Reminiscence-chip maker Micron Technology lower its current-quarter income forecast and warned of a destructive free money stream within the following quarter as demand for chips utilized in private computer systems and smartphones continues to drop.
Fourth-quarter income could are available at or beneath the low finish of its prior forecast, the corporate mentioned, sending its shares down about 5 % in premarket buying and selling. Its earlier estimate of $7.2 billion, plus or minus $400 million, missed Wall Road targets in June.
Micron, which final reported destructive free money stream in 2020 throughout the early days of the pandemic, warned it might see important sequential declines in income and margins in its first quarter attributable to a fall in shipments.
Rising inflation, the Ukraine disaster, and COVID curbs in key PC market China have damage demand and worsened provide snags pressuring the sector.
Micron additionally joined chip corporations Intel, Advanced Micro Devices, and Nvidia Corp in flagging an increase in buyer inventories.
“For the second half of the 12 months, the market will doubtless drop to a brand new decrease base stage—the third (calendar) quarter may very well be iffy relying on how a lot stock there may be to filter,” mentioned Dean McCarron, president of Mercury Research, which tracks market share amongst chipmakers.
Knowledge signifies the DRAM reminiscence market can be severely oversupplied no less than in 2023, in response to analysis agency TrendForce.
No. 2 reminiscence chipmaker SK Hynix Inc and Western Digital have warned of a slowing uptake from prospects as they brace for a possible recession. Weaker demand for smartphones can be affecting the sector.
Micron’s forecast lower comes after it introduced a $40 billion funding in reminiscence chip manufacturing, which might enhance its US market share from 2 % to 10 %.
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