BANGALORE - Micron Technology beat estimates for third-quarter results on Wednesday, powered by demand for its memory chips from the rapidly growing artificial intelligence (AI) sector and an easing supply glut in its traditional PC and smartphone markets.
Shares of the company rose more than 2 per cent in trading after the bell.
They have gained 34 per cent in 2023 on bets that use of the company’s memory chips in generative AI services-related servers will skyrocket following the popularity of ChatGPT, OpenAI’s chatbot.
“The recent acceleration in the adoption of generative AI is driving higher-than-expected industry demand for memory and storage for AI servers, while traditional server demand for mainstream data centre applications continues to be lacklustre,” chief executive Sanjay Mehrotra said.
Customers continue to reduce excess inventory, leading to improved pricing trends and increased confidence that the industry has passed the bottom for growth and revenue, he added.
After a surge in demand during the Covid-19 pandemic, consumer spending on smartphones and personal computers hit a trough, driving down prices and causing a build-up of inventories.
“We believe the current memory industry inventory correction is now behind us,” said Summit Insights Group managing director Chan KinNgai.
Industry checks indicate some green shoots in the form of demand stabilisation, Mr Chan added, even as demand for PCs, smartphones and servers is expected to remain mixed in the second half of 2023.
Micron’s third-quarter revenue of US$3.75 billion (S$5.08 billion) beat estimates of US$3.65 billion, while fourth-quarter revenue forecast of about US$3.9 billion was largely in line with expectations, according to Refinitiv data.
The company’s adjusted net loss of US$1.43 per share was narrower than estimates for a US$1.58 per share loss.
Chipmakers are also caught up in the US-China technology spat, with the Biden administration reportedly considering updated restrictions designed to slow the flow of AI chips to China.
In May, China’s cyberspace regulator failed Micron’s products in a security review and barred purchases by operators of key infrastructure.
Micron, the biggest US memory chipmaker, reiterated on Wednesday that several of its customers have been contacted by Chinese government representatives about the future use of the company’s products.
The company has said up to half of its China market share is at risk due to the regulator’s decision.
“Our goal is to gain share in other parts of the market and retain our global share and this is not an instantaneous process, it takes time to play out,” chief business officer Sumit Sadana said. REUTERS
