Micron cuts $300M from capital spending
By Jack Robertson
EBN
(03/21/01, 05:33:45 PM EST)
Micron Technology, Inc., Boise, Ida., today announced that although the company's consolidated results of operations will not be released until next week, the semiconductor pre-tax results of operations were slightly profitable for the second quarter of fiscal 2001.
Net sales for its semiconductor operations were $1.05 billion for its second quarter ended March 1, 2001.
Micron told analysts in a conference call that the PC industry customers have burned off virtually all of their excess DRAM inventories and are now building systems with freshly-manufactured chips. Kip Bedard, vice president of investor relations, said in the current quarter shipments to PC makers will reflect the shipments of these products to market.
However, Mike Sadler, vice president of sales and marketing, said customers in the wireless, telecom and networking equipment markets still have large amounts of excess chip inventories that is impacting sales.
Micron sells DRAMs, SRAMs, and flash to the netcom customers that are affected, he said. Sadler said he couldn't predict when these inventories would be depleted and normal ordering would resume.
He said the netcom customers were slower to react to the sharp downturn in sales than the PC industry and stocks continued to build up while product shipments slowed. "The slow response in this sector was complicated because of contract manufacturers holding much of the inventory" providing poorer visibility, he added.
Steve Appleton, Micron chairman, said the firm has revised its current fiscal year capital spending downward from $2.3 billion to $2 billion. Depending on market conditions, the latest revised capex estimate would change "a couple of hundred thousand thousands plus-or-minus," he added.
He said Micron has already spent about half of the $2 billion in its first fiscal half. He said the firm is cutting production costs significantly by its faster transition to 0.15-micron processing, which now accounts for 30% of all wafer starts at all fabs worldwide. He estimated this percentage will increase to 50% worldwide by the end of Micron's fiscal year at the end of August.
Micron's chip output increased in the last fiscal quarter with wafer starts rising "in the low double digit" percentage sequentially, Sadler said. He said Micron was not cutting back wafer starts, but the slower bit growth reflected a shift to more 256-megabit DRAMs with lower volumes in the early product life cycle, as well as lower bit density SRAMS and flash.
He said by the end of the calendar year more than 30% of Micron DRAM production will be in DDR chips. He reiterated that Micron is selling DDR modules "at zero premium" over single data rate SDRAM DIMMs.
Micron Electronics, Inc., a majority-owned subsidiary of the company primarily operating webhosting and PC hardware businesses, rescheduled the release of its second quarter earnings to Friday, March 23. For that reason, Micron Technology, Inc., said it expects to release its consolidated results of operations early in the week of March 26, after the MEI financial statements are available and have been consolidated. |
