Memory leader Micron opened semiconductor earnings season. FY25Q1 corresponds to September through November 2024.
Micron FY25Q1 Results:
Revenue was $8.71B, up 84% year over year and 12% sequentially, a record high (previous peak was $8.4B in FY18Q4). Revenue has grown year over year for five consecutive quarters. FY25Q2 revenue is guided at $7.9B, up 36% year over year but down 9% sequentially.
GAAP gross margin was 38.4%, up 3.1 percentage points sequentially. FY25Q2 gross margin is guided at 37.5%, down 0.9 percentage points sequentially (peak was 61% in FY18Q4).
GAAP operating income was $2.17B, up 43% sequentially. Operating margin was 25% (peak was $4.3B in FY18Q4).
Operating cash flow was $3.244B, down 5% sequentially (peak was $5.2B in FY18Q4). Free cash flow has been positive for three consecutive quarters.
GAAP net income was $1.87B, positive for four consecutive quarters. Non-GAAP net income was $2.037B, positive for four consecutive quarters. FY25Q2 GAAP net income guided at $1.414B, Non-GAAP at $1.604B (peak was $4.3B in FY18Q4).
No share repurchases this quarter.
Business Segments:
DRAM revenue was $6.4B, up 87% year over year, growing for five consecutive quarters, up 20% sequentially, accounting for 73% of revenue. DRAM bit shipments grew low-double-digits sequentially; ASP grew high-single-digits sequentially.
NAND revenue was $2.241B, up 82% year over year, growing for five consecutive quarters, accounting for 26% of revenue. NAND bit shipments declined low-single-digits sequentially; ASP declined low-single-digits sequentially.
Next quarter DRAM bit shipments expected to decline slightly sequentially; NAND bit shipments expected to decline significantly sequentially. Data center remains the primary growth driver (CNBU/SBU operating income up 89%/60% sequentially). Consumer-related demand weaker than expected (MBU/EBU operating income down 36%/90% sequentially). Customers will destock through spring 2025. FQ2 shipments below expectations. FY25H2 shipments expected to resume growth.
By End Market:
Data center revenue grew 400% year over year this quarter, exceeding 50% of total revenue for the first time. 2024 server shipments expected to grow low-teens% year over year (raised), with AI servers growing significantly. 2025 growth expected to be similar. Key data center products: HBM, high-density D5/LP5, and data center SSDs, each expected to contribute billions in FY25 revenue (unchanged). Largest data center customer contributed 13% of quarterly revenue. Advanced-node DRAM/HBM for data center remains in shortage throughout 2025.
HBM revenue doubled sequentially this quarter (previous quarter was hundreds of millions; SK hynix Q3 HBM revenue was ~$2.6B). HBM yield and capacity ramp exceeded expectations. HBM gross margin exceeds DRAM (DRAM gross margin exceeds corporate average). FY25 HBM revenue expected to reach several billion dollars. HBM TAM projected to grow from ~$4B in 2023 to $16B in 2024, over $30B in 2025 (raised by $5B), $64B in 2028, and over $100B in 2030.
HBM3E 8H entered NVIDIA B200/GB200 supply chain. HBM shipments began to a second major HBM customer in December; third HBM customer expected in FQ2. HBM market share expected to match DRAM share (20%+) in H2 2025.2024/2025 HBM volume and pricing locked in. HBM4 offers 50%+ performance improvement over HBM3E; advanced logic portion of Micron's HBM4 will be manufactured with TSMC. HBM4 volume production expected in 2026.
Data center SSD revenue hit a new quarterly record, as did market share. Micron's data center PCIe Gen5 SSD entered the GB200 NVL72 recommended configuration. Next quarter data center SSD growth expected to moderate due to elevated customer inventory. Long-term trend: SSDs to replace HDDs, potentially after 2027.
2024 PC shipments expected flat year over year (lowered), below prior expectations. 2025 PC shipments expected to grow mid-single-digits year over year, weighted to H2, driven by Windows 10 end-of-life in October 2025.
MBU operating margin was 27% this quarter, positive for two consecutive quarters. 2024 smartphone shipments expected to grow mid-single-digits year over year (raised). 2025 smartphone shipments expected to grow low-single-digits year over year. DRAM content per phone continues to rise; phones with 8GB+ DRAM now exceed 60% of shipments.
Auto DRAM/NAND demand growth slowed due to industry inventory correction and a shift from premium to value models, impacting automotive revenue. Industrial demand recovery expected late 2025.
Earnings Call Highlights:
2024 DRAM bit demand growth expected at high-teens% (unchanged); NAND bit demand growth at low-teens% (lowered). 2025 DRAM bit demand growth at mid-teens% (unchanged); NAND bit demand growth at low-teens% (lowered). 2025 DRAM supply/demand expected healthy; NAND oversupply persists. Capex to be cut and node transitions slowed thereafter.
Excluding HBM, DRAM front-end cost expected to decline mid-high-single-digits% in FY25 (unchanged); NAND front-end cost to decline low-teens% (lowered).
1-beta DRAM, G8 (232-layer)/G9 NAND for HBM3E continue ramping. 1-gamma EUV DRAM on track for 2025 volume production.
Next-quarter capex is guided to $3B; FY25 capex is guided to $14B, accounting for high-30s% of revenue (raised), mostly HBM-related. The company secured a $6.1B CHIPS Act grant for Idaho/New York DRAM fabs. It is in discussions with the U.S. Department of Commerce for a $275M grant for a Virginia fab. It has reached an agreement with the Singapore government to build an HBM advanced packaging plant, targeting production in 2027.
Micron disclosed a significant data point: 2024 mainland China DRAM capacity (CXMT) accounts for mid-single-digits of global capacity; NAND capacity (YMTC) accounts for high-single-digits. Roughly by capacity, CXMT ranks ~4th globally, YMTC ~6th.
DIO was 149 days this quarter, down 9 days sequentially. Next quarter DIO expected to rise sequentially but then decline gradually, reaching below 120 days by FY25Q4.
FY25 mainland China and Hong Kong direct/indirect revenue exposure combined at ~mid-teens%. Mainland competition mainly in low-end consumer (LP4/DDR4); Micron focused on high-end. Remaining three quarters of FY25 global LP4/DDR4 revenue exposure ~10%, share expected to decline further.
Overall, Micron's earnings missed expectations, primarily due to weaker-than-expected consumer electronics demand.
Micron raised 2025 HBM TAM to $30B this quarter; at 20% share that implies $6B, up ~$1B, likely due to yield improvement. As noted before, with FY25 HBM volume and pricing locked, the main swing factor for FY25 results is PC and smartphone markets. The unexpected weakness in those markets indeed casts a shadow over Micron's FY25 outlook. Based on official capex guidance, simple math suggests FY25 revenue around $37B, up 40%-50% year over year.
After yesterday's selloff, Micron's P/B has returned to 2.1x, at the upper end of its historical range (+1 sigma). Global HBM leader SK hynix trades at 1.9x P/B (24Q3); laggard Samsung at 0.9x (24Q3).