The biggest US manufacturer of memory chips, Bloomberg -- Micron Technology Inc., gave a weak forecast for the current period, as consumers cut back on spending on computers and phones.
Micron said in a statement Thursday that sales will be $7.2 billion in its fourth quarter. According to Bloomberg, the average analyst estimate of $9.14 billion is higher than the average analyst estimate of $9.14 billion. The company said that the profit will be close to $1.63 a share, well short of the $2.57 predicted by analysts.
The outlook reflects a slowdown for two key markets for Micron's memory chips: computers and smartphones. Consumers and businesses have been reining in spending because of concerns that the major world economies are headed for a recession.
In a statement from Sanjay Mehrotra, the industry demand environment has weakened recently, and we are taking action to moderate our supply growth in fiscal 2023, Chief Executive Officer Sanjay Mehrotra said. That means that the company plans to use stockpiles to fill orders rather than increase its production, and will spend less on new plants and equipment.
Micron's shares fell by more than 8% in extended trading after the report, before recovering to a decline of about 3%. They had lost 41% this year through the close, part of a rout for semiconductor stocks that had rallied over the last five years.
Net income was $2.63 billion, or $2.34 a share. Profit and sales were in line with analysts' predictions.
Micron's memory chips perform a crucial role in electronic devices - one that has grown as the amount of data generated has accelerated. As the trend continues, Mehrotra has argued that more money will flow to its category of chips.
The US company competes with South Korea's Samsung Electronics Co. and SK Hynix Inc. as well as Japan's Kioxia Holdings Corp. in a market that has historically been perilous and unpredictable. Many of their products are sold as interchangeable commodities, which can suffer rapid price fluctuations - sometimes trading for less than they cost to produce.
DRAM chips hold information temporarily, helping processors crunch data. Nand flash memory is used as a permanent storage in phones and computers. Micron, based in Boise, Idaho, is a smaller rival to Samsung in both types of chips, with the South Korean company dominating the industry.
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