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Favorable Industry Fundamentals Drive Micron

Though management expects the positive environment to persist into next year, shares of the memory supplier are overpriced.

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Micron Technology Inc
(MU)

Fourth-quarter revenue grew to $6.138 billion, up 10% sequentially, led by a 14% gain in server DRAM sales and record quarterly revenue from the embedded business unit (which features automotive, consumer, and industrial end-markets). DRAM sales rose 14% over the prior quarter to $4.05 billion, with the aforementioned server gains partially offset by declines in mobile DRAM. We note SSD revenue fell 15% sequentially, due to a shipment pause caused by an issue on select 3D NAND drives. Per management, this issue has been resolved and sequential SSD growth should resume next quarter. Gross margins rose to 50.7% from 46.9% last quarter, as Micron enjoyed strong bit growth and ASP increases in DRAM, partially offset by a cost per bit increase in NAND.

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About the Author

Abhinav Davuluri

Strategist
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Abhinav Davuluri, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers microprocessors, wafer manufacturing equipment, and other companies in the semiconductor space.

Before joining Morningstar in 2015, Davuluri spent two years as a process engineer for Intel.

Davuluri holds a bachelor’s degree in chemical engineering from the University of Michigan. He also holds the Chartered Financial Analyst® designation.

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