October 1, 2022

Raven Tribune

Complete News World

Micron's warning of weak demand shakes chip stocks

Micron’s warning of weak demand shakes chip stocks

A solid-state drive is presented to Micron Technology data center customers at a product launch event in San Francisco, US, October 24, 2019. REUTERS / Stephen Nellis / File Photo

Register now to get free unlimited access to Reuters.com

Aug 9 (Reuters) – Micron Technology Inc (MU.O) It lowered its revenue forecast for the current quarter on Tuesday and warned of negative free cash flow in the next three months as customer inventories build up amid waning demand for chips used in computers and smartphones.

The bleak forecast comes a day after Nvidia (NVDA.O) It warned of weakness in the gaming arena, adding to fears of the first downturn in the chip industry since 2019.

This sent Micron shares and the Philadelphia SE Semiconductor Index (.sox) It fell 5.7% and 4.3%, as investors looked beyond US President Joe Biden’s signing of a landmark $52.7 billion bill to support semiconductor production and research. Micron CEO Sanjay Mehrotra was among those present at the signing. Read more

Register now to get free unlimited access to Reuters.com

Micron also announced a $40 billion investment in memory chip manufacturing in the United States, but said capital expenditures are expected to decline in fiscal year 2023 from 2022.

Fourth-quarter revenue is likely to come in at or below the bottom line of the company’s previous forecast. Its previous range of $6.8 billion to $7.6 billion was below Wall Street’s targets in June. Read more

Micron, which last reported negative free cash flow in 2020 during the early days of the pandemic, warned that it could see significant sequential declines in revenue and margins in the first quarter due to lower shipments.

See also  We Have Hundreds of Blockchain Patents - But Regulations Won't Let Us Participate in Crypto - Bitcoin News Regulatory

Higher prices have forced consumers to reduce their spending on electronic devices, leading to a reassessment of production at companies with surplus stocks of chips and other components in anticipation of strong post-pandemic demand.

PC shipments are expected to decline 9.5% this year, according to information technology research firm Gartner.

This, along with lower demand for smartphones, has led to demand-related warnings from Micron and other companies including Intel. (INTC.O)Advanced Micro Devices (AMD.O)Qualcomm (QCOM.O) And Nvidia Inc (NVDA.O).

CFO Mark Murphy said at the Keybanc Technology Leadership Forum, Tuesday, that Micron is also seeing cloud, industry and automotive customers make “inventory adjustments” due to the overall uncertainty.

“It’s a tough setup for this quarter.”

Register now to get free unlimited access to Reuters.com

Additional reporting by Shafi Mehta in Bengaluru; Editing by Anil de Silva and Devika Siamnath

Our criteria: Thomson Reuters Trust Principles.