Opinion: Chip giant Micron is becoming another AI play for investors

The company still reported a net loss of $1 billion, but it forecast it would return to an operating profit in its fiscal third quarter.

But what pleased investors even more were Micron’s comments about its new memory-chip module, called HBM3E. This new module, which Micron describes as being built for AI and supercomputing, will be in volume production in early calendar 2024 and is expected to generate several hundred million dollars in revenue in fiscal 2024.

“I’ll just point out that our HBM supply is basically — in calendar year 2024 — is sold out at this point,” Chief Executive Sanjay Mehrotra told analysts.

In addition to its potential in the data center, Micron is also seeing huge potential for memory chips that fit into AI-capable PCs or mobile devices, where AI will be used locally, instead of involving expensive data-center operations. And that will require more memory for PCs.

“In PCs, we forecast unit volumes to grow by a low- to mid-single-digit percentage in calendar 2024 after two years of double-digit percentage PC unit-volume declines,” Mehrotra said. PC makers are expected to start ramping production of AI PCs in the second half of 2024, which will require an additional capacity of four to eight gigabytes of DRAM (dynamic random access memory) per PC, he said, and increased solid-state drive capacities as well.

He also said that longer term, many popular generative-AI applications will be on smartphones. “Our leading product portfolio is poised to capture this memory and storage opportunity,” he added.

Micron is going to increase its capital spending in fiscal 2024, in part due to the manufacturing of its new HBM3E modules, but company executives said they remained “extremely disciplined” on capex.

Micron was not asked any questions about a pending lawsuit filed against it last month by Chinese rival Yangtze Memory Technologies for patent infringement, but at the time, it said it does not comment on litigation.

Apart from that and issues with Chinese sanctions, Micron’s road to recovery appears to be moving full-steam ahead. And now it’s looking like another opportunity for investors looking beyond Nvidia Corp.

NVDA

for chip makers poised to take advantage of the growing AI boom.