The cyclical nature of Micron Technology, Inc (NASDAQ:MU) business happens to be a unique attribute globally. This company focuses on the production of NAND and DRAM.
These products happen to have been produced in significant volumes over the previous quarters. This ended up impacting pricing a great deal, with analysts describing it as soft.
The turn of events
Micron Technology expressed its disappointment with the first quarter’s performance. The business gave an update outlining that the revenues had declined by 35% as compared to what it got previous year’s same quarter.
Anyone that follows the progress of the memory chip markets knows the trends quite well. Whenever it gets moving, it moves! Such a person understands how matters turn out when the industry holds the brakes in terms of capacities channeled into the markets. The ripple effects that follow usually persist for quite long.
The set up of the memory chip plants isn’t an easy undertaking in terms of the required resources and time. Analysts say that it might take many years and consume billions of dollars.
Micron thinks that proper strategies are the way to go to make it in this nature of business. Earlier on, it channeled $9 billion into capital equipment. It wants to change that saying it has plans to cut that down to $7 billion and $8 billion this fiscal year. Reports show the inclination of the other memory-chip makers to a similar course.
Thoughts from leaders and analysts
Analysts are looking forward to witnessing the impact of the shortage from the point of surplus. There are high chances that it might end up improving pricing.
The Chief Business Officer of Micron Summit Sadana was recently in an interview where he disclosed some changes taking effect. The leader said that they had started witnessing some slight improvements in terms of pricing for both NAND and DRAM.
Sadana admits that several factors could lead to poor performance. He said that one of them would be seasonal slowness in the sale of products. The second one is the change in strategy among the PC makers. For instance, they would resort to something else other than memory.
