Micron Technology Inc, the largest US maker of memory chips, reported fiscal third-quarter profit and sales that exceeded analysts’ estimates as limited supply industrywide bolstered prices.
Net income rose to US$806 million, or US$0.68 a share, from US$43 million, or US$0.04, a year earlier, the Boise, Idaho-based company said in a statement yesterday. Revenue in the three months ended May 29 climbed 72 percent to US$3.98 billion. Analysts on average had projected earnings of US$0.61 a share on sales of US$3.9 billion.
After years of losses in a market where prices fluctuated along with unsteady supply and demand, the company has bought out competitors to help balance the industry and prevent gluts. This year, Micron and rivals such as Samsung Electronics Co are also benefiting from increased corporate demand for computers, giving prices a further boost.
“The bigger picture is all about supply constraints,” Sanford C. Bernstein analyst Mark Newman said.
Newman added that prices are gaining for both computer memory and chips used as storage in mobile phones and tablets.
Micron’s stock, up 44 percent this year, traded as high as US$32 in extended trading following the announcement. It had earlier declined 1.9 percent to US$31.26 at the close in New York.
Micron is reporting earnings less than two weeks after Intel Corp, the world’s largest chipmaker, raised its projection for second-quarter revenue on stronger demand for corporate PCs. The upbeat forecast bolstered optimism for results at other PC-related companies.
The company is getting increasing demand for all of its products, including chips for server computers, networking equipment and mobile phones, Micron president Mark Adams said in a telephone interview.
“We continue to feel pretty good about the demand profile of the business,” Adams said.
Micron has no plans to build factories, which is limiting supply. New manufacturing plants would soon become obsolete as the industry shifts to new types of memory chips, Micron CEO Mark Durcan said on a conference call with analysts.
The company anticipates that its competitors will also hold off on expansion, he said.
Micron, which does not forecast profit or sales, said DRAM prices are on course to be flat this quarter. Improvements in production will lower the cost by “low single digits,” in percentage terms, the company said.
Micron is the only remaining US manufacturer of DRAM chips. The purchase of Japanese rival Elpida Memory Inc last year gave Micron a bigger chunk of the DRAM market, helping it gain scale and providing a greater return on its technology investments.
Acquiring Elpida also limited the number of chipmakers building new plants and curtailed most of the industry’s output to just three companies: Samsung Electronics Co, SK Hynix Inc and Micron.
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