Micron Technology, the largest American manufacturer of memory chips, is under pressure. After a disappointing sales forecast, the stock dropped 11% in after-hours trading. The main reason? A persistent slump in consumer markets – smartphones and PCs, which normally account for the majority of chip demand, are falling short of expectations.
The numbers speak for themselves: Micron forecasts revenue of around 7.9 billion US dollars for the second fiscal quarter. Analysts had expected 8.99 billion US dollars – a gaping hole of over one billion dollars. The expected profit of a maximum of 1.53 US dollars per share also falls significantly short of the forecast of 1.92 US dollars.
AI as a Ray of Hope – but Not Enough
At first glance, it sounds like a success story: Micron reports that revenue from AI-related components increased by an impressive 400% in the last quarter. This area now accounts for more than half of total revenue. However, the euphoria is dampened by weakness in traditional markets.
While consumer-oriented markets are weaker in the short term, we expect growth in the second half of our fiscal year," emphasized CEO Sanjay Mehrotra in a statement. However, the reality shows that inventory at customers is depleting more slowly than expected, further suppressing demand.
Consumer Markets: A Review and a Gloomy Outlook
The mobile sector is particularly hard hit: A decline of 19% compared to the previous quarter. The PC market also disappoints, although Micron hopes to see moderate growth of 5% by 2025 – with a boost only in the second half of the year.
Another reason for the sluggish development: Consumers are updating their devices more slowly than expected. The pandemic euphoria, when tech upgrades flourished, seems to have finally dissipated. It looks similarly bleak in the automotive and industrial sectors, where declines in sales are also noticeable.
A New Hope: High-Bandwidth Memory
But there is a silver lining: High-Bandwidth Memory (HBM), a new generation of memory technology essential in AI systems. These chips are complex to produce but can command higher prices and could stabilize the industry in the long term.
Micron is investing heavily in this future technology: For the fiscal year 2025, the company plans to invest $14 billion in new facilities and equipment, despite cuts in spending on traditional memory chips.
Competition: Discipline Instead of Price War
An interesting trend is emerging: Micron and its competitors SK Hynix and Samsung are showing unusual restraint in production expansion. This discipline could help curb the dreaded price fluctuations of the past. But the memory of 2023, when Micron still had to accept billions in losses due to falling prices, is still fresh.
Micron's Risk: Dependency on the Boom-and-Bust Cycle
Micron masters two key technologies: DRAM, which temporarily stores information and works in collaboration with processors from Nvidia or Intel, as well as NAND flash, which permanently stores data. However, both technologies remain extremely susceptible to supply-demand fluctuations.
The crucial question remains: Can Micron overcome the reliance on weakening consumer markets and benefit from the AI revolution? Or will the boom-and-bust dynamics of the chip industry continue to dominate? The next quarters will be decisive – for Micron and the entire industry.
