(Bloomberg) — Micron Technology Inc., the biggest US maker of computer memory chips, declined in late trading after its forecast disillusioned investors looking for an even bigger payoff from artificial intelligence mania.
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Fiscal fourth-quarter sales might be $7.4 billion to $7.8 billion, the corporate said in a press release Wednesday. While the typical analyst estimate was $7.58 billion, some projections were above $8 billion. Profit might be about $1.08 a share, minus certain items, versus a projection of $1.02.
Though Micron is getting a lift from the AI computing boom, demand continues to be sluggish in its traditional markets, reminiscent of personal computers and smartphones. Those areas are only starting to get better from a historic slump last 12 months.
The shares fell about 7% in prolonged trading. Micron had rallied 67% this 12 months before the close, lifted by investor expectations that it should be one among the principal beneficiaries of AI spending.
Within the third quarter, which ended May 30, Micron’s revenue rose 82% to $6.81 billion. The Boise, Idaho-based company reported a profit of 62 cents a share, excluding certain items. That compares with estimated sales of $6.67 billion and a projected profit of fifty cents a share.
Micron sells an important component of AI hardware — high-bandwidth memory — that works with processors from Nvidia Corp. to crunch data. The memory, often called HBM, can serve up information more quickly, helping computing systems develop and run AI models.
Micron sold $100 million of latest HBM3e chips within the just-completed quarter and predicts that total sales of high-bandwidth products will rise to “several hundred million dollars” in the present period. It should then increase to multiple billions in fiscal 2025, which runs through August of that 12 months.
Ramping up production of this latest memory has been a challenge. As a result of the problem of accelerating factory output — and qualifying the chips to work with computer systems — supply effectively has a “hand brake on it,” Manish Bhatia, Micron’s executive vice chairman of world operations, said in an interview.
In light of those constraints, the corporate expects pricing to steadily increase. There’s also less probability of the memory market returning to a list glut, a problem that has long plagued the industry.
The corporate is on target to spend about $8 billion on latest plants and equipment in fiscal 2024. That budget will increase materially next 12 months in support of construction at sites in Idaho and in Latest York state.
The Idaho facility won’t contribute to produce until fiscal 2027, with the Latest York site coming the next 12 months, Micron said. However the timing may depend upon Micron’s evaluation of supply and demand.
In a slide presentation, the corporate said that PC-industry unit sales remain on target to extend by a percentage within the low single digits in calendar 2024. Smartphone units will gain by a low- to mid-single-digit range. The corporate expects AI features to assist spur demand for phones and PCs heading into 2025.
Chief Executive Officer Sanjay Mehrotra reiterated a view that 2024 would mark a rebound for the memory chip industry, with record sales coming in 2025.
Micron competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. in selling chips that provide short-term memory in computers and phones. Additionally they makes flash memory, which handles longer-term storage in those devices.
(Updates with comments from executive in sixth paragraph.)
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