What's going on?
Micron posted better-than-expected results this week, but America’s biggest memory chipmaker urgently needs to get its hands on neon if it wants to keep the lights on.
What does this mean?
Gone are the days when Micron relied on the slowing PC market for sales: the chipmaker made 60% more from selling its chips to industrial and data center customers last quarter than the same time the year before, and it made record sales to carmakers too. And since the chip shortage is still rearing its ugly head, Micron could up its prices without putting desperate customers off. That – along with some savvy cost-cutting on the factory floor – helped the company nearly quadruple its profit. Micron’s now confident it’s on track for a record-breaking year, and investors seemed to agree: they sent its shares up 7%.
Why should I care?
The bigger picture: Micron is running out of gas.
That record-breaking year isn’t guaranteed, mind you: Micron needs neon to produce its chips, and Ukraine’s two biggest suppliers of the gas – which produce about half of the world’s supply – have been forced to stop operations altogether by the war. And while there’s enough in storage to keep chipmakers going for a few months, analysts think the shortfall could eventually stall production and make the chip shortage even worse.
Zooming out: More chips, anyone?
On the plus side, Micron did commit at the tail-end of 2021 to invest more in production to help ease the chip shortage. And rival Kioxia has just followed suit: the Japanese chipmaker announced last week that it’ll be spending $8 billion on building a new plant as soon as next year. Not that it’s doing this out of the goodness of its heart: Kioxia’s hoping the move will help it make up ground on chipmaking frontrunner Samsung.