Micron Technology Inc warned that it would need to spend heavily on production to meet burgeoning demand, overshadowing an upbeat forecast from the largest US maker of computer memory chips.
Capital spending would exceed US$25 billion this fiscal year, which runs through August, the company said as part of its quarterly report on Wednesday. Analysts had estimated US$22.4 billion.
Micron added that next year’s expenditures would increase more than US$10 billion from the prior year.
Photo: Bloomberg
“We project our fiscal 2027 capex to step up meaningfully,” chief executive officer Sanjay Mehrotra said during a conference call.
The heavy spending reflects the cost of keeping up with an insatiable appetite for Micron’s memory chips, especially high-bandwidth components used in artificial intelligence (AI) computing.
Fiscal third-quarter revenue would be approximately US$33.5 billion, the Idaho-based company said.
Analysts estimated US$23.7 billion on average for the period. Excluding some items, profit would be about US$19.15 a share, compared with a projection of US$11.29.
Memory prices have been soaring because of shortages fueled by AI computing demand. High-bandwidth memory is critical to the data transfer needed for training and running AI models. That has led memory makers to allocate more production to these higher-margin orders, hurting supply of other types of memory and causing price spikes.
Micron shares had risen 62 percent this year heading into the report, making it the best-performing stock on the closely watched Philadelphia Stock Exchange Semiconductor Index.
For the fiscal second quarter, which ended on Feb. 26, sales nearly tripled to US$23.9 billion. Earnings climbed to US$12.20 per share. Analysts had estimated US$19.7 billion in revenue and US$9 per share in profit on average.
The company has benefited from an unprecedented data center build-out. Their market is dominated by just three providers — Micron, Samsung Electronics Co and SK Hynix Inc — and demand is expected to stay strong for years to come.
Memory shortages have been good for Micron and its peers, but hard on the broader technology industry and consumers. Supply constraints have raised prices and lowered the number of smartphones and computers slated to ship this year.
HP Inc last month said that the company has seen memory prices roughly double this quarter from the previous period.
The global shortage is likely to persist for another four to five years because of endemic constraints in semiconductor production, SK Group chairman Chey Tae-won said this week.
In the AI market, Micron is working to ramp up production of new high-bandwidth memory, or HBM4. A big question is how much Nvidia Corp would rely on Micron for that component.
Any decision by Nvidia to limit its use of Micron for the new Vera Rubin line — and instead favor rival products — would be a significant blow.
Nvidia is the dominant maker of AI accelerators, the main processors used to power AI. Memory components from Micron and its competitors assist those chips in holding and managing data.
Last month, Micron shares surged after chief financial officer Mark Murphy assured investors that the company is producing HBM4 in high volumes.
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