01—Abstract
Summary
Summary of the 10-K filed October 6, 2023. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc. (MU) reported significant revenue declines of 49%a 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 billionb 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%c 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.
02—Key points
Key Highlights
- Revenue decreased by 49% year-over-year in FY2023 due to significant declines in average selling prices for DRAM and NAND products.
- The company recorded $1.83 billion in inventory write-downs in FY2023 to adjust for falling market values, impacting gross margins.
- Micron is making substantial capital investments in new U.S. fabrication facilities, particularly for DRAM production, supported by the CHIPS Act.
- A decision by China's Cyberspace Administration (CAC) has impacted Micron's ability to sell products to certain customers in China, affecting revenue.
- The company initiated a restructure plan in response to challenging market conditions, including a headcount reduction of approximately 15%.
- Despite a difficult year, Micron anticipates improved pricing and demand trends to support a recovery in fiscal year 2024.
- Operating segments (CNBU, MBU, EBU, SBU) all experienced significant revenue declines in FY2023.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2023, Micron Technology Inc lost $0.38.
- Revenue$15.54B100.0%
- Cost of revenue−$16.96B109.1%
- Gross profit−$1.42B9.1%
- Operating costs−$4.33B27.9%
- Operating income−$5.75B37.0%
- Interest, other & tax−$88.0M0.6%
- Net income−$5.83B37.5%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed October 6, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $15.54B$30.76B | −49.5% |
| Cost of Revenue | $16.96B$16.86B | +0.6% |
| Gross Profit | -$1.42B$13.90B | −110.2% |
| R&D Expenses | $3.11B$3.12B | −0.1% |
| SG&A Expenses | $920.00M$1.07B | −13.7% |
| Operating Income | -$5.75B$9.70B | −159.2% |
| Interest Expense | $388.00M$189.00M | +105.3% |
| Net Income | -$5.83B$8.69B | −167.1% |
| EPS (Basic) | $-5.34$7.81 | −168.4% |
| EPS (Diluted) | $-5.34$7.75 | −168.9% |
| Shares Outstanding (Basic) | 1.09B1.11B | −1.7% |
| Shares Outstanding (Diluted) | 1.09B1.12B | −2.6% |
05—Questions
Frequently Asked Questions
What were the main drivers for Micron's financial performance in FY2023?
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.
How is Micron addressing the inventory challenges and associated write-downs?
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.
What is the impact of the Chinese government's CAC decision on Micron's business?
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.
What is Micron's strategy for future growth and capacity expansion?
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.
06—Continue