Micron cuts DRAM and NAND production in response to falling prices

Finally, we are seeing a sustained decline in these prices after several years of high NAND and DRAM memory prices. According to Micron, the decline in the average sales price (ADP) of their products in the first quarter of 2019 was more than 20%.

Micron cuts DRAM and NAND production in response to falling prices

This naturally had a direct impact on revenues, which fell 26% quarter-on-quarter and 21% year-on-year to $5.8 billion in the second quarter of 2019. In addition, DRAM revenues decreased by 30% and 28%, respectively, year-over-year. This situation cannot continue for manufacturers and Micron is ready to fight with it.

The oversupply in both DRAM and NAND is also responsible for the sharp fall in prices, which is “worse than expected”. The company expects a 17% higher decline in sales for the third quarter of 2019. This results in a decrease of between $4.6 billion and $5 billion and the gross margin decreased to 37-40% from 50% in the previous quarter.

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The company has therefore announced to reduce production by 5%. This applies to both DRAM and NAND flash products. In other words, these are all RAM and SSD memory drives for the PC that interest us. The forecast is that NAND and DRAM memories will continue to decline in value throughout the year, and Micron managed to slow but not prevent the decline.