Micron Shows Resilience Across Q4 2022 and Full Year Fiscal 2022 Results

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The News: Micron Technology, Inc (Nasdaq: MU) announced results for its fourth (Q4) and full year (FY) of fiscal 2022, which ended September 1, 2022. Fiscal Q4 highlights include revenue of $6.64 billion versus $8.64 billion for the prior quarter and $8.27 billion for the same period last year. Fiscal 2022 highlights include revenue of $30.76 billion versus $27.71 billion for the prior year Read the Micron Press Release here.

Micron Shows Resilience Across Q4 2022 and Full Year Fiscal 2022 Results

Analyst Take: Micron reported its Q4 2022 and FY 2022 results of fiscal 2022. Micron’s Q4 2022 financial results were impacted by rapidly weakening consumer demand and significant customer inventory adjustments across all its end markets. From our view, Micron is responding determinedly to this weak environment by decreasing supply growth through significant cuts to fiscal 2023 capex and by reducing utilization across the company’s fabs.

Micron Q4 2022 highlights included:

  • Revenue of $6.64B versus $8.64B for the prior quarter and $8.27B for the same period last year
  • GAAP net income of $1.49B, or $1.35 per diluted share
  • Non-GAAP net income of $1.62B, or $1.45 per diluted share
  • Operating cash flow of $3.78B versus $3.84B for the prior quarter and $3.88B for the same period last year

In contrast, across FY 2022 Micron delivered record annual revenue in fiscal year 2022 with solid profitability and free cash flow despite a challenging environment in the latter part of the year. Also, the company ramped up its 1-alpha DRAM and 176-layer NAND nodes across its portfolio and returned a record amount of cash to shareholders. Moreover, it attained record revenue in mobile, auto, industrial, and networking end markets as well as registered share gains in client and data center SSDs which contributed to record revenue in SSDs as well as in its consolidated NAND business.

Micron Fiscal 2022 highlights included:

  • Revenue of $30.76B versus $27.71B for the prior year
  • GAAP net income of $8.69B, or $7.75 per diluted share
  • Non-GAAP net income of $9.48B, or $8.35 per diluted share
  • Operating cash flow of $15.18B versus $12.47Bs for the prior year

On the positive side, we believe Micron’s August warning helped soften the impact of the Q4 2022 and fiscal 2022 results. After six years of cash flow positive, Micron is facing industry-wide headwinds, however we see the company’s cost discipline as providing critical buffer to endure looming inventory and demand-side uncertainties.

Plus, Micron will receive up to $320 million in Japanese government subsidies, marking the first of an expected series of deals to fortify supply chains against the disruptive threat from China. The move follows on Micron’s announced plans in August to increase its chip production in the U.S., boosted by the passage of the CHIPS Act. Currently, most of Micron’s chip production — akin to many other semiconductor companies — happens in Asia. Micron announced that production would likely begin in 2025 and can ultimately bring 40,000 jobs to the U.S. economy. We anticipate that Micron will remain steadfast to its strategic vision while making the necessary adjustments to handle near-term market corrections.

Micron Q4 2022 Guidance Perspective and 2023 Outlook

Of concern, Micron revenue came in below the low end of guidance in accordance with its August pre-Q4 forecast announcement warning of a negative free cash flow due to customer inventory backups amid diminishing demand for chips used in PCs and smartphones. As such, Q4 revenues came in below the low end of guidance at $6.6 billion. Except for the automotive segment, all the other end markets declined quarter-over-quarter and year-over-year.

For fiscal year, 2023 Micron capital expenditures (CapEx) is pegged to decline 33 percent to $8 billion. These figures align with Micron’s declaration that the semiconductor industry is entering its most substantial downturn since the Great Recession of 2008-09 and possibly since 2001 given the expectation of a recession coupled with inflationary pressure (i.e., stagflation) and inventory build.

As a result, Micron plans to slash spending on new chipmaking build by 50% to address the significant virtually unparalleled oversupply situation. We view Micron’s performance as not unique and aligning with the most recent financial reporting of top-tier chipmakers such as Intel, NVIDIA, and AMD and may portend a trend of softer post-pandemic demand for chips supporting consumer products such as smartphones and PCs.

Key Takeaways on Micron’s Q4 2022 and FY 2022 Results

In fiscal 2022, to its credit the company generated record revenue of $30.8 billion and returned a record $2.9 billion to shareholders. From our view, Micron’s robust presence in the DRAM and NAND market segments, portfolio versatility, and robust balance sheet can enable the company to steer through the languishing near-term supply-demand environment until macroeconomic and semiconductor segment conditions improve.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

Micron to Invest $40 Billion in U.S. Chip Manufacturing with Boost from CHIPS and Science Act

Embedded World 2022: Micron Unfolds Compute Foundation Innovations for Accelerating Intelligent Industrial and Automotive Edge

Micron Investor Day 2022: A Promising Look into the Growth of Memory and Storage

Image Credit: Nasdaq

The original version of this article was originally published on Futurum Research.

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. From Big Data to IoT to Cloud Computing, Newman makes the connections between business, people and tech that are required for companies to benefit most from their technology projects, which leads to his ideas regularly being cited in CIO.Com, CIO Review and hundreds of other sites across the world. A 5x Best Selling Author including his most recent “Building Dragons: Digital Transformation in the Experience Economy,” Daniel is also a Forbes, Entrepreneur and Huffington Post Contributor. MBA and Graduate Adjunct Professor, Daniel Newman is a Chicago Native and his speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

Ron Westfall

Ron is an experienced research expert and analyst, with over 20 years of experience in the digital and IT transformation markets. He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including software and services, infrastructure, 5G/IoT, AI/analytics, security, cloud computing, revenue management, and regulatory issues.

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