DRAM Market Debacle Takes Toll on Micron

Posted 09/30/2011 at 11:48am | by Paul Lilly

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Micron this week announced financial results for its fourth fiscal quarter and 2011 fiscal year ended September 1, 2011, and the numbers aren't pretty. The company's revenue from DRAM in the third quarter dropped 12 percent compared to Q3, a slump Micron said was the result of declines in the average selling prices. Revenue from sales of NAND flash products picked up some of the slack and grew 11 percent, but doesn't have enough volume to make up for the downturn in DRAM.

There are a number of reasons why Micron's DRAM business is struggling. The biggest one is a continued oversupply of DRAM chips, a situation Micron warned will negatively affect its margins going forward, Reuters reports. Lower than expected PC sales growth is also playing a role.

Rising NAND flash sales only provide a modicum of relief. According to Reuters, NAND accounts for only about 25 percent of Micron's sales, whereas DRAM makes up more than half.

"DRAM is going to be problematic for them for the next several quarters," Avian Securities analyst Win Cramer told Reuters. "I don't think anytime in the near term NAND would be completely able to offset DRAM problems."

Image Credit: Micron