By Chavi Mehta and Jane Lanhee Lee
(Reuters) -Memory chipmaker Micron Technology forecast first-quarter revenue below Wall Street estimates on Thursday as demand from its key end markets including PCs and smartphones worsen amid rising worries about an economic downturn.
To cope with the tougher market conditions, Micron also said it would cut its investments.
“We are taking decisive steps to reduce our supply growth including a nearly 50% wafer fab equipment capex cut versus last year,” said Chief Executive Sanjay Mehrotra in its earnings statement.
Shares of the Boise, Idaho-based company, which have roughly declined 45% so far this year on fears of a further slowdown in demand for semiconductors, fell 2.4% in extended trading. Chip equipment maker Applied Materials Inc also dropped 2% in after hours on the news.
Micron was the first to sound a severe warning bell for the entire semiconductor industry during its third quarter earnings report late June.
Since then, the situation has only worsened with the weakness seeping from consumer electronics to end markets such as data centers and cloud as a global economic slowdown caused by red-hot inflation, rising interest rates, geopolitical tensions and COVID-19 lockdowns in China has led businesses and consumers alike to rein in expenses.
Spiraling demand had led to inventory build ups, which in turn has forced companies to drive down the prices of chips. Research firm TrendForce forecast a 13% to 18% drop in DRAM chips pricing, which makes over 70% of Micron’s revenue, while also forecasting a 15% to 20% drop in NAND memory pricing for the last three months of 2022.
The company forecast adjusted current-quarter revenue to be $4.25 billion, plus or minus $250 million. Analysts on average expected revenue to be $5.62 billion, according Refinitiv data.
Adjusted revenue for the quarter ended Sept. 1 was $6.64 billion. Analysts on average expected revenue to be $6.68 billion.
(Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee; Editing by Krishna Chandra Eluri and Marguerita Choy)
