Micron of the week announced Drastic cost-cutting measures including a 10% headcount reduction and further reductions in capital expenditures. As a result, the company will slow down the launch of new DRAM nodes and delay the introduction of his 1γ (1-gamma) production node, which uses extreme ultraviolet (EUV) lithography, until 2025. Meanwhile, the company has started sampling his 24Gb. DDR5 memory devices for enterprise applications.
Delayed EUV rollout
Micron is the only major DRAM manufacturer not using EUV lithography in its modern manufacturing process. The memory maker plans to use EUV for multiple layers of his 1γ manufacturing technology, which was due to be introduced in 2024. This is because Micron will need to cut spending on new equipment in 2023 and his 2024 fiscal year and cut his DRAM bit shipments in 2023. DRAM ramp-up in 1β and 1γ manufacturing technologies will need to be delayed in the next few quarters.
The company’s latest 1β (1-beta) manufacturing node (increasing bit density by 35% and improving power efficiency by 15%) relies solely on deep ultraviolet (DUV lithography). In contrast, Samsung and SK Hynix are already using his EUV scanner for multiple layers of 4th generation 10nm class technology (1α, 1-alpha) and 5th generation 10nm class DRAM node. We plan to increase its use in However, the company is delaying his 1β to reduce bit production shipments and reduce CapEx. This is why we also delay the introduction of 1γ.
“Given our decision to delay ramping up production of 1β DRAM, we expect the introduction of 1γ (1-gamma) to be in 2025.” statement By micron reading. Similarly, the next NAND node beyond 232-layer 3D NAND memory will be postponed in line with new demand prospects and increased required supply. ”
Delays in EUV-based manufacturing processes are a major concern, as one EUV layer replaces multiple DUV masks. This reduces cycle times, increases yields, and reduces costs. Bearing in mind that both Samsung and SK Hynix will use his EUVs extensively in the next few years, they may have an edge over Micron on cost.
24Gb DDR5 IC sampling
Advanced process technology is especially useful for complex high density DRAM devices such as Micron’s 24Gb DDR5 ICs. Qualified by Micron’s partners, the chip will be made using Micron’s proven 1α node.
Using 24Gb memory chips instead of 16Gb devices can increase memory module capacity by 50% without increasing the number of ICs per module. For mainstream and ultra-dense servers, it means 48GB, 96GB, 192GB, or 384GB modules. Micron may also manufacture 24GB and 48GB DDR5 modules for client applications.
The increase in DDR5 in servers will only start when AMD and Intel start rolling out their next-generation EPYC and Xeon Scalable processors with DDR5 support. Meanwhile, Micron expects server DDR5-bit shipments to crossover with DDR4 in the middle of his 2024.
Reduce capital investment
As mentioned earlier, one of the reasons behind the 1β and 1γ delays is the reduction in capital expenditures for FY2023 (ending September 2023) and FY2024 (ending September 2024). Micron has cut his CapEx for fiscal 2023 from $7 billion to his $7.5 billion range. That’s down from his $8 billion target the company set a few months ago and his $12 billion in fiscal year 2022 (i.e. CapEx has been cut by about 40%). The company plans to cut spending on wafer fab equipment (WFE) by 50% year-over-year, but construction spending will increase as it builds a new fab in Idaho. His WFE spending for fiscal 2024 will also be less than Micron’s original plan.
layoffs are coming
The company expects modest growth in demand for both types of memory it produces (10% for DRAM and about 20% for NAND), so operating costs will also need to be reduced. As a result, the company plans to reduce its workforce by 10% of his through 2023, through a “combination of voluntary layoffs and layoffs.”
“For both years, demand for DRAM and NAND outperformed past trends and future growth projections due to lower end demand in most markets, higher customer inventories, the impact of the macroeconomic environment, and regional factors in Europe. We are well behind, and China,” Micron said in a statement.
balance supply and demand
The production and cost-cutting measures Micron has introduced seem dramatic, but the company believes it needs to balance supply and demand because profitability and long-term prosperity depend on it.
“The industry is still in a state of oversupply, but customers are running out of inventory,” Micron’s chief financial officer Mark Murphy said. Seeking Alpha). “But profits will be challenged throughout the year, which will challenge gross margins.”
“The speed and pace of the recovery from a profitability standpoint will depend on how quickly supply lines up,” Micron Chief Executive Sanjay Melotra said. bloomberg.
