10-KPeriod: FY2018

MICRON TECHNOLOGY INC Annual Report, Year Ended Aug 30, 2018

Filed October 15, 2018For Securities:MU

Summary

Micron Technology, Inc. reported a significant increase in net sales for the fiscal year ended August 30, 2018, up 50% year-over-year to $30.39 billion, driven by strong performance across all business units, particularly Compute and Networking (CNBU), which saw a 77% increase in sales. This growth was fueled by favorable market conditions and strong demand in key segments like cloud servers and graphics, coupled with effective execution of advanced technologies such as 1Xnm DRAM and 64-layer 3D NAND. Gross margins expanded considerably to 59% from 42% in the prior year, reflecting improved pricing and cost efficiencies. The company demonstrated robust operational execution and technological leadership, transitioning to advanced manufacturing nodes and expanding its portfolio of high-value solutions, including SSDs and managed NAND. Significant investments in Research and Development (R&D) continued, with R&D expenses increasing by 17% to $2.14 billion, underscoring Micron's commitment to innovation in memory and storage technologies like 3D XPoint memory. The company also announced a significant $10 billion stock repurchase authorization, signaling confidence in its future financial performance and commitment to returning value to shareholders.

Financial Highlights

30 data points
Beta

Revenue

$30.39B

58.9% Gross Margin

Net Income

$14.14B

46.5% Net Margin

EPS (Diluted)

$11.51

Free Cash Flow

$8.52B

Financial Statements
Beta
Revenue$30.39B
Cost of Revenue$12.50B
Gross Profit$17.89B
R&D Expenses$2.14B
SG&A Expenses$813.00M
Operating Income$14.99B
Interest Expense$342.00M
Net Income$14.14B
EPS (Basic)$12.27
EPS (Diluted)$11.51
Shares Outstanding (Basic)1.15B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Net sales increased by 50% to $30.39 billion in FY2018, driven by strong demand and favorable market conditions.
  • 2Gross margin improved significantly to 59% in FY2018 from 42% in FY2017, reflecting better pricing and cost efficiencies.
  • 3Compute and Networking (CNBU) segment sales grew by 77%, highlighting strong demand in cloud, enterprise, and graphics markets.
  • 4The company is advancing its technological leadership with 1Xnm DRAM and 64-layer 3D NAND production, and developing next-generation technologies.
  • 5Research and Development expenses increased by 17% to $2.14 billion, signaling continued investment in innovation.
  • 6Micron announced a $10 billion share repurchase authorization, indicating confidence and a commitment to shareholder returns.
  • 7Despite strong growth, the company faces intense competition and market volatility in average selling prices, as noted in risk factors.

Frequently Asked Questions

Micron's primary revenue drivers in fiscal year 2018 were strong demand and favorable market conditions across its key segments, particularly in the Compute and Networking (CNBU) and Mobile Business Unit (MBU). The company saw significant growth due to increased sales volumes and improved average selling prices for DRAM products, and higher sales volumes for NAND products driven by SSD and mobile managed NAND solutions. Advancements in technologies like 1Xnm DRAM and 64-layer 3D NAND also contributed significantly to sales growth.

Micron experienced a substantial improvement in profitability in fiscal year 2018. Gross margin increased to 59% from 42% in the prior year, and operating income more than doubled to $14.99 billion from $5.87 billion. This enhanced profitability was driven by a combination of higher net sales, improved average selling prices, and effective cost reductions through advancements in product and process technology.

Micron is focused on developing and ramping advanced memory and storage solutions. Key technological advancements include the production of 1Xnm DRAM and 64-layer 3D NAND. The company is also investing heavily in R&D for future technologies such as next-generation 3D NAND and 3D XPoint memory. Micron is also strategically shifting its product portfolio towards higher-value solutions like SSDs and managed NAND products.

Micron faces intense competition from major players like Samsung and SK Hynix. Key risks include volatility in average selling prices, which can lead to significant price declines that outpace cost reductions. The semiconductor market is highly competitive, and the company must continuously innovate and reduce manufacturing costs to remain competitive. Furthermore, global trade tensions, supply chain disruptions, and potential patent infringement claims are also significant risks.