Micron resumes buybacks that had been suspended amid slump

Micron Technology Inc., citing a brighter outlook, is resuming a stock buyback program that it had suspended nearly two years ago during an industry downturn.

The largest U.S. maker of computer memory chips sells a vital component of artificial intelligence hardware – high-bandwidth memory – that works with processors from Nvidia Corp. to crunch data. While its earnings forecast last month failed to impress investors, the company has been hailed as one of the biggest potential beneficiaries of the generative AI boom.

“In light of improved conditions,” Micron said in a filing Wednesday, “the company determined that repurchases may resume.”

Micron gained more than 5% when trading opened in New York on Wednesday, but closed 2.47% down by the end of trading to $86.80.

The type of memory that Micron produces can serve up information more quickly, helping computing systems develop and run AI models. Micron sold $100 million of new HBM3e chips in the last quarter and expects total sales of high-bandwidth products will rise to “several hundred million dollars” in the current period. It will then increase to multiple billions in fiscal 2025, which runs through August of that year.

Ramping up production of this new memory has been a challenge. Due to the difficulty of increasing factory output – and qualifying the chips to work with computer systems – supply effectively has a “hand brake on it,” Manish Bhatia, Micron’s executive vice president of global operations, said in an interview.

Micron’s board had originally authorized the stock buyback program in May 2018, but the company decided to temporarily suspend the repurchases in December 2022 due to the market downturn.

The company said Wednesday that resuming the buybacks will help “offset dilution from employee stock purchase programs,” while noting that it remains committed to strengthening its balance sheet and sustaining its investment-grade credit rating.