- Micron Technology plans to slash memory chip production spending in FY 2023 to cope with an “unprecedented” plunge in demand across all end markets, CEO Sanjay Mehrotra said on an earnings call Thursday.
- The Idaho-based chipmaker will reduce capital spending by up to 30% and chip equipment spending up to 50% to slow production growth.
- Despite the dip in sales, Micron continues to invest in long-term memory manufacturing, with its Boise production facility and remains on track to announce a second random access memory chip plant in the U.S., Mehrotra said.
Semiconductor manufacturers have been reporting chip oversupply in recent months, fueled by declining demand for smartphones and PCs. Both Micron and Apple supplier Taiwan Semiconductor Manufacturing Company announced steps to adjust their inventory levels in July due to stagnant sales.
The CEO noted that overall demand has been negatively impacted by the war in Ukraine, COVID-19-related lockdowns in China and inflationary pressures that have hampered consumer behavior across segments. Global semiconductor sales in August dropped 3.4% compared to the July total, according to the Semiconductor Industry Association.
As a result of falling demand, Micron will enact plans it voiced in July to reevaluate its capital expenditure plans to save costs in the coming quarter.
“Global semiconductor sales growth has stalled in recent months, and month-to-month sales decreased in August by the largest percentage since February 2019,” John Neuffer, SIA president and CEO said in a statement.
Looking ahead, Mehrotra expects the supply-demand balance will be restored, considering current supply growth adjustments and long-term market demand for memory chips. The company is continuing to invest in its $15 billion project to build the U.S.’s first new memory chip production facility in 20 years.
“The long-term manufacturing investments we are making will further strengthen our diversified fab footprint and position us to capitalize on the exciting long-term opportunities ahead of us,” Mehrotra told investors.