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(Bloomberg) — Micron Technology Inc., the largest U.S. maker of computer memory chips, is expected to experience its worst decline in more than four years after its earnings missed the mark, hurt by sluggish demand for smartphones and computers.
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Sales will be about $7.9 billion in the second fiscal quarter, which ends in February, the company said Wednesday. This compares to the median estimate of $8.99 billion. Earnings will be no more than $1.53 a share, excluding items, short of the $1.92 expected.
Although Micron is seeing strong demand for components used in the computer’s artificial intelligence system, it is still facing weak demand from smartphone and PC makers – two markets that eat up most of its chips.
Shares of Micron, up 22% this year through Wednesday’s close, fell 15% in premarket trading in New York on Thursday. If the decline continues, it will be the biggest decline since March 2020.
“While consumer-related markets remain weak in the near term, we expect a return to growth in the second half of our fiscal year,” Chief Executive Officer Sanjay Mehrotra said in a statement.
In the first quarter, which ended Nov. 28, sales rose 84% to $8.71 billion. Excluding other items, earnings were $1.79 per share. Analysts had predicted sales of $8.71 billion and earnings of $1.76 on average.
The company said data-related revenue grew 400% in the quarter from last year. That segment now accounts for more than half of the company’s total sales. However, the operation was not enough to offset weak orders from consumer-facing device makers, Micron said.
In this area, customers have been working hard.
“We are now seeing a significant impact on customer service reductions,” Micron said in a sales report. “We expect the turnaround time to be short and expect customers to reach a healthy level by spring.”
The company predicts that the PC market will grow by about 5% in 2025, with the biggest growth coming in the second half. It also said that the owners of these devices are renovating them at a slower rate than expected.
Micron said its mobile business was down 19% sequentially, which was due to lower inventory. Auto and industrial sales also fell.
For fiscal year 2025, the chip maker is budgeting for $14 billion in new products and equipment. The investment also includes a reduction in planned investment in the new production of storage chips.
