Micron Technology Inc. wants to produce extra memory chips within the present semiconductor scarcity, however a choice in 2019 to decrease manufacturing throughout a downturn might be costing it cash now.
Earlier Wednesday, Micron
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reported better-than-expected results for the fiscal second quarter, amid the worldwide chip shortage. Several analysts on the corporate’s convention name questioned its capital-spending plans.
“When I look at your full-year capex versus what you’ve spent fiscal year to date, you’re going to be down over 40% in the second half of the year,” mentioned Credit Suisse analyst John Pitzer. “Why not get a little bit more aggressive on capex?”
Sunjay Mehrotra, president and chief government of Micron, defended the corporate’s plans to spend $9 billion in fiscal 2021, which he mentioned was near the best stage of capital spending in Micron’s historical past.
“We want to make sure we manage it prudently,” Mehrotra mentioned. “Our goal is that over longer term, in terms of supply-growth CAGR [compounded annual growth rate], to be aligned with industry-demand growth CAGR, and we have made prudent decisions over the course of last few years in terms of capex investment.”
But now it seems that the corporate could also be shopping for a brand new fab, by way of a attainable acquisition, just after recently deciding to shut down its 3D XPoint memory facility in Utah. Micron has been in discussions with a number of potential patrons of this fab, and it seems to have a use for the funds.
According to the Wall Street Journal, Micron is interested in potentially buying Japanese NAND-memory firm Kioxia, and will find yourself in a bidding struggle with Western Digital Corp.
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for the corporate. The firm is estimated to be valued at about $30 billion.
That might be a big chunk of change for the final remaining American memory-chip maker, which slowed down its production of chips in early 2019 amid a slowdown. In its March name with analysts that yr, Micron executives talked about slowing down manufacturing of dynamic random entry memory (DRAM) chips by about 5%, amid a 28% drop in demand, together with value cuts.
Micron’s dilemma reveals the issue for semiconductor corporations that select to proceed to make their very own chips in multibillion-dollar fabrication vegetation. When demand reveals, the vegetation are idled, or slowed to make fewer chips, however the price to run them stays the identical.
The have to one way or the other construct, add or purchase extra capability in the course of an trade scarcity, when it would take over a yr to get a brand new manufacturing unit up and operating as soon as the pricey key tools arrives, is a foul place that no firm desires to be in. Intel Corp.
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which is planning on constructing extra vegetation within the U.S., and presumably in Europe, in an effort to grow to be a producer for different corporations in addition to itself, is most likely watching Micron’s scenario intently.
Investors, nevertheless, appeared to react properly to Micron’s feedback about its plans for capital spending, and particularly the sturdy trade demand, sending its shares up 4% in after-hours buying and selling. If the corporate finally ends up overpaying for one other memory-chip maker with a view to get extra capability, although, that notion of self-discipline might shortly disappear.
