Micron chief warns 'severe shortage' of DRAM expected to continue this year

And drought in Taiwan threatens supply. Good news for firm's wallet, not so much for chip buyers

Micron CEO Sanjay Mehrotra has warned about a "severe shortage" of supply in the DRAM memory market, with the situation expected to worsen as the year progresses.

Speaking at an earnings conference call talking investors through the company's Q2 results, Mehrotra said: "As a result of the strong demand and limited supply, the DRAM market is currently facing a severe undersupply, which is causing DRAM prices to increase rapidly. We see the DRAM market tightening further through the year."

Micron's chief financial officer, David Zisner, added: "While demand is strong across both the DRAM and NAND markets, our supply is now constrained as our inventories are very lean, particularly in DRAM."

This, he said, would limit its ability to meet the anticipated surge in demand from data centre, cloud, and PC customers.

"[Our inventory is] pretty lean at this point. I mean all the inventory that you're seeing is either WIP or raw materials. There is a bit of finished goods, but it's [not] just the amount of finished goods we need to stage to meet the customer demand," Zisner later added.

The news is good for the storage firm, of course, for which DRAM accounted for 71 per cent of revenue.

Revenues for the quarter were $6.24bn, up 8 per cent quarter-on-quarter and 30 per cent year-on-year. DRAM accounted for a whopping $4.4bn of this. This represented growth of 10 per cent quarter-on-quarter and 44 per cent year-on-year. NAND accounted for 26 per cent of total revenue, or $1.8bn, growing 5 per cent against the last quarter, or 9 per cent year-on-year.

Micron's pessimistic outlook comes after a warning in March from CFO Zisner that global DRAM output would be "really tight" in the near future. However, in the weeks since those dire remarks, the memory manufacturer has been forced to tackle new challenges that threaten to further constrain its manufacturing output.

"Recently, due to the drought in central Taiwan, there has been a reduction in the water supply for one of our DRAM fab sites," said Mehrotra. While this hasn't had any immediate impact on the company's operations, the firm has been forced to obtain alternative sources of water and ramp up water conservation efforts. The company chief added this was a "developing situation," implying it may be forced to cut back if things worsen.

Micron isn't alone here. Earlier this year, TSMC was forced to begin trucking water to its foundry facilities in anticipation of government-mandated water conservation rules, as reservoirs reached dangerously low levels in the country's north.

Semiconductor manufacturing is an incredibly thirsty business. This applies to logic semiconductors (like processors) as much as memory. Plants routinely consume millions of gallons of water per day, which first must be treated in order to remove contaminants that could damage equipment and inventory. The resulting waste water is almost always heavily contaminated, and requires intensive treatment before it can be reused or returned to the public water supply.

Rival memory manufacturer SK Hynix recently raised a $1bn "green bond" from investors intended almost exclusively at managing its water consumption, with the cash earmarked for at new recycling and purification facilities, as well as investments on new low-power SSDs.

Although Micron's sales to storage clients declined modestly, the company reported a healthy resurgence in shipments to mobile vendors, up 44 per cent year-on-year. This, Zisner said, was thanks to the recovery in end-user purchases of smartphones driven by the global rollout of 5G. He also added that storage business sales are expected to rise this year as the company pushes its 176-layer SSDs into volume production. ®

Broader topics

Other stories you might like

  • US won’t prosecute ‘good faith’ security researchers under CFAA
    Well, that clears things up? Maybe not.

    The US Justice Department has directed prosecutors not to charge "good-faith security researchers" with violating the Computer Fraud and Abuse Act (CFAA) if their reasons for hacking are ethical — things like bug hunting, responsible vulnerability disclosure, or above-board penetration testing.

    Good-faith, according to the policy [PDF], means using a computer "solely for purposes of good-faith testing, investigation, and/or correction of a security flaw or vulnerability."

    Additionally, this activity must be "carried out in a manner designed to avoid any harm to individuals or the public, and where the information derived from the activity is used primarily to promote the security or safety of the class of devices, machines, or online services to which the accessed computer belongs, or those who use such devices, machines, or online services."

    Continue reading
  • Intel plans immersion lab to chill its power-hungry chips
    AI chips are sucking down 600W+ and the solution could be to drown them.

    Intel this week unveiled a $700 million sustainability initiative to try innovative liquid and immersion cooling technologies to the datacenter.

    The project will see Intel construct a 200,000-square-foot "mega lab" approximately 20 miles west of Portland at its Hillsboro campus, where the chipmaker will qualify, test, and demo its expansive — and power hungry — datacenter portfolio using a variety of cooling tech.

    Alongside the lab, the x86 giant unveiled an open reference design for immersion cooling systems for its chips that is being developed by Intel Taiwan. The chip giant is hoping to bring other Taiwanese manufacturers into the fold and it'll then be rolled out globally.

    Continue reading
  • US recovers a record $15m from the 3ve ad-fraud crew
    Swiss banks cough up around half of the proceeds of crime

    The US government has recovered over $15 million in proceeds from the 3ve digital advertising fraud operation that cost businesses more than $29 million for ads that were never viewed.

    "This forfeiture is the largest international cybercrime recovery in the history of the Eastern District of New York," US Attorney Breon Peace said in a statement

    The action, Peace added, "sends a powerful message to those involved in cyber fraud that there are no boundaries to prosecuting these bad actors and locating their ill-gotten assets wherever they are in the world."

    Continue reading

Biting the hand that feeds IT © 1998–2022