KeyBanc Capital Markets - August 2023

August 7, 2023

CFO Mark Murphy and KeyBanc Analyst John Vinh

  • · Pricing and volume trends are consistent in Q4 as they expected they would, so bouncing along the bottom. Industry demand is expected to increase through the calendar year. Industry inventory levels continue to improve.
  • · They expect prices to inflect in the second half of the year. Price inflection is being seen in some place now. He called out DDR5 as one area.
  • · Micron expects record TAM in calendar year 2025 with “more normal” levels of profitability. This is a good time to recall that memory company executives don’t really know anything more than we do beyond a quarter or two out. The predictions Sanjay and other Micron executives have made about what calendar 2025 will look like are laughable.
  • · The China ban is weighing on their results. They aren’t changing their forecast and continue to adjust their distribution to markets.
  • · Murphy reiterated they continue to believe their through-cycle free cash flow margins will be at least 10%.
  • · Inventory is in good shape in PC and smartphones, just a matter of demand coming back.
  • · Data center inventories are expected to be healthy by the end of 2023 or early in 2024.
  • · No more inventory write-downs are expected. Still a “decent amount” of inventory at the memory producers needs to be worked down.
  • · Because cost downs are harder to achieve today than ten years ago, the industry response was different than in the past. Players held inventory longer, slowed tech node migration, and reduced output, rather than cutting prices faster to shed inventory.
  • · Micron believes they will have a greater share of the HBM market than their overall DRAM share. Murphy spent several minutes towards the end of the call talking about Micron’s HBM product. For investors, this is mostly a waste of time as good product quality and performance is an expectation in the DRAM market and gleans the winners little advantage in financial performance.


This was not the call that Micron investors are waiting for, the one that says that pricing has turned and is increasing strongly. Rather, this update said the market conditions are as Micron expected they would be when they had their last earnings call. The positive news is the CFO said pricing in some product areas has inflected and is improving. Based on how he said this, the move upward isn’t strong. The market is either still absorbing inventory (data center) or has health inventory but weak demand (PC and mobile). Also, memory makers are still carrying significant inventory above normal levels that needs to be worked down. Investors continue to wait for the supply-demand balance to tip in favor of producers.