Operating Costs for Memory companies are now below 12%

Last night Micron decided to dilute their stocks with an additional 1B$ offering of new stocks. The company intend to use the proceeds to buy back debt. This comes at a time with record profits and cash flow for Micron and the other memory companies. This is indeed a time to harvest and sow, to prepare for the next (if history is a good indicator for the future..) memory cycle.

All of the memory companies have enjoyed increasing revenues and gross profit margins to the level where the operating costs now are below 12%. Surprisingly Hynix have the highest gross profit margin indicating very competitive products or a strong presence in high-profit markets like the data center.

 

The chart also reveals the high operating costs of processing companies like Intel and Nvidia. Their business is highly reliant on keeping a high gross margin to keep the business healthy. A few companies are obvious negative outliers of which AMD and Cypress is a more permanent kind than NXP.

 

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