Chipmaker Micron tops revenue estimates on demand from booming AI
4:30 pm Wednesday, June 28th, 2023
(Reuters) -Micron Technology beat analysts’ estimates for third-quarter revenue on Wednesday, driven by demand for its memory chips from the fast-growing artificial intelligence sector.
Shares of the company rose about 3% in trading after the bell. They have gained about 34% this year.
CEO Sanjay Mehrotra said customers continued to reduce their excess inventory in the quarter with inventories in the PC and smartphone segments being close to normal levels.
As a result, Micron is seeing improved pricing trends and increased confidence that the industry has passed the bottom for growth and revenue, he added.
Micron reported revenue of $3.75 billion for the quarter ended May 31, compared with estimates of $3.65 billion, according to IBES data from Refinitiv.
Soaring demand from the generative AI sector, which has garnered heightened investor attention following the viral popularity of OpenAI’s ChatGPT, has helped prop up sales amid weakness in Micron’s traditional smartphone and PC markets.
The proliferation of generative AI will likely fuel a jump in demand for data to feed large language models and could boost the need for more storage chips, analysts have said.
U.S. chipmakers are also being caught up in the U.S.-China technology spat. Last month, China’s cyberspace regulator failed Micron’s products in a security review and barred purchases by operators of key infrastructure.
Micron, the biggest U.S. memory chipmaker, has said that it expects the ban to impact about half of its revenue from China-headquartered firms, which equates to a low-double-digit percentage of total revenue.
The company reiterated that several of its customers including phone manufacturers have been contacted by representatives of the Chinese government about the future use of the company’s products.
Micron fourth-quarter revenue of $3.9 billion plus or minus $200 million for the quarter ending Aug. 31, largely in line with expectations.
The company, which makes DRAM and NAND flash memory chips, reported a net loss of $1.9 billion for the third quarter, compared with a profit of $2.63 billion a year earlier.
(Reporting by Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila)
