10-KPeriod: FY2023

MICRON TECHNOLOGY INC Annual Report, Year Ended Aug 31, 2023

Filed October 6, 2023For Securities:MU

Summary

Micron Technology, Inc. (MU) reported significant revenue declines of 49% in fiscal year 2023 compared to 2022, largely due to a sharp drop in average selling prices for both DRAM and NAND products, coupled with a challenging industry environment characterized by weak demand and elevated customer inventory levels. The company incurred substantial inventory write-downs totaling $1.83 billion in 2023 to account for declining market values. Despite these headwinds, Micron is strategically investing in new fabrication facilities in the U.S. (Idaho and New York) to support future demand and technology advancements, contingent on government incentives like the CHIPS Act. The company faced specific challenges, including an impact on its China business due to a cybersecurity review by the Chinese Cyberspace Administration (CAC), which restricts sales to critical information infrastructure operators. Micron is also actively managing costs, including a workforce reduction plan that aimed for a 15% cut by year-end 2023, to navigate the current market conditions. Looking ahead, Micron anticipates a gradual recovery in pricing and demand throughout fiscal year 2024.

Financial Highlights

29 data points
Beta

Revenue

$15.54B

-9.1% Gross Margin

Net Income

-$5.83B

-37.5% Net Margin

EPS (Diluted)

$-5.34

Free Cash Flow

-$6.12B

Financial Statements
Beta
Revenue$15.54B
Cost of Revenue$16.96B
Gross Profit-$1.42B
R&D Expenses$3.11B
SG&A Expenses$920.00M
Operating Income-$5.75B
Interest Expense$388.00M
Net Income-$5.83B
EPS (Basic)$-5.34
EPS (Diluted)$-5.34
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Revenue decreased by 49% year-over-year in FY2023 due to significant declines in average selling prices for DRAM and NAND products.
  • 2The company recorded $1.83 billion in inventory write-downs in FY2023 to adjust for falling market values, impacting gross margins.
  • 3Micron is making substantial capital investments in new U.S. fabrication facilities, particularly for DRAM production, supported by the CHIPS Act.
  • 4A decision by China's Cyberspace Administration (CAC) has impacted Micron's ability to sell products to certain customers in China, affecting revenue.
  • 5The company initiated a restructure plan in response to challenging market conditions, including a headcount reduction of approximately 15%.
  • 6Despite a difficult year, Micron anticipates improved pricing and demand trends to support a recovery in fiscal year 2024.
  • 7Operating segments (CNBU, MBU, EBU, SBU) all experienced significant revenue declines in FY2023.

Frequently Asked Questions

Micron's financial performance in FY2023 was primarily driven by a significant downturn in the memory and storage industry. This included weak demand across many end markets, global macroeconomic challenges, and customers reducing their inventory levels. These factors led to substantial decreases in average selling prices (ASPs) for both DRAM and NAND products, resulting in a 49% year-over-year decline in total revenue.

Micron incurred $1.83 billion in inventory write-downs in FY2023 to bring the carrying value of its inventory down to its estimated net realizable value, reflecting the sharp decline in market prices. The company is actively managing its inventory levels by reducing wafer starts and controlling supply. Micron anticipates customer inventory normalization and industry-wide supply discipline to improve conditions and expects pricing trends to continue improving through fiscal year 2024.

The Chinese Cyberspace Administration (CAC) has determined that Micron's products present a cybersecurity risk, leading to a restriction on critical information infrastructure operators in China purchasing Micron products. This decision has impacted Micron's revenue, particularly in the domestic data center and networking markets in China, and has slowed its overall recovery. Micron estimates that a significant portion of its China-headquartered customer revenue is at risk.

Micron is investing in future growth by planning to build two leading-edge memory manufacturing fabs in the United States (Boise, Idaho, and Clay, New York). These investments are intended to support expected memory demand in the second half of the decade and are contingent on government incentives, such as those provided by the CHIPS Act. Additionally, Micron is expanding its back-end assembly and test capabilities in China and India.