Micron Technology Inc on Wednesday predicted a steeper loss than anticipated in the current quarter, indicating that an industry slump is still weighing on the largest US maker of memory chips.
The company projected a fiscal first-quarter loss of as much as US$1.14 a share, excluding some items. Analysts had estimated a US$0.96 loss. On the bright side, revenue is expected to start recovering in the period. Micron predicted sales of US$4.2 billion to US$4.6 billion, compared with an estimate of US$4.21 billion.
For Micron and competitors Samsung Electronics Co and SK Hynix Inc, this year has been brutal. Customers in their main markets — PCs and smartphones — have slashed orders as they cope with lackluster demand and stockpiles of excess parts.
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Micron CEO Sanjay Mehrotra said the firm has taken “decisive actions on supply and cost,” which would help the company as the market for memory chips recovers next year and then reaches record levels again in 2025.
The burden of excess inventory has now lifted and Micron’s customers, apart from those who make data center servers, are ordering at levels that reflect demand for their products, Mehrotra said in an interview. In some areas, devices makers are now increasing the amount of memory and storage put into each product.
Prices for Micron’s products are going up, and the rate of the price jump is increasing, he said.
“This is how we’ll enter 2024,” Mehrotra added.
The company’s latest forecast suggests sales would begin to grow again in the fiscal first quarter, which runs through November.
Yet one additional obstacle that Micron faces is Beijing’s designation of its products as a security risk. That has already cut into the US company’s revenue in China — the largest market for semiconductors — in what management has previously called a “significant headwind.”
Micron expects the industry outlook to brighten considerably by 2025 — especially as artificial intelligence systems demand new types of more expensive memory chips.
In the interim, the outlook remains mixed. In traditional servers — the computers that are still the mainstay of most data centers — demand remains “lackluster,” Mehrotra said.
Personal computers and smartphones should return to growth next year, with units increasing by a percentage in the low to mid-single digits, Micron said.
To cope with the slowdown, Micron and its peers reined in production, severely reducing supply and helping prices bottom out. It expects to be “significantly” below peak output last year for the foreseeable future.
The company plans to continue to run factories at less than full capacity well into next year. Micron would also further reduce spending on new equipment next year.
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