Micron Technology, Inc. (NASDAQ: MU) stock lost over 6.7% on March 23rd, 2018 pre market session (as of 4:37 AM GMT-4; Source: Google finance) post their second quarter of 2018 update.
For the second quarter of 2018, the Revenue from trade NAND which accounted 25% of overall company revenue fell 3% sequentially but rose 28% on a year-over-year basis. The shipment quantities rose in the low double-digit percentage range on a sequential basis, while ASPs fell in the mid-teens percentage range. The sequential ASP decline in NAND increased in part on the back of a decent last time buy of higher price MLC NAND in the fiscal first quarter.
Meanwhile, the Operating margins rose 44% in the fiscal second quarter, enhanced 260 basis points from the first quarter. The Storage Business Unit, revenue rose 20% yoy to $1.3 billion, driven by solid revenue in SSDs. SD revenue fell 9% with the strong growth in SSDs on a sequential basis. The sequential revenue comparison was hurt by a mix shift within the group’s NAND component sales.
The group have been incurring and would likely to continue to incur, costs related with production capacity underutilization in advance of volume ramp of these new 3D crosspoint products. These charges negatively hurt their SBU operating margins by over 500 basis points this quarter. Including these charges, second quarter operating margins were 20% as compared with 29% in the fiscal first quarter and 7% in the prior-year period.
On the other side, the group is shifting its NAND, from rather a components supplier to becoming a solutions provider. They launched and started qualifications of the industry’s first cloud and enterprise SATA SSD drive incorporating 64-layer 3D TLC NAND. The group also launched the 3DFS solutions targeted at flagship smartphones. These solutions are also based on their 64-layer 3D TLC NAND, which has 15% higher performance and double the density of the prior technology.
They are focusing DRAM, cost competitiveness and speeding up their product execution. They have been qualified at 1X nanometer DRAM at three of the world’s largest hyperscale customers, with other qualifications underway. The comprehensive and expanding portfolio of DRAM, NAND and NOR solutions has enabled them to achieve a record design wins for their automotive business in the first half of fiscal 2018.