Micron Technology Cuts Q4 Outlook; Earmarks $40B In Chip Manufacturing Over The Decade

Micron Technology, Inc's MU expectations for CY22 industry bit demand growth for DRAM and NAND have declined amid macro uncertainties and supply chain constraints. Therefore, it expected a challenging market environment in Q4 and Q1. 

Micron expected Q4 revenue to come at or below the low end of the provided revenue guidance range. 

Based on the last guidance, Micron said it expects Q4 revenue of $6.8 billion to $7.6 billion. The analyst consensus estimate was $9.05 billion. 

Also Read: Why Nvidia Shares Are Getting Hammered Today

In Q1'23, bit shipments will likely decline sequentially, and Micron expected significant sequential declines in revenue and margins. It expected free cash flow to be negative in Q1. 

To address the near-term environment, Micron declared new FY23 wafer fab equipment (WFE) CAPEX reductions adding to the WFE CAPEX reductions previously discussed, and now expects FY23 total CAPEX to be down meaningfully versus FY22.

Separately, Micron looks to invest $40 billion through the end of the decade to build leading-edge memory manufacturing in multiple phases in the U.S. 

Micron expects to begin production in the second half of the decade, ramping overall supply in line with industry demand trends.

Micron's planned investment, the largest in memory manufacturing in U.S. history, will ultimately create up to 40,000 new American jobs. 

The move was made ahead of President Joe Biden at the White House for the signing of the momentous CHIPS and Science Act, aligns with the company's financial plans, and is a crucial element of Micron's $150+ billion global investment in manufacturing and R&D over the next decade.

CEO Sanjay Mehrotra said, "This legislation will enable Micron to grow domestic production of memory from less than 2% to up to 10% of the global market in the next decade, making the U.S. home to the most advanced memory manufacturing and R&D in the world."

Price Action: MU shares traded lower by 3.86% at $59.08 in the premarket on the last check Tuesday.