After Growing Almost 1.5x YoY In 2018, Why Did Micron’s Revenue Drop 23% In 2019?

Micron (NASDAQ: MU) is a manufacturer of semiconductor devices, primarily dynamic random access memory (DRAM) for PCs and mobile devices, NAND Flash, and NOR Flash memory.

Micron’s Total Revenue grew almost 50% YoY from $20.32 billion in 2017 to $30.39 billion in 2018, before dropping to $23.41 billion in 2019, on the back of slowing demand, that has led to a supply glut in the semiconductor industry. We expect revenue to grow to $25.08 billion by 2021.

Revenue growth of about $1.67 billion by 2021 to be driven by $800 million growth in DRAM revenue, $680 million in NAND flash revenue, and about $190 million in NOR and 3D XPoint revenue

• Micron’s Revenue grew almost 50% from $20.32 billion in 2017 to $30.39 billion in 2018, before dropping 23% in 2019, to about $23.41 billion.
• This slump came on the back of a drop in semiconductor demand that led to a supply glut, driving down selling prices.
• DRAM revenue took the biggest hit, dropping around 28% YoY from $21.23 billion in 2018 to $15.25 billion in 2019.
• We expect another drop in revenue, of around 11% for 2020, but we expect things to get better in 2021, as the supply glut clears out, driving revenue up to $25.08 billion.

Micron has 3 Operating Segments-

To know more about Micron’s operating segments, and what products they offer, you can view your interactive dashboard, Micron Revenue: How Does Micron Make Money? 

A] Revenue from Core DRAM to grow about 5% ($800 million) over the next two years, to make up 64% of total revenue

• DRAM revenue grew from $12.96 billion in 2017 to $21.23 billion in 2018, before dropping to $15.25 billion in 2019.
• The memory market is currently in a state of oversupply, and this has driven down demand, and lowered selling prices.
• Furthermore, DRAM makes up the memory components used primarily in PCs and notebooks, and a drop in consumer electronics demand has further hampered DRAM demand.
• We expect things to get slightly better by 2021, pushing DRAM revenue to about $16.05 billion.

B] Revenue from NAND flash to grow about 10% ($680 million) by 2021, and make up around 30% of total revenue

• NAND flash revenue grew from $6.78 billion in 2017 to $8.4 billion in 2018, before falling to $6.95 billion in 2019.
• We expect revenue from this segment to further drop to $6.25 billion in 2020, before rising to about $7.63 billion in 2021, as the supply glut clears.

C] NOR and 3D XPoint revenue to grow about 16% ($190 million) over two years, and make up 6% of total revenue

• Revenue from this segment grew more than 2x, from $0.58 billion in 2017 to $1.21 billion in 2019.
• We expect NOR and 3D XPoint revenue to grow to $1.4 billion by 2021.

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