips has resulted in an inventory of DRAM and NAND silicon that is simply too large.
“Micron is taking bold and aggressive steps to reduce bit supply growth to limit the size of our inventory. We will continue to monitor industry conditions and make further adjustments as necessary,” said Micron CEO Sanjay Mehrotra in a statement.
Micron is making production cuts as it expects to receive large federal and state subsidies to build new chip factories in the United States over the next two decades. The company has pledged to spend $40 billion building US factories over the next decade, and it has committed $100 billion alone to a mega-factory in New York that will take more than 20 years.
For the New York plant, Micron is expected to receive $5 billion in state grants, and it hopes to receive federal grants made available through the CHIPS and Science Act for this project and others across the country.
While the company is currently experiencing a course correction after demand outstripped supply for much of the past two years, Micron believes these new plants are worth it in the long run. We better hope so, because that’s a lot of government money that could be wasted otherwise.
“Despite the short-term cyclical challenges, we remain confident in the secular demand drivers for our markets and, over the long term, we expect memory and storage revenue growth to outpace the rest of the industry. semiconductor industry,” Mehrotra said.
It’s no surprise that Micron is experiencing a major reversal in demand. We’ve been reporting on the weakening chip market for some time, and this has extended to DRAM and NAND flash memory used in system memory, SSDs, memory cards and embedded applications.
This morning, Taiwanese research firm TrendForce said overall DRAM industry revenue fell 28.9% to $18.19 billion in the third quarter compared to the three-month period. former. This is the second largest drop after the one that occurred during the 2008 recession, according to the firm.
TrendForce blamed the drop on lower demand for consumer electronics, but said server DRAM shipments were also lower than the previous quarter, though relatively flat this year. ®