Micron rises even as Q1 outlook disappoints, set to receive up to $320M from Japan for plant
Micron Technology (NASDAQ:MU) shares gained nearly 4% on Friday even as the company offered up an outlook for the first-quarter that fell well below estimates and said it would drastically cut spending going into 2023.
Looking to the next quarter, Boise, Idaho-based Micron (MU) said it expects revenue to be between $4B and $4.5B, with earnings per share ranging between a loss of 6 cents and a gain of 14 cents. Gross margins are expected to be between 24% and 28%.
Analysts were expecting Micron (MU) to generate $6.02B in sales and earnings of 87 cents per share.
Micron (MU) also said it would cut total capital expenditures by 30% year-over-year and wafer fab equipment spending by up to 50% next year.
Kioxia, which competes with Micron (MU) in making memory chips, also said on Friday that it would cut wafer input volume by roughly 30% at its Yokkaichi and Kitakami flash memory plants -- which are operated jointly with Western Digital (NASDAQ:WDC) -- , starting in October.
In a statement, Kioxia said it would "continue to review and adjust operations as needed," while noting it is still confident in the outlook for the flash memory market.
Seeking Alpha contributor Robert Castellano said Micron's (MU) spending cut will likely impact Lam Research (LRCX) and Applied Materials (AMAT), as both have "high exposure to memory."
"Micron, got to this point of higher than demanded memory growth by not judiciously monitoring capex, which was the cause of the last downturn of 2019," Castellano said. "But the process is difficult and I estimate that reduced capex will lower capacity growth to 8-9%."
For the period ending September 1, Micron (MU) said it earned $1.45 per share on $6.64B in revenue. Gross margins came in at 40.3%, slightly above estimates of 39.7%.
Analysts were expecting a quarterly gain of $1.37 per share on $6.78B in revenue.
In addition to reporting earnings, Micron (MU) declared its quarterly dividend of 11.5 cents per share, payable on October 26 to shareholders of record as of October 11.
Separately, Micron (MU) is set to receive up to $322M from Japan to produce advanced memory chips at a Hiroshima factory, according to Japan's trade minister.
U.S. Vice President Kamala Harris visited Japan as the two countries look to increase cooperation for manufacturing and supply chains after the COVID-19 pandemic disrupted global supply chains and geopolitical tensions have increased.
“I hope the deal will contribute to further expansion of cooperation between Japan and the United States in the area of semiconductors,” Japan’s Economy and Trade Minister Yasutoshi Nishimura said.
Micron (MU) said it would use the money to strengthen capacity and move up development of its 1-beta DRAM, used for advanced facilities, 5G networks and artificial intelligence.
Last month, investment firm J.P. Morgan said that memory chip makers, including Micron (MU), were starting to become more attractive even as pessimism in the industry rises.