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Micron’s bleak outlook is only getting worse

The IT industry is in turmoil, it’s going downhill. After Intel delivered disaster and Nvidia followed suit, it’s now Micron’s turn. The forecast, which already deteriorated considerably at the end of June, is being revised downwards today and the months that follow will not improve either. Further adjustments will now follow.

A decrease in sales leads to savings

Today, nearly six weeks after Micron’s dismal forecast for its current fourth quarter of fiscal 2022, the company has placed it on shaky ground, which ultimately means even it won’t come true. Before the crash, analysts once forecast revenue of $9.1 billion, but Micron cautiously announced in late June that they could only target revenue of $7.2 billion.

Today, this value continues to fall, at the lower end of the forecast or below the quarter is now only expected to develop, which would equate to approximately $6.8 billion in sales. For the next first quarter of the new fiscal year 2023 at Micron, the company expects further consecutive declines, meaning it will be even worse than the current quarter. Even free cash flow should then fall into negative territory.

In FQ1, bit transmissions are now expected to decline sequentially, and we expect significant sequential declines in revenue and margins. We expect free cash flow to be negative in FQ1.

In order not to fall into the abyss in 2023, Micron is now adjusting all its spending. In particular, less wafer fab equipment (WFE) needs to be purchased and the CAPEX value in the fiscal year 2023 is significantly lower than in 2022.

Other companies are likely to follow

The boss of Acer also warned about this in Asia today, not to underestimate the statements and figures from the industry giants such as Intel, Nvidia, and now Micron support. Accordingly, other companies are likely to follow, depending on which point in the supply chain with a corresponding delay. Because the so-called inventory adjustment, ie the adjustment of inventories to the current market environment, which Micron is also engaged in today, will not stop at any group.