Semiconductors and Components

Micron's Profit Grows as DRAM Surges

11 October 2013

U.S. memory chip maker Micron Technology Inc. (Boise, Idaho) reported a $1.71 billion net profit on sales of $2.84 billion for the fourth quarter of its 2013 fiscal year, ended Aug. 29. However, the majority of that profit was due to a one-time gain related to the acquisition of Elpida Memory Inc. and Rexchip Electronics Corp., which was completed during the quarter.

Meanwhile Micron's DRAM revenue was up 50 percent sequentially as a result of a 42 percent increase in sales volume and 5 percent increase in average selling prices (ASPs).

Micron recorded a gain of $1.48 billion on completion of the acquisition July 31, leaving the resulting profit at $224 million, up from a net profit of $43 million in the previous quarter and a net loss of $243 million in the fourth fiscal quarter a year before. The sales revenue was up 23 percent sequentially from $2.32 billion and up 45 percent compared with the same quarter a year before.

For the full fiscal year, Micron reported a net income of $1.19 billion on net sales of $9.07 billion. The annual revenue increased by 10.2 percent from $8.23 billion as the memory maker swung away from a $1.03 net loss.

While DRAM sales leapt upwards in the fourth quarter, revenue from NAND flash memory showed a more modest 5 percent sequential increase produced by a 17 percent increase in volume offset by an 11 percent decrease in ASPs.

Mark Durcan, Micron CEO, said the company is executing well on multiple fronts and referenced the start of sales of its hybrid memory cube format 3-D memory and a second generation of solid-state drives. "Our product portfolio and systems solutions position us well to compete in the current favorable market environment," Durcan said.

Speaking on a conference call following the quarterly report, Mark Adams, president of Micron, said that there is strong demand for specialty DRAM and under supply in DRAM for PCs. This together with the lost supply due to a fire at an SK Hynix wafer fab in Wuxi, China, was likely to maintain market demand. "We are on allocation with customers in multiple segments. The DRAM market will remain strong through the end of calendar 2013," Adams said.

The DRAM market has been strong through much of 2013, according to IHS. After two consecutive down years, the industry has been enjoying the fruits of consolidation—chiefly Micron's acquisition of Elpida and Rexchip. With the decline of the PC market in recent years, DRAM suppliers have been shifting to offer a great percentage of mobile DRAM.

According to IHS, DRAM makers enjoyed unprecedented growth in ASPs in the first half of the year. The firm expects stable ASPs in the second half of the year to continue to buoy DRAM profit margins.

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