(Bloomberg) — Micron Technology Inc., the largest U.S. maker of memory chips, plunged in late trading after giving a lackluster forecast, a sign that booming demand for its computer and phone semiconductors may be waning.Sales will be about $7.65 billion in the period ending in November, Micron said Tuesday in a statement. That compares with an average analyst estimate of $8.57 billion, according to data compiled by Bloomberg. Excluding certain items, profit will be $2 to $2.10 a share, compared with a projection of $2.56.
Most Read from Bloomberg
The dimmer outlook suggests that slowing demand among personal-computer makers is taking a toll. The memory chip industry is known for its dramatic boom-and-bust cycles, which make earnings hard to predict. But Micron Chief Executive Officer Sanjay Mehrotra has argued that the wild swings between shortages and gluts have moderated because a wider variety of devices use the company’s chips now.
The stock fell as much as 7% to $67.99 in extended trading following the announcement. It had been down 2.8% this year, compared with a 19% advance by the Philadelphia Stock Exchange Semiconductor Index.
Even before Tuesday’s news, Micron’s shares have lagged behind an overall run-up on chip stocks. Investors have remained cautious about the long-term prospects for companies in historically the most volatile part of the $400 billion industry.
Micron is coming off a surge in fiscal 2021, when heavy demand allowed the company to charge more. Its sales were $27.7 billion in the period, a record level and more than twice the total from five years ago. Over the years, Micron has reported sales declines of more than 20% and gains of as much as 80%.
In the fiscal fourth quarter, Micron posted revenue of $8.27 billion, up 36% from a year earlier. Net income was $2.72 billion, or $2.39 a share, in the period, which ended Sept. 2. Micron is part of a global semiconductor supply chain that’s struggled to keep up with the pace of orders — partly due to the pandemic. The shift to working from home spurred the need for technology, and production has also been disrupted by new flare-ups of Covid-19, which has caused factory shutdowns in hubs such as Malaysia.
Micron competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc., and Japan’s Kioxia Holdings Corp. in a memory-chip market that has consolidated over the past decade. Samsung dominates production of both major types of chips, making it the world’s second-largest overall chipmaker, behind Intel Corp. DRAM chips hold data temporarily, helping processors crunch data. Nand-style flash memory, meanwhile, acts as permanent storage in phones and computers.
(Updates with annual sales in fifth paragraph.)
Most Read from Bloomberg Businessweek
©2021 Bloomberg L.P.
