The return of Micron Technology Inc. to sales growth last quarter as it recovers from the memory chip downturn was partly due to the boom in AI-related chips, which put the chipmaker more in the spotlight as a potential AI investment.
On Wednesday, Micron’s fiscal first-quarter results beat analysts’ expectations, with revenue growing to $4.7 billion, up 16% from $4 billion a year ago, the first revenue growth in six quarters. Micron shares MU,
rose 4% in after-hours trading.
The company still reported a net loss of $1 billion, but expects to return to operating profit in the fiscal third quarter.
But what delighted investors even more were Micron’s comments about its new memory chip module, called HBM3E. This new module, which Micron says is built for AI and supercomputing, will enter volume production in early 2024 and is expected to generate hundreds of millions of dollars in revenue in fiscal 2024.
“I just want to point out that our HBM offering is effectively sold out at this point – in calendar year 2024,” CEO Sanjay Mehrotra told analysts.
In addition to the potential in the data center, Micron also sees huge potential for memory chips that fit into AI-enabled PCs or mobile devices, where AI will be used locally, rather than expensive data center operations. And that requires more memory for PCs.
“In PCs, we forecast PC volumes to grow at a low- to mid-single-digit percentage rate in calendar 2024, after two years of double-digit PC volume declines,” Mehrotra said. PC makers are expected to start ramping up production of AI PCs in the second half of 2024, which will require an additional capacity of four to eight gigabytes of DRAM (dynamic random access memory) per PC, he said, and increased capacity of solid-state drives. also.
He also said that in the longer term, many popular generative AI applications will appear on smartphones. “Our industry-leading product portfolio is ready to leverage these memory and storage capabilities,” he added.
Micron will increase its capital expenditures in fiscal 2024, partly due to production of its new HBM3E modules, but company executives said they remained “extremely disciplined” on capital expenditures.
Micron was not asked about an ongoing lawsuit filed against the company last month by Chinese rival Yangtze Memory Technologies for patent infringement, but said at the time it does not comment on the lawsuit.
Other than that and the issues with Chinese sanctions, Micron’s road to recovery appears to be full steam ahead. And now it appears to be a new opportunity for investors looking beyond Nvidia Corp. NVDA,
for chipmakers ready to take advantage of the growing AI boom.