A good start of fiscal 2017 for Micron
Micron Technology (MU) earns 60% of its revenue from DRAM and 31% from NVM (non-volatile memory). In fiscal 1Q17, the company is likely to witness strong revenue as DRAM prices are growing faster than NAND prices.
In fiscal 4Q16, Micron’s revenue rose 10.4% sequentially to $3.2 billion, even though DRAM and NAND prices continued to fall. Fiscal 1Q17 will likely be a good quarter for the company as memory prices increase.
Pacific Crest expects the contract price for DRAM 4GB (gigabyte) DDR3 to increase by more than 20% MoM (month-over-month) in December 2016. It expects contract price for NAND 128 GB TLC (triple level cell) to rise by around 6% MoM during the same period.
Micron raised its fiscal 1Q17 revenue guidance to $3.97 billion, up from the earlier guidance of up to $3.85 billion. This represents a sequential growth of 24% and YoY (year-over-year) growth of 18.5%.
Revenue by segment
The revenue growth will be primarily driven by strong demand for DRAM in the PC and mobile space and NAND in the storage space. Below are a few details of Micron’s expectations:
- Micron’s revenue from graphics will likely grow due to orders from Nvidia (NVDA).
- Revenue from PCs will likely grow due to orders from Intel (INTC), and Apple (AAPL), both of which launched new versions of laptops.
- Revenue from storage will likely grow due to the launch of its new TLC-based 3D NAND.
- Revenue from mobile will likely grow due to strong demand from Apple and Chinese handset makers.
This fiscal 1Q17 guidance excludes the impact of Inotera integration on Micron’s earnings. However, the revenue is unlikely to be affected by this integration, and so it’s safe to assume that Micron’s fiscal 1Q17 revenue will reach somewhere near $4 billion.
The company may also report strong guidance for fiscal 2Q17 as NAND and DRAM prices continue to increase. This would benefit not only Micron but also its partner Intel, which has started production of 3D NAND at its China plant.