The largest US maker of memory chips, Micron Technologies Inc. (NASDAQ: MU) extends its positive momentum in pre session on Thursday following 7.19% rally in last close by providing a better-than-anticipated prognosis for the quarter, Micron (MU) increased its value, igniting optimism that the harsh industry downturn may be nearing its end.
According to a statement released by the corporation on Tuesday, sales might reach $3.9 billion in the third quarter of this fiscal year. This contrasts with the $3.75 billion average expert projection. Further job losses were also announced by the corporation. In premarket trade, shares were up as high as 3.2% at $61.18.
Customer inventories are improving, and according to Chief Executive Officer Sanjay Mehrotra, “we foresee steady improvements to the industry’s supply-demand balance.” In “a tough market environment,” he added, the business produced second-quarter results that were in line with its estimates.
According to the estimate, the memory chip business may be ready to rebound after a challenging period. A sharp decline in consumer demand over the previous year prompted Micron’s clients to reduce their purchases. They have been working through a stockpile of surplus inventory rather than purchasing new chips, a problem that the memory business has historically faced after boom years.
German chipmaker Infineon Technologies AG upped its own projections for the quarter and the full year only hours before Micron issued its outlook, citing stronger-than-expected sales of automotive and industrial goods. Several chipmakers’ profitability have increased as demand, notably from the car sector, has helped them recover from Covid 19-era shortages and the worldwide unrest brought on by the Ukrainian conflict.
In the current period, the business expects to lose around $1.58 per share, which includes a 45-cent effect from $500 million in inventory write-downs. A loss of 84 cents per share was what analysts predicted. Increasing inflation has led to sluggish consumer spending, which is a problem for manufacturers of phones and computers. Because products from competing firms are directly interchangeable and are exchanged like commodities, Micron’s chips, which store and help handle information in such devices, are particularly susceptible to fluctuations in demand.
Rapid shifts in the supply-demand equation may force manufacturers to sell their products for less than what it actually costs to produce them. Even though Micron sold more computer memory chips during the most recent quarter, revenue nonetheless decreased as a result of 20% pricing declines.
Micron announced cost-cutting measures three months ago, including a 10% employment reduction and a halt to new manufacturing investment. Profitability would remain challenging, despite the revenue situation expected to improve in the second part of the year, it had stated.
The firm, which is situated in Boise, Idaho, said on Tuesday that its overall staff cut will now be 15%. According to presentation slides published on its website, Micron is cutting its expenditure on new plants and equipment by 40% to $7 billion this year.
The business anticipates that in 2023, demand will increase more quickly than supply. Since inventories has peaked and end markets like smartphones and personal computers are decreasing less sharply than anticipated, Micron anticipates a shift to sequential revenue growth. According to Micron, its data center division hit bottom in the second fiscal quarter.
