In its most-recent quarter, Micron’s (MU) catbird seat may have cracked. The company delivered 18% revenue growth Y/Y. However, revenue and gross margin fell sequentially. Revenue of $7.9 billion was down 6% Q/Q, while gross margin (58%) fell sharply. We have seen this story before with Micron – falling revenue amid margin compression. Even more daunting is that the average sales price (“ASP”) for DRAM fell in the high single digits, while NAND ASP fell in the low- to mid-teens percent range. Even if volume stabilizes, the company’s revenue could fall due to a decline in pricing power.

According to CNBC, Samsung (OTC:SSNLF) appears to have rung the alarm on memory demand. Below is commentary related to Samsung’s Q4 2018 earnings guidance and my interpretation.

CNBC Commentary

Samsung Electronics said on Tuesday that its fourth-quarter earnings likely decreased sharply due to lackluster demand in its memory chip business as well growing competition in the smartphone segment.

The South Korean tech giant predicted operating profit for the three months ended December was approximately 10.8 trillion Korean won ($9.67 billion) — or 28.71 percent down from a year ago …

Consolidated sales for the fourth-quarter is predicted to be around 59 trillion won, lower than the 62.8 trillion won analysts predicted in a Reuters poll, and 10.57 percent down from a year ago.

My Interpretation:

The projected operating income was 18 percent less than the 13.2 trillion won analysts had predicted after taking into account weakness in the semiconductor market. Read more:


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