Micron Technology Faces Significant Share Decline Amid Sluggish Demand
The largest US maker of computer-memory chips, Micron Technology Inc., is bracing for its biggest share decline in over four years. This comes after the company’s revenue forecast fell short of projections, largely due to weak demand for smartphones and personal computers.
Sluggish Demand Takes a Toll
Micron’s sales are expected to reach approximately $7.9 billion in the fiscal second quarter, which runs through February. This is significantly lower than the average analyst estimate of $8.99 billion. Moreover, profit is projected to be no more than $1.53 a share, minus certain items, well below the $1.92 projection.
Strong AI Demand Can’t Offset Weak PC and Smartphone Sales
Although Micron is seeing strong orders for components used in artificial intelligence computing, the company still faces lackluster demand from makers of phones and PCs. These two markets consume the majority of its chip volume, making it challenging for Micron to offset the decline.
CEO Optimistic About Future Growth
Chief Executive Officer Sanjay Mehrotra remains optimistic, stating that “while consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year.” This sentiment is echoed in Micron’s prediction that the PC market will grow around 5% in 2025, with most of the expansion coming in the second half.
Data Center-Related Revenue Soars
In the fiscal first quarter, data center-related revenue grew an impressive 400% from a year earlier. This unit now accounts for more than half of the company’s total sales. However, this surge wasn’t enough to offset weak orders from makers of devices aimed at consumers, who have been working through a backlog of inventory.
Inventory Reductions Impact Mobile Business
Micron’s mobile business unit suffered a 19% sequential decline, brought on by the inventory reductions. Automotive and industrial sales also fell. The company expects this adjustment period to be relatively brief and anticipates customer inventories reaching healthier levels by spring.
Fiscal 2025 Budget and High-Bandwidth Memory
For fiscal 2025, Micron is budgeting spending on new plants and equipment of $14 billion. This amount includes a reduction in its planned outlay on new production for storage chips. The company is hoping for sustained demand for high-bandwidth memory, a technology highly prized by makers of AI computing systems.
Memory-Chip Makers’ Discipline Pays Off
Micron and its South Korean rivals, SK Hynix Inc. and Samsung Electronics Co., have been more disciplined in adding new production. This means problems with inventory gluts won’t be as painful as in the past. As a result, Micron has avoided reporting billions of dollars of net losses when prices slumped below the cost of production.
Leave a Reply