Memory leader Micron opened semiconductor earnings season. FY25Q3 corresponds to March through May 2025.
Micron FY25Q3 Earnings:
Revenue of $9.3B, up 37% year over year and 16% sequentially, a record high. FY25Q4 revenue guided at $10.7B, up 38% year over year and 15% sequentially, another record high.
GAAP gross margin of 37.7%, up 0.9 percentage points sequentially. FY25Q4 gross margin guided at 41%, up 3.3 percentage points sequentially (peak gross margin was 61% in FY18Q4).
GAAP operating income of $2.17B, up 22% sequentially, for an operating margin of 23% (peak operating income was $4.3B in FY18Q4).
Operating cash flow of $4.61B, up 17% sequentially (peak operating cash flow was $5.2B in FY18Q4). Free cash flow positive for five consecutive quarters.
GAAP net income of $1.89B, up 19% sequentially. Non-GAAP net income of $2.18B, up 22% sequentially. FY25Q4 GAAP net income guided at $2.58B, Non-GAAP at $2.81B (peak net income was $4.3B in FY18Q4).
No share repurchases this quarter.
Business Segments:
DRAM revenue of $7.1B, up 51% year over year, marking the seventh consecutive quarter of growth, and up 15% sequentially, representing 76% of revenue. DRAM bit shipments grew over 20% sequentially; ASP declined low-single-digits sequentially. FY25Q4 bit shipments expected to grow sequentially.
NAND revenue of $2.2B, up 4% year over year, marking the seventh consecutive quarter of growth, representing 23% of revenue. NAND bit shipments grew mid-20% sequentially; ASP declined high-single-digits sequentially. FY25Q4 bit shipments expected to grow sequentially.
This quarter, data center DRAM and NAND continued to diverge. CNBU operating income was $2.18B, up 14% sequentially, marking the seventh consecutive quarter of sequential growth. SBU posted an operating loss of $9M, swinging to a loss sequentially. Mobile MBU operating income was $220M, up 262% sequentially, ending three consecutive quarters of sequential decline. EBU operating income was $98M, up 3,167% sequentially, ending two consecutive quarters of sequential decline.
By End Market:
2025 server unit shipments expected to grow mid-single-digits year over year (unchanged), driven primarily by AI servers. Key data center products include HBM, high-density D5/LP5, and data center SSDs. Data center revenue doubled year over year this quarter, with data center DRAM revenue setting a new record for the fourth consecutive quarter. HBM market share continues to rise. In the first three quarters of FY25, combined revenue from data center high-density D5 and LP products reached several billion dollars, continuing to hit new highs. Micron remains the sole volume supplier of LPDRAM for data centers. Data center SSD market share hit a new high for the third consecutive quarter; third-party data ranked it #2 in Q1. The 9550 SSD recommended for GB200 NVL72 completed qualification with multiple vendors this quarter. CY25H2 data center SSD market expected to be better than CY24H1.
HBM revenue exceeded $1.5B this quarter, up nearly 50% sequentially. By comparison, SK hynix Q1 HBM revenue was approximately $4.4B. 2025 HBM TAM expected to exceed $35B (unchanged).
HBM3E 12H for GB300 has begun ramping, with yield ramp faster than 12H. Expected to surpass other HBM products in revenue in FQ4. Shipped to four HBM customers this quarter, covering both GPU and ASIC. H2 2025 HBM market share expected to align with the company's DRAM market share (20%+). In early June, Micron announced it won the AMD MI355X platform with HBM3E 36GB 12H. Micron's HBM4 uses its own 1-beta DRAM stacked with an advanced-node logic die (likely manufactured by TSMC, similar to SK hynix's HBM4). Samples have been sent to multiple customers, with volume production targeted for 2026.
2025 PC unit shipments expected to grow low-single-digits year over year (lowered). Micron's client SSD market share hit a new high in Q1.
MBU revenue grew 45% sequentially, driven by customer destocking completion and sustained increase in mobile DRAM content. Began sampling the industry's first LP5X product based on 1-gamma process this quarter. MBU product operating margin of 14%, up 8 percentage points sequentially.
Micron's end-market customer inventory levels are generally healthy. Industrial business began growing sequentially.
Starting next quarter, Micron will report financials under a new architecture with four business units: Cloud Memory Business Unit (CMBU), Core Data Center Business Unit (CDBU), Mobile & Client Business Unit (MCBU), and Automotive & Embedded Business Unit (AEBU).
Earnings Call Highlights:
2025 DRAM bit demand growth expected at high-teens% (raised). NAND bit demand growth expected at low-teens% (unchanged). 2025 DRAM/NAND bit supply growth below industry average for non-HBM DRAM and NAND. Mid-term DRAM/NAND bit demand CAGR expected at mid-teens% (unchanged).
Consumer business dragged down gross margin in FQ3. Gross margin expected to improve gradually from FQ4 as DRAM growth outpaces NAND.
NAND process transition will make FY25 NAND capacity 10% lower than FY24. As HBM wafer consumption and die-per-wafer ratios continue to rise (HBM3E consumes 3x wafers vs. D5; HBM4 will consume more; HBM4E will consume over 4x), Micron needs to build new greenfield capacity.
FY25 capex guided at $14B (unchanged), mostly HBM-related. FY26 capex expected at ~35% of revenue.
DIO of 139 days this quarter, down 19 days sequentially. FY25Q4 DRAM inventory expected to be very tight, NAND inventory to decline significantly, with DIO falling below 120 days.
Micron's LP4 and D4 products primarily use 1-alpha DRAM process and will cease shipping in 2-3 quarters. FY25H2 global revenue exposure to D4-related products estimated at low-single-digits. LP4 shortage may also lift D4 product revenue share.
Overall, this was a decent quarter for Micron. Market concerns over weak consumer electronics have eased, and worries about near-term data center SSD oversupply are fading. HBM3E 12H is ramping, and HBM4 progress is solid. However, given Micron's elevated valuation, the market needs more positive signals on HBM TAM upside — which management did not provide this time.
Micron currently trades at 2.8x P/B, already breaking above its historical valuation range by two standard deviations. Meanwhile, global HBM leader SK hynix trades at 2.5x P/B (25Q1, 25Q2 likely lower), and laggard Samsung Electronics at 1x P/B (25Q1, 25Q2 likely lower).
If one optimistically values the HBM business in isolation: 2025 HBM TAM of $35B, assuming Micron captures 25% share (Counterpoint 25Q1), implies ~$8.8B revenue. At a 30% net margin (CNBU OPM of 43%), that yields ~$2.64B net income. Using the official 2024-2028 HBM TAM CAGR guidance of 40%+ and a PEG of 1x implies 40x PE, valuing the HBM business at ~$105B — about 75% of Micron's current market cap. Of course, this is just a thought experiment.