Memory chip maker Micron Technology Inc (MU.O) on Monday said it would shift how it returns cash to shareholders, buying up more shares when prices are low, fewer when prices are high and instituting a dividend for the first time.
Micron makes DRAM and NAND memory chips, which are needed for nearly all computing systems and whose price can fluctuate widely based on global supply and demand. This can cause swings in profits – and share prices – at most memory makers.
Micron on Monday said it would start adjusting its previously regular share repurchases – which have returned about $4 billion in cash to shareholders since 2018 – to match those cycles, holding back when prices are high so that it can retire more shares for each dollar spent.
“We’re changing our buyback strategy to be more opportunistic,” Micron Chief Financial Officer David Zinsner said during a conference call announcing the news.
Micron on Monday also declared an initial quarterly dividend of 10 cents per share, payable in cash on Oct. 18.
Capital return programs can be tough for memory companies to manage during the industry’s boom-and-bust cycles.
Micron’s largest two competitors for memory chips – Samsung Electronics Co Ltd (005930.KS) and SK Hynix Inc (000660.KS) – both pay dividends to shareholders. Hynix cut its dividend in 2019 when profits plummeted at the bottom of an industry cycle.
Micron’s changes to its capital return program come as the company is preparing to ramp up spending for a new generation of chips.
Micron in June said its capital expenditures for fiscal 2021 would rise above $9.5 billion, partly driven by pre-payments as it starts to acquire extreme ultraviolet lithography (EUV) machines from Dutch maker ASML Holding NV (ASML.AS). The machines are necessary for making the most cutting-edge chips but can cost more than $100 million each.