Micron Technology(US:MU) Haitong Securities International·2025-09-25 00:53Investment Rating - The report assigns an "Outperform" rating for the company, indicating an expected total return over the next 12-18 months that exceeds the relevant market benchmark [32]. Core Insights - The company achieved record revenue of $37.4 billion for FY2025, a 49% year-over-year increase, with a gross margin improvement of 17 percentage points to 41% and an EPS of $8.29, reflecting a 538% year-over-year growth [9][10]. - Q4 FY2025 revenue reached $11.3 billion, marking a quarterly record with a 22% quarter-over-quarter growth and a 46% year-over-year growth [10]. - DRAM revenue constituted 79% of total revenue in Q4, amounting to $9 billion, with a year-over-year increase of 69% and a quarter-over-quarter increase of 27% [10][11]. - The report highlights significant advancements in core products, particularly in DRAM and HBM technologies, with the company being the first to ship 1-gamma DRAM [12][13]. Financial Performance Overview - FY2025 revenue reached $37.4 billion, a 49% increase year-over-year; gross margin improved by 17 percentage points to 41%; EPS was $8.29, up 538% year-over-year [9]. - Q4 FY2025 revenue was $11.3 billion, with a 22% quarter-over-quarter growth and a 46% year-over-year growth [10]. - DRAM revenue in Q4 was $9 billion, representing 79% of total revenue, with a year-over-year increase of 69% and a quarter-over-quarter increase of 27% [10]. Business Segment Performance - Cloud Memory Business Unit (CMBU) reported Q4 revenue of $4.5 billion, a 34% quarter-over-quarter increase, with a gross margin of 59% [11]. - Core Data Center Business Unit (CDBU) generated $1.6 billion in Q4 revenue, growing 3% quarter-over-quarter, with a gross margin of 41% [11]. - Mobile Client Business Unit (MCBU) achieved $3.8 billion in Q4 revenue, a 16% quarter-over-quarter increase, with a gross margin of 36% [11]. - Automotive and Embedded Business Unit (AEBU) reported $1.4 billion in Q4 revenue, a 27% quarter-over-quarter increase, with a gross margin of 31% [11]. Core Products and Technology Progress - The 1-gamma DRAM node achieved mature yields at a record speed, 50% faster than the previous generation, with the first certification from OEM customers in Q4 [12]. - HBM revenue approached $2 billion in Q4, with an annualized run rate nearing $8 billion [13]. - G9 NAND mass production is progressing in line with market demand, with successful customer certification for data center PCIe Gen6 SSDs [13]. Market Demand and Industry Outlook - Total server shipments in 2025 are expected to grow by approximately 10%, with strong demand for AI servers [14]. - High-performance storage demand driven by AI inference is boosting the demand for large-capacity SSDs [15]. - The PC market is projected to see mid-single-digit percentage growth in shipments due to the end of support for Windows 10 and AI PC adoption [16]. - The automotive and industrial market is experiencing increased demand for memory and storage driven by ADAS and AI applications [19]. Capacity and Capital Expenditures - Capital expenditures for FY2025 are projected at $13.8 billion, with FY2026 expenditures expected to exceed those of FY2025 [22]. - A new wafer fab in Idaho is expected to start production in the second half of 2027, with additional capacity planned [20]. - The first EUV equipment for 1-gamma DRAM production is scheduled for installation in Q4 2025 [21]. Financial Guidance and Cash Flow - Q1 FY2026 revenue is expected to reach a record $12.5 billion, with a gross margin of 51.5% and EPS of $3.75 [23]. - In Q4 FY2025, operating cash flow was $5.7 billion, with free cash flow of $803 million [24].