Micron CEO: supply chain bottlenecks are improving

Shares of Micron Technology Inc (NASDAQ: MU) are up nearly 10% this morning on market-beating Q1 results and strong guidance for the future.

CEO Mehrotra’s remarks on CNBC’s ‘Squawk on the Street’

According to CEO Sanjay Mehrotra, supply chain bottlenecks are improving and will continue to get better in 2022. On CNBC’s “Squawk on the Street”, he said:

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Supply chain is easing in certain pockets of the market on investments the semiconductor industry, including Micron, has put into the supply chain. Some shortages may still continue, but some have improved, and we are expecting easing of shortages gradually through calendar year 2022.

Mehrotra expects strong demand for Micron products next year, particularly from 5G, EVs, and cloud. Easing supply constraints, he added, will release pent-up demand in 2022. The chief executive also expressed confidence that Micron had a supply chain that was “well prepared” to stand the risks associated with the Omicron variant.

We’ve seen over the course of the pandemic that the demand drivers are strong and secular in nature. So, we expect continued strong demand and Micron has shown that we can adapt quickly to the changes in the marketplace.

Q1 results

Micron reported $2.31 billion in net income ($2.04 per share) versus the year-ago figure of $803 million (701 cents per share). On an adjusted basis, it earned $2.16 per share. At $7.69 billion, its revenue printed about 34% up on a year-over-year basis.

According to FactSet, experts had forecast $2.10 per share of adjusted EPS on $7.68 billion in revenue. DRAM sales were up 38% to beat estimates, but NAND sales with a 19% annualised growth came in shy of expectations.  

The Idaho-headquartered company attributed its strong results primarily to data-centre sales that jumped over 70% in the recent quarter on strong cloud demand and the return of enterprise IT investment. Micron valued its capital expenditures in Q1 at $3.27 billion.

Future outlook

For Q2, Micron now forecasts for up to $2.05 of per-share earnings on $7.3 billion to $7.77 billion in revenue, as per the earnings press release. In comparison, analysts called for $1.84 in EPS and $7.29 billion in revenue.

The chipmaker expects a 30% growth in NAND demand this year and just under a 20% increase in DRAM demand. Capital expenditures are likely to register at $11 billion to $12 billion in fiscal 2022.