Micron Technology Inc, the largest US maker of computer memory chips, said it is cutting production in response to a slump in demand for its key products, taking quick action to ease the impact on revenue.
The company also said it would reduce its investment in improving manufacturing by about US$500 million.
Revenue in the current period will be about US$4.8 billion, plus or minus US$200 million, the Boise, Idaho-based company said on Wednesday on a conference call.
That compares with an average analyst prediction of US$5.34 billion. The middle of that range would represent a sales decline of 38 percent.
Micron projected profit of US$0.85 a share, plus or minus US$0.10, in the period ending in May.
Profit, excluding certain items, was US$1.71 a share in the fiscal second quarter. Revenue fell 21 percent to US$5.84 billion in the period ended on Feb. 28.
Analysts, on average, projected profit of US$1.65 a share on sales of US$5.83 billion, according to data compiled by Bloomberg.
That sales decline was the first in more than two years.
Micron makes chips used as the main memory in computers and as storage in mobile devices. The company said it would idle 5 percent of production for DRAM and NAND memory chips, because of weaker demand and reduce its planned capital expenses in the fiscal year by about US$9 billion.
Micron expects that inventory reductions by its customers would continue until the middle of the year, chief executive officer Sanjay Mehrotra said in an interview.
The company was already seeing evidence that clients are working through stockpiles of unused parts, he said.
In “the second half we will have an improved demand environment,” he said. “Despite very steep price declines, Micron reported very healthy profitability.”
“Micron is a very different Micron now, in terms of closing the gap with competitors” on costs, he said.
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