Shares of Micron Technology, the largest memory chip manufacturer in the United States, turned out on a downward trajectory after the company’s forecast disappointed investors who had expected greater benefits from the so-called artificial intelligence boom.
The firm said in a statement released last Wednesday, June 26, that the brand’s fiscal fourth-quarter sales are expected to range from $7.4 billion to $7.8 billion. It is worth noting that a kind of consensus forecast was circulated among analysts, which provided that the mentioned figure would reach $7.58 billion. At the same time, there were separate expectations that Boise, Idaho-based Micron would post sales expectations of more than $8 billion in its fiscal fourth quarter.
The company’s profit for the mentioned period, management expects, will be about $1.08 per share excluding certain items, compared with analysts’ forecast of $1.02.
The so-called artificial intelligence boom, which is a global tendency, is stimulating Micron’s business, but at the same time, demand remains low in traditional markets, including personal computers and smartphones. The markets mentioned are currently on a gradual recovery path, but this is only the beginning of the process of making up for losses recorded against the backdrop of last year’s record downturn.
Micron shares, listed on Nasdaq, fell about 7% in extended trading as investors expected the artificial intelligence boom to have a larger impact on the company’s financial performance in the fiscal fourth quarter. It is worth noting that since the beginning of the current year, the firm’s securities have risen in price by 67%. This result was also driven by investor sentiment, which expected Micron to be a stronger beneficiary of the rapid growth of consumer interest in artificial intelligence at the global level.
In the fiscal third quarter, which ended May 30, the company’s revenue reached $6.81 billion. This figure is 82% higher than the result for the same period last year. The company also reported a profit of 62 cents per share, excluding certain items.
Micron is developing high-bandwidth memory (HBM) chips. These products are critical hardware components for artificial intelligence. Microcircuits, developed by the company, work with processors from Nvidia Corp to crunch data. HBM chips are characterized by a higher processing speed of information arrays. Also, these microcircuits help computing systems elaborate and run artificial intelligence models.
During the quarter ended May 30, Micron sold $100 million worth of new HBM3e chips. The company also forecasts that total sales of high-bandwidth products will reach several hundred million dollars in the current quarter. Moreover, the firm expects the corresponding figure to rise to several billion dollars for fiscal year 2025, which will last until August of the corresponding calendar year.
Increasing the production of HBM chips has been a challenge for Micron. During the conversation with the media, the company’s executive vice president for global operations, Manish Bhatia, said that the difficulty of increasing the number of manufacturing activities in factories and qualifying microcircuits to work with computer systems is a handbrake to achieve the mentioned goal. Against the backdrop of the mentioned realities, Micron expects that prices for the specified products will show steady growth. It also reduces the likelihood of a scenario in which an inventory glut situation will again form on the memory chip market, which is a problem that has long plagued the industry.
Micron plans to spend about $8 billion on new plants and equipment in fiscal 2024. The corresponding spending will be significantly increased next year to fund the construction of facilities in Idaho and New York State.
Micron says the production site in Idaho will not contribute to increased shipments until fiscal 2027. The New York site is coming the following year. In this case, the timing may vary depending on the analysis of supply and demand.
Micron expects sales in the personal computer market to gradually increase throughout the 2024 calendar year. The company also predicts that smartphone sales will rise in the low to mid-single digits. Micron suggests that artificial intelligence features could increase demand for personal computers and smartphones in 2025.
Micron chief executive Sanjay Mehrotra believes that 2024 will be a period of growth in the memory chip industry, and record sales will be fixed in the corresponding market in 2025.
The company competes with South Korean firms Samsung Electronics and SK Hynix in the sales area of microcircuits, which provide short-term memory in computers and smartphones.
As we have reported earlier, Japan Provides Subsidies for Micron Plant.
