Micron Technology, Inc. recently posted fiscal first-quarter financial results that revealed it improved its revenue by 12.2 percent year-over-year. The company’s healthy annual growth is a byproduct of its strong research and development and heavy demand for its NAND and DRAM products.
The firm also gave a positive outlook for the fiscal second quarter and the rest of 2021 despite manufacturing and supply challenges. America’s largest memory module maker expects robust interest in its 5G and cloud computing components to drive its sales this year.
Sales Up Due to Product Innovation and Surging Demand
Micron made $5.77 billion in revenue in the three months ending December 3, with adjusted earnings per share of $0.71. That represents a solid improvement over its sales of $5.14 billion and earnings per share of $.43 in FQ1 2020.
CEO Sanjay Mehrotra said his firm grew its business last period thanks to its technological leadership and powerful end-market demand.
On the first count, the corporation deployed its fifth-generation 3D NAND flash memory, which featured a groundbreaking 176 layers. Since its new offerings possess unparalleled density with a significantly reduced die size, they have resonated with customers in multiple industries.
In addition, Mehrotra mentioned that his company benefited from the post-pandemic digital transformation trend. He indicated society’s recent embrace of remote operation bolstering technologies like artificial intelligence (AI) and Internet of things (IoT) benefited his organization. Specifically, Micron experienced a 17 percent spike in DRAM sales and an 11 percent uptick in NAND sales from 2020.
The chipmaker also forecast 2021 will be a growth year, despite recently encountering some major internal and external headwinds.
Near-Term Adversity, Long-Term Prosperity
For FQ2 2021, Micron projects it will take in $5.6 billion to $5.8 billion with adjusted earnings of $0.34 to $0.41 per share. The high point of the firm’s guidance anticipates annual sales growth of 21 percent and a 13.88 percent profit improvement. It expects the digitalization acceleration trend to ramp up demand for its 5G and cloud offerings in the current quarter and the full year.
The chipmaker’s expectations for the current period are interesting given its internal and external challenges.
Last month, the company’s Taoyuan and Taichung, Taiwan-based manufacturing facilities endured a 6.7-magnitude earthquake. The Taoyuan factory also suffered a power outage in early December. Though it had measures in place to mitigate damage, its available DRAM inventory suffered as a result. Nevertheless, the chipmaker said it factored the unexpected new costs into its robust FQ2 2021 outlook.
Micron is also being impacted by the recent semiconductor industry production capacity and raw material shortage. CFO David Zinsner suggested the constrained availability of certain nonmemory components is hurting demand for its PC products.
Mehrotra added that global DRAM supply would become even tighter once the coronavirus vaccine is widely distributed. The chief executive believes the world will enter an inoculation fueled economic recovery phase later this year. Because the industry is already dealing with cross-segment shortages, the supply crunch will only worsen.
That said, Micron should see significant long-term success despite its near-term issues. The firm’s portfolio is leading-edge, it has strong operational resiliency, and multiple digital technology evolutions are unfolding simultaneously. Those three factors will likely enable the company to reach new economic plateaus this decade.