Micron is Cutting DRAM and NAND Output to Combat Price Drops
Ron Perillo / 9 months ago
Oversupply Led to Sharp Fall in Pricing
After several years of high memory prices, they are finally falling down. So much so that according to Micron, it has lead to over 20% fall in their product’s average sale price (ASP) during the quarter ended February 2019.
This of course, directly affects their revenue, which has fallen 26% sequentially and 21% on year to $5.8 billion in its fiscal Q2 2019. Furthermore, their DRAM revenues decreased 30% sequentially and 28% from a year earlier.
Oversupply in both DRAM and NAND sectors are also to blame for the sharp fall in pricing, which is “worse than expected”. The company also expects revenues to drop 17% further in fiscal Q3 2019. That is down to $4.6 to 5 billion, with gross margin sliding to 37-40% from 50% in the previous quarter.
Which is why the company has announced plans to cut production by 5%. This applies to both their DRAM and NAND flash products.
What is Micron Saying About the Issue?
“Micron continues to execute well across a range of product, operational and financial initiatives against the backdrop of a challenging market environment,” says Micron president and CEO Sanjay Mehrotra. “These initiatives and our focus on high-value solutions, cost competitiveness and innovation will enable us to emerge even stronger as the market environment improves.”