10-KPeriod: FY2022

MICRON TECHNOLOGY INC Annual Report, Year Ended Sep 1, 2022

Filed October 7, 2022For Securities:MU

Summary

Micron Technology, Inc. (MU) reported strong revenue growth for the fiscal year ended August 31, 2022, driven by increased demand across its Compute and Networking (CNBU), Embedded (EBU), and Storage (SBU) business units. The company highlighted advancements in its DRAM and NAND technology nodes, including the ramp-up of its 1α DRAM node and volume production of its 232-layer NAND. However, the filing also indicates a sharp deterioration in the industry environment during the fourth quarter of fiscal 2022, marked by macroeconomic challenges and customer inventory adjustments, leading to significant reductions in bit shipments and average selling prices for both DRAM and NAND. This trend is expected to continue into the first quarter of fiscal 2023, prompting Micron to selectively reduce facility utilization to manage elevated inventory levels. The company also outlined significant capital expenditure plans, including new fabs in the United States, contingent on government incentives, signaling a long-term investment strategy.

Financial Statements
Beta

Key Highlights

  • 1Micron reported a 11% increase in total revenue for FY2022 compared to FY2021, reaching $30.76 billion, driven by growth in DRAM and NAND product sales.
  • 2The company achieved a consolidated gross margin of 45% in FY2022, an improvement from 38% in FY2021, attributed to cost reductions from ramping advanced technology nodes (1α DRAM and 176-layer NAND).
  • 3Significant investments are planned for new leading-edge memory manufacturing fabs in the United States (Boise, ID, and Clay, NY), contingent on CHIPS Act support, with production targeted to start in 2025 and the latter half of the decade, respectively.
  • 4The industry environment deteriorated significantly in Q4 FY2022 due to macroeconomic challenges and customer inventory adjustments, leading to expected declines in bit shipments and pricing for Q1 FY2023.
  • 5Micron is actively managing its inventory by selectively reducing facility utilization to address elevated levels and supply growth.
  • 6The company's R&D efforts are focused on advanced technologies such as EUV lithography, DDR5, LPDDR5, HBM, and CXL-based products, as well as advancements in NAND technology.
  • 7The company faces intense competition and volatility in average selling prices, with industry-wide supply increases and demand fluctuations posing ongoing risks.

Frequently Asked Questions

Micron's business is structured into four reportable segments: Compute and Networking Business Unit (CNBU), Mobile Business Unit (MBU), Embedded Business Unit (EBU), and Storage Business Unit (SBU). In FY2022, CNBU revenue increased by 12% to $13.69 billion, EBU revenue grew by 24% to $5.24 billion, and SBU revenue increased by 15% to $4.55 billion. MBU revenue remained relatively flat at $7.26 billion.

Micron experienced a significant deterioration in the memory and storage industry environment in the fourth quarter of fiscal year 2022 due to global macroeconomic challenges and customer inventory adjustments. This has led to reductions in bit shipments and average selling prices for both DRAM and NAND, a trend expected to continue into the first quarter of fiscal year 2023. The company is taking steps to manage inventory, including selectively reducing facility utilization.

Micron continues to invest heavily in R&D for advanced technologies like EUV lithography, DDR5, LPDDR5, HBM, and CXL-based products, as well as next-generation NAND. Capital expenditure plans include significant investments in new leading-edge memory manufacturing fabs in the United States (Boise, Idaho, and Clay, New York), contingent on government incentives, to support expected memory demand in the second half of the decade.

Key risks and challenges include the volatility in average selling prices for memory and storage products, intense industry competition, potential downturns in the global economy, the ability to develop and produce new competitive technologies, supply chain disruptions, dependence on key customers, geopolitical risks associated with international operations, and the need to attract and retain highly skilled employees.