Micron doubles production as stall • The Register

Micron Technology is taking deeper production cuts for 2023 amid fears the economy is deteriorating and continues a sharp reversal of the high demand that made chip shortages the norm in the first two years of the COVID pandemic.

The American chipmaker announced on Wednesday that it is reducing production of DRAM and NAND wafers by about 20 percent compared to the fourth quarter of its fiscal 2022, which ended on September 1. This will impact all of Micron’s manufacturing nodes, leading to a decline in DRAM supply and single-digital growth for NAND supply in 2023, the company said.

Micron said it also plans to reduce capital expenditures and go beyond the 30 percent capital expenditure cut announced in September for 2023 production.

The chip industry is taking these actions because a slowdown in demand for Micron’s memory and storage chips has led to simply too large a supply of DRAM and NAND silicon.

“Micron is taking bold and aggressive steps to reduce bit supply growth and limit the size of our inventory. We will continue to monitor industry conditions and make further adjustments as needed,” Micron CEO Sanjay Mehrotra said in a statement.

Micron is making the production cuts as it expects to receive significant federal and state subsidies to build new U.S. chip manufacturing facilities over the next two decades. The company has pledged to spend $40 billion to build U.S. fabs over the next decade, and it has pledged $100 billion for a mega-fab in New York alone that will take more than 20 years to complete becomes.

For the New York factory, Micron is expected to receive $5 billion in subsidies from the state, and it hopes to receive federal subsidies provided through the CHIPS and Science Act for this and other projects across the country.

While the company is currently undergoing a course correction after demand has outstripped supply for much of the past two years, Micron believes these new fabs will pay off over the long term. We hope so better, because that’s a lot of government money that could otherwise go to waste.

“Despite near-term cyclical challenges, we remain confident about the long-term demand drivers for our markets and long-term expect memory and storage revenue growth to outpace that of the rest of the semiconductor industry,” said Mehrotra.

It’s no surprise that Micron is seeing a big drop in demand. We’ve been reporting for some time on the flagging chip market, which extends to DRAM and NAND flash memory used in system memory, SSDs, memory cards and embedded applications.

This morning, Taiwanese research firm TrendForce announced that total DRAM industry revenue fell 28.9 percent to $18.19 billion in the third quarter from the previous three-month period. According to the company, this is the second-biggest drop after that during the 2008 recession.

TrendForce attributed the decline to lower demand for consumer electronics, but said DRAM shipments for servers were also lower sequentially, although relatively stable this year. ®