Reminiscence chipmaker Micron expects income drop, expects AI to spice up gross sales in 2025 By Reuters

By Akash Sriram and Jane Lanhee Lee

(Reuters) -Micron Expertise Inc on Tuesday forecast third-quarter income would tumble practically 60% from a yr earlier however the steep drop was in keeping with Wall Road expectations and firm executives painted a rosy outlook for 2025 with synthetic intelligence boosting gross sales.

With a glut nonetheless nagging the chip trade, Micron expects the deepest income drop since 2001. Micron mentioned it might preserve investments at about $7 billion for fiscal yr 2023, the decrease finish of a beforehand said vary. It is going to goal a 15% headcount discount this yr, greater than its earlier 10% goal.

Micron shares in after hours buying and selling had been up about half a p.c.

Matt Bryson, Wedbush Securities chip analyst, mentioned the minimize in capital spending was a constructive for traders as it might “pull ahead the timing and breadth of a future restoration”.

Micron Expertise (NASDAQ:) President and CEO Sanjay Mehrotra advised analysts on an earnings name that he was assured concerning the long-term and mentioned the reminiscence chip trade would see a document calendar yr 2025 by way of market dimension.

“Once you take a look at the long run, it equals AI. And AI equals reminiscence, and Micron is effectively positioned with our know-how and product highway maps to handle the rising alternatives there,” he mentioned.

A proliferation of generative AI chatbots reminiscent of Microsoft (NASDAQ:) Corp-backed OpenAI’s ChatGPT has boosted demand for information facilities, mitigating the development of easing demand for chips. Analysts say the growth of generative AI may gas a bounce within the want for storage.

Sumit Sadana, Micron’s chief enterprise officer advised Reuters {that a} typical AI server has as much as eight instances the quantity of DRAM and thrice the quantity of NAND {that a} regular server has. DRAM is reminiscence that erases when the machine is turned off whereas NAND shops reminiscence even when the machine is off.

Sadana mentioned that regardless of the near-term challenges, the brand new factories in Idaho and New York are on schedule to start out development this yr and subsequent yr respectively. “We’re making good progress by way of our chips utility,” he mentioned about making use of for funding for these plant by the CHIPS and Science Act.

Micron mentioned buyer inventories are bettering and it expects gradual enhancements to the trade’s supply-demand steadiness. It additionally mentioned gross margins that had been hit by the chip glut will proceed to enhance.

The corporate expects third-quarter income of $3.70 billion plus or minus $200 million, matching analysts’ common estimate, in response to Refinitiv information.

Income for the second quarter fell by about 53% to $3.69 billion and the corporate misplaced $2.3 billion, in contrast with a revenue of $2.26 billion a yr earlier.

Micron expects to incur a lack of $1.58 per share, excluding objects, plus or minus 7 cents, within the present quarter in contrast with Wall Road expectation of 90 cents per share.