The Zhitong Finance App learned that on March 20, memory chip giant Micron Technology (MU.US) released financial reports. Revenue for the second fiscal quarter of fiscal year 2024 was US$5.82 billion, up about 57.7% year on year, far exceeding 15.6% of the first fiscal quarter, and higher than analysts' expectations of US$5.35 billion. On March 21, Micron Technology closed up more than 14% to 109.85 US dollars. At one point, it rose more than 17% before the market. Its CEO said during the earnings call that demand for AI servers is driving the rapid growth of HBM, DDR5 and data center SSDs. Related targets: Shanghai Fudan (01385), SMIC (00981), Huahong Semiconductor (01347).

Micron Technology's latest financial report shows that for the second fiscal quarter of the 2024 fiscal year ending in February, the company's revenue surged 58% year on year to reach US$5.82 billion. Driven by demand for artificial intelligence (AI) storage hardware, the performance was strong, with earnings of 42 cents per share, far higher than analysts' expectations.

Micron Technology's adjusted operating profit also turned a loss into a profit of US$204 million, while analysts expected a loss of US$240 million. The company's revenue forecast for the third fiscal quarter is US$6.4 billion to US$6.8 billion, earnings per share are expected to be around 45 cents, and gross margin is expected to be around 26.5%.

It is worth noting that in fiscal year 2023, which ended at the end of August last year, it was also a painful data recorded in Micron's history — operating income fell 49%, at least the worst since the late 80s of the last century. At the same time, there was also a huge loss of 5.7 billion US dollars, which is also the biggest loss in more than 10 years.

In just a few months, Micron achieved a “reversal of the predicament”. As of the first fiscal quarter in November last year, the revenue growth rate was corrected; the second-quarter report, which had just been released, had a year-on-year revenue growth rate of 58%; the latest guidelines show that the revenue growth rate for the current fiscal quarter will reach 76%. The company's CEO said in an earnings call on Wednesday that demand for AI servers is driving the rapid growth of HBM, DDR5 and data center SSDs.

According to reports, due to weak demand for personal computers and smartphones, the memory chip industry can be described as experiencing one of the worst declines in industry history from the second half of 2022 to 2023. In 2024, the storage market will recover. According to WSTS (World Semiconductor Trade Statistics Association), the memory chip market will grow 44.8% year over year in 2024.

Compared with traditional memory chips, the market demand for high-end memory chips HBM and DDR5 is growing more rapidly. Furthermore, according to the latest data, the global memory chip market is about US$84 billion in 2023 and is expected to grow to US$12.3 billion by 2024.

Shanghai Securities is optimistic that the memory chip price increase will continue to ferment, and the industry's prosperity will continue to rise. According to an analysis by Zhongyuan Securities, memory prices continue to rise, supply-side output is still shrinking, and downstream demand is picking up. The server market is gradually recovering, and the relationship between supply and demand continues to improve, and memory prices are expected to continue to rebound; considering supply, demand, inventory, prices, etc., a cyclical recovery may have arrived. Against the backdrop of intensifying international geopolitical conflicts, the domestic market of domestic storage manufacturers has entered a period of accelerated growth.

According to the Huachuang Securities Research Report, AI demand is strongly driven, and the storage market will experience a sharp rise in volume and price. On the PC/mobile phone side, AI can accelerate terminal configuration upgrades, and the demand for bits is expected to continue to rise. On the server side, according to Micron estimates, the amount of DRAM/NAND used in AI servers is 8 times/3 times that of traditional servers, respectively; at the same time, it has also spawned massive demand for new high-performance memories. HBM has broken through memory capacity and bandwidth bottlenecks, and is regarded as a next-generation DRAM solution, and has become an indispensable key technology in the AI era.

Related concept stocks:

Fudan, Shanghai (01385): As an enterprise with a broad product line among domestic chip design companies, the company's business includes four major product lines: security and identification chips, non-volatile memory, smart meter chips, and field programmable gate arrays (FPGAs). The company provides customers with chip testing services through its holding subsidiary Hualing Co., Ltd. In 2022, the company's FPGA business achieved revenue of 781 million yuan, an increase of 82.81% over the previous year. The rapid growth of FPGA is mainly due to the continuous release of the company's billion-level FPGA products. At the same time, the company's embedded programmable PSoC products have been successfully mass-produced and applied in batches to multiple customers.

SMIC (00981): SMIC recently stated at a performance briefing that under the premise that there are no major changes in the external environment, the 2024 guideline given by the company is that the increase in sales revenue should not be lower than the average of comparable peers, with a single-digit increase over the previous year. The company plans to continue to advance the 12-inch factory and capacity construction plans announced in recent years in 2024, and the capital expenditure is expected to be roughly the same as the previous year.

Huahong Semiconductor (01347): Recently, during an investigation, Huahong Semiconductor stated that the company's goal is to achieve full production of 95,000 sheets in the first 12-inch factory by the middle of 2024. Based on the current strong demand for several platforms, the company is confident that it can achieve this goal. When the capacity utilization rate returns to 90% to 95%, the company will have the opportunity to raise the OEM price of the 8-inch and 12-inch platforms and adjust the product portfolio structure to improve the company's gross profit level.