The IT industry is in turmoil, things are going downhill. After Intel delivered a disaster and Nvidia followed suit, it is now Micron's turn. The forecast, which had already deteriorated significantly at the end of June, will be revised downwards again today, and the months that will follow will not get any better either. Further adjustments will now follow.
Declining sales lead to savings
Today, nearly six weeks after Micron's bleak forecast for the current fourth quarter of fiscal 2022, the company has put it on shaky ground, which ultimately means that even it won't materialize. Before the crash, analysts had once assumed sales of $9.1 billion, but Micron announced at the end of June, with great caution, that it could only target sales 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 correspond to around 6.8 billion US dollars in sales.
For the subsequent first quarter of the new fiscal year 2023 at Micron, the company expects further sequential declines, which means it will be even worse than the current quarter. Even the free cash flow should then fall into the negative.
In FQ1, bit shipments 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 already making adjustments to its spending. In particular, wafer fab equipment (WFE) is to be purchased less, and the CAPEX value in the 2023 financial year will be significantly below that of 2022.
Other companies are likely to follow
Acer's boss also warned in Asia today not to underestimate the statements and figures from industry giants such as Intel, Nvidia and now also Micron. Accordingly, other companies are likely to follow, depending on their position in the supply chain with a corresponding delay. Because the so-called inventory adjustment, i.e. the adjustment of stock levels to the current market environment, which Micron is also addressing today, will hardly stop at any group.