NAND bit shipments increased 26% sequentially and 49% year-over-year. Like-for-like NAND ASPs decreased 4% quarter-over-quarter with blended decreasing 10% QoQ. Inventory levels of flash on their balance sheet are “healthy.” They are seeing signs that flash pricing is beginning to inflect off the bottom of the cycle. Demand for flash in the consumer segment has returned to revenue growth. Client demand is okay. NAND demand from cloud customers “remains subdued.” NAND gross margin in the quarters was negative 10.3%. Underutilization charges in manufacturing were $142M in the quarter. They wrote down $9M worth of NAND inventory. The combination of underutilization and inventory write-downs totaled a 9.7% headwind to gross margin. Days of inventory in NAND are at the lowest level in nearly four years. That is back to the last downturn in 2019. The company expects improved NAND pricing in the current quarters. They raised their calendar 2023 total NAND demand growth estimate to low-to-mid teens %. For 2024, they see high-teens % growth in NAND demand, with production significantly below that. Their high case for demand growth is low-20% range. They plan to continue to run their NAND fabs below capacity for at least one to two more quarters. That is, into the third fiscal quarter of 2024.
- S. Hughes (cyclical long MU)