Fri, Dec 20, 2024 page9

• Micron Technology drops after sluggish PC, cellphone demand hurts forecast

  • Bloomberg
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  Micron Technology Inc, 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.

  Sales would be about US$7.9 billion in the fiscal second quarter, which runs through February, the company said in a statement on Wednesday.

  That compares with an average analyst estimate of US$8.99 billion. Profit would be no more than US$1.53 a share, minus certain items, well short of the US$1.92 projection.

  

  Micron Technology’s. booth is pictured at the Semicon Japan exhibition in Tokyo on Dec. 11.

  Photo: Bloomberg

  Although Micron is seeing strong orders for components used in artificial intelligence (AI) computing, it still faces lackluster demand from makers of cellphones and PCs — two markets that consume the majority of its chip volume.

  Micron shares, up 22 percent this year through Wednesday’s close, tumbled 11 percent 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,” Micron chief executive officer Sanjay Mehrotra said in the statement.

  In the fiscal first quarter, which ended on Nov. 28, sales rose 84 percent to US$8.71 billion. Excluding certain items, profit was US$1.79 per share. Analysts had predicted a sales of US$8.71 billion and profit of US$1.76 on average.

  The company said that data center-related revenue grew 400 percent 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,” it added.

  The company predicts that the PC market would grow about 5 percent next year, 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 saw a 19 percent sequential decline, brought on by the inventory reductions. Automotive and industrial sales also fell.

  For the next fiscal year, 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.

  Memorychip 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.

  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 Inc and Samsung Electronics Co — have been more disciplined in adding new production.

  That means problems with inventory gluts would not be as painful as in the past, Micron has said.

  As recently as last year, the company was reporting billions of dollars of net losses when prices slumped below the cost of production.
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