MICRON Technology, the largest US maker of computer memory chips, tumbled in late trading after its revenue forecast missed projections by about US$1 billion, hurt by sluggish demand for smartphones and personal computers (PC).
Sales will be roughly US$7.9 billion in the fiscal second quarter, which runs to February, the company said on Wednesday (Dec 18). That compares with an average analyst estimate of US$8.99 billion. Profit will be no more than US$1.53 a share, minus certain items, well short of the US$1.92 projection.
Though Micron is seeing strong orders for components used in artificial intelligence computing, it still faces lacklustre demand from makers of phones and PCs – two markets that consume the majority of its chip volume.
Micron shares, up 22 per cent this year to Wednesday’s close, tumbled 11 per cent in extended trading following the announcement.
“While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,” chief executive officer Sanjay Mehrotra said.
In the fiscal first quarter, which ended Nov 28, sales rose 84 per cent to US$8.71 billion. Excluding certain items, the profit was US$1.79 per share. Analysts had predicted sales of US$8.71 billion and profit of US$1.76 on average.
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The company said that data centre-related revenue grew 400 per cent in the quarter from a year earlier. That unit now accounts for more than half of the company’s total sales. Still, the surge was not enough to offset weak orders from makers of devices aimed at consumers, Micron said.
In that area, customers have been working through a backlog of inventory.
“We are now seeing a more pronounced impact of customer inventory reductions,” Micron said in an investor presentation. “We expect this adjustment period to be relatively brief and anticipate customer inventories reaching healthier levels by spring.”
The company predicts that the PC market will grow around 5 per cent in 2025, with most of the expansion coming in the second half. It commented that owners of the devices are updating them more slowly than anticipated.
Micron said that its mobile business unit suffered a 19 per cent sequential decline, brought on by the inventory reductions. Automotive and industrial sales also fell.
For fiscal 2025, the chipmaker is budgeting spending on new plants and equipment of US$14 billion. That amount includes a reduction in its planned outlay on new production for storage chips.
Memory chip makers, long accustomed to a boom-and-bust industry, are hoping for sustained demand for a new type of product called high-bandwidth memory. That technology is highly prized by makers of AI computing systems, letting Micron and other memory companies command higher prices, though it is complex to produce and deploy.
Other types of memory are still subject to large swings in price depending on the balance of supply and demand. But the three main memory companies – Micron and South Korean rivals SK Hynix and Samsung Electronics – have been more disciplined in adding new production. That means problems with inventory gluts will not be as painful as in the past, Micron has said.
As recently as 2023, the company was reporting billions of US dollars of net losses when prices slumped below the cost of production.
Micron makes dynamic random access memory, or Dram, a type of chip that temporarily holds information and works alongside processors from Nvidia, Intel and Advanced Micro Devices. It also make Nand flash memory – semiconductors that store information in everything from data-centre computers to smartphones. BLOOMBERG
