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(Bloomberg) — Micron Technology Inc. (MU), the largest US maker of computer-memory chips, is set for its biggest share decline in more than four years after its revenue forecast missed projections, hurt by sluggish demand for smartphones and personal computers.
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Sales will be roughly $7.9 billion in the fiscal second quarter, which runs through February, the company said in a statement Wednesday. That compares with an average analyst estimate of $8.99 billion. Profit will be no more than $1.53 a share, minus certain items, well short of the $1.92 projection.
Though Micron is seeing strong orders for components used in artificial intelligence computing, it still faces lackluster demand from makers of phones and PCs — two markets that consume the majority of its chip volume.
Micron shares, up 22% this year through Wednesday’s close, tumbled 15% in premarket trading before New York exchanges open on Thursday. If the decline holds, it’ll be the biggest intraday drop since March 2020.
“While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year,” Chief Executive Officer Sanjay Mehrotra said in the statement.
In the fiscal first quarter, which ended Nov. 28, sales rose 84% to $8.71 billion. Excluding certain items, profit was $1.79 per share. Analysts had predicted a sales of $8.71 billion and profit of $1.76 on average.
The company said that data center-related revenue grew 400% in the quarter from a year earlier. That unit now accounts for more than half of the company’s total sales. Still, the surge wasn’t enough to offset weak orders from makers of devices aimed at consumers, Micron said.
In that area, customers have been working through a backlog of inventory.
“We are now seeing a more pronounced impact of customer inventory reductions,” Micron said in an investor presentation. “We expect this adjustment period to be relatively brief and anticipate customer inventories reaching healthier levels by spring.”
The company predicts that the PC market will grow around 5% in 2025, with most of the expansion coming in the second half. It commented that owners of the devices are updating them more slowly than anticipated.
Micron said that its mobile business unit suffered a 19% sequential decline, brought on by the inventory reductions. Automotive and industrial sales also fell.
For fiscal 2025, the chipmaker is budgeting spending on new plants and equipment of $14 billion. That amount includes a reduction in its planned outlay on new production for storage chips.