Micron Warns Market Outlook For 2023 Has Weakened

Key Insights

• Micron announced that it would have to make adjustments to its plans due to weaker market conditions. 
• The company stated that it would need to significatly improve total inventory in the supply chain.
• Micron’s announcement put significant pressure on semiconductor stocks.

Micron Cuts Capex Plans For The Next Year

Micron stock is down by 6% in today’s trading session after the company presented a weak outlook for the next year.

Micron said that it would reduce DRAM and NAND wafer starts by approximately 20% compared to the fiscal fourth quarter 2022. The company will also work towards additional capex cuts.

The company commented: “Recently, the market outlook for calendar 2023 has weakened. In order to significantly improve total inventory in the supply chain, Micron believes that in calendar 2023, year-on-year DRAM bit supply will need to shrink and NAND bit supply growth will need to be significantly lower than previous estimates.”

Micron also noted that it remained confident in the secular demand drivers for its markets. The company expects that memory and storage revenue growth would outpace the growth of the rest of the semiconductor industry.

Micron Prepares For Weaker Economy

The semiconductor industry is trying to adjust to the potential recession in the developed countries and the consequences of the new U.S. export controls on China.

Recently, semiconductor stocks managed to rebound together with the general market. In addition, the meeting between Biden and Xi at G20 did not lead to more tenstions between U.S. and China, which served as an additional positive catalyst for semiconductor stocks.

Today, Micron’s report put significant pressure on the semiconductor segment. AMD is down by almost 5%, while NVIDIA is losing 3% in today’s trading session.

The weak performance of the semiconductor segment pushed NASDAQ Composite towards the 11,250 level. The market will remain extremely sensitive to any changes in company’s outlooks for the next year as traders are worried that a potential recession could deal significant damage to companies’ profits.

For a look at all of today’s economic events, check out our economic calendar.