Memory maker Micron offers hope for PC parts supply returning 'in the coming months'

Oh, and boasts over record-breaking return from IoT segment, too


Memory maker Micron has some words of encouragement for those who are still struggling to find the parts they need for a PC build at less than usurious pricing: Supply shortages are likely to be "largely resolved" over the next few months.

That there's an ongoing component shortage in the electronics industry isn't news, particularly to PC gamers. Nvidia's popular GPUs became hard to find back in 2018 with chief exec Jensen Huang blaming demand from cryptocurrency miners. The pandemic only made things worse, and it's still difficult to find ready supplies of both AMD and Nvidia graphics cards at their recommended retail prices - thanks to scalpers buying up what supply there is and flipping them for a quick profit.

There's light at the end of the tunnel, Micron president and chief exec Sanjay Mehrotra told investors and analysts during the company's earnings call for its Q4 of fiscal 2021, ended September 2. "Some PC customers are adjusting their memory and storage purchases due to shortages of non-memory components that are needed to complete PC builds," he explained, seemingly in reference to the scarcity of graphics cards and ICs.

"We expect this adjustment for our PC customers to be largely resolved in the coming months.

"PC customers have been impacted by their own semiconductor shortages and their supply chain constraints. Their end-user demand is very strong. In fact, they have an unfulfilled backlog, generally, among these customers, which is quite extensive.

"And you know that, even in the PC industry, while prices have gone up if the customers are able to maintain a strong backlog that speaks to the end strong demand. It really is all driven by work from home, learn from home - that demand acceleration that has taken place through the pandemic will continue to support a healthy environment for PC in calendar year '22 as well."

Supplies of the company's own NAND and DRAM products remained healthy, the company claimed during the call, but with room for improvement. "Our optimal level of inventory, we like to see it be 100-plus in terms of days," Dave Zinsner, Micron's chief financial officer, explained during the call. "We can operate slightly below that. We're definitely below the optimal level, it's at 94 days. For us, we never like to see it go below 95 days.

"[We're] probably going to exit the year somewhere in the 100 days of inventory. Finished goods inventory is really where we're particularly lean, and we do have to make some progress in that space to get ourselves into a better position. But overall, I would say the back half of the year we will probably be in the optimal range."

One thing that would help with bumping up supply is the influx of cash expected from the sale of the Lehi chip plant, originally part of Micron's joint venture with Intel on 3D XPoint technology, to Texas Instruments. Completion of the sale will bolster Micron's coffers by a cool $900m - "below our book value of the assets sold," Zinsner admitted in the company's Q3 earnings call - but has been pushed out to the first quarter of Micron's next financial year.

When the cash does finally land, it seems like Micron's hoping to push its technology forward. The company has confirmed a 15 per cent increase in planned research and development expenditure for its coming financial year, which Mehrotra claimed would help Micron "deliver bold product and technology innovations designed to fuel the data economy as well as to expand our portfolio to capitalise on opportunities such as high-bandwidth memory and CXL [Compute Express Link] solutions."

Another area of focus in extreme ultraviolet (EUV) lithography, one of several approaches the semiconductor industry is taking to continue shrinking feature sizes and prop up the ailing Moore's Law. Mehrotra repeated earlier statements on a 2024 target for volume production of EUV parts, and flagged a key milestone: the delivery of a new EUV lithography system, the ASML NXE:3600, to Micron's Boise headquarters.

"The delivery of this tool is an important milestone towards our previously disclosed plan of implementing EUV in high-volume manufacturing in the 2024 timeframe," Mehrotra claimed. "We expect that the integration of EUV with our existing multi-patterning immersion lithography expertise will help us maintain DRAM technology leadership for many years to come."

On the numbers side, Micron reported revenue of $8.27bn for the quarter and $27.705bn for the year, up 11 per cent quarter-on-quarter and 29 per cent year-on-year respectively, with a more-than-healthy gross margin of 37.6 per cent for the year - up seven percentage points. Mehrotra also reported new records in industrial Internet of Things (IoT) and NAND flash revenues - the latter aided by the company's highest-ever mobile sales.

Investors, however, appeared disappointed, with Micron's share price slipping 3.67 per cent in after-hours trading having already closed at a 2.77 per cent drop. Micron did not respond to a request for comment in time for publication. ®

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