Micron makes deeper cuts to memory chip production

July 02, 2019 //By James Morra
Micron Technology in March said it would reduce its DRAM and NAND production in 2019 as demand dropped off for short-term memory and long-term storage used in smartphones, data centers and personal computers, watering down the selling price of its products and eroding its profits.

But the company, the No.4 player in the global chip industry, acknowledged last week that it needed to be more aggressive.

The company said it still planned to cut DRAM manufacturing by 5% to balance out the supply and demand of the short-term memory chips, which is what determines its average selling price. In March, Micron said it would also curtail NAND production by 5%. But Sanjay Mehrotra, Micron's chief executive officer, said on a conference call last week it would slash NAND production by another 5%—a total of 10% in 2019.

Micron said it would reduce its planned capital spending by $1.5 billion, bringing its total to about $9 billion in 2019. The company has struggled to manage the current oversupply of memory chips, driving down average prices for DRAM and NAND. Many of the company's largest customers are trying to get through surplus inventory they amassed over the last year during a global shortage of DRAM and NAND products.

The current oversupply in the NAND market is stems from accelerated supply growth driven by the semiconductor industry's shift to 3D NAND, the company said. "We continue to target our bit shipments to be close to the industry demand growth rate," said Mehrotra, who was hired as chief executive officer in 2016. "We are optimistic that the overall NAND market will start to stabilize in the second half of [2019]."

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