uploads///micron earnings

Micron Impacted by Soft Demand for Phones and Computers


Dec. 24 2018, Updated 7:30 a.m. ET

Weak demand for phones and computers

Micron Technology (MU) is struggling with an oversupply of DRAM (dynamic random access memory) and NAND (negative AND) memory chips. The demand is weaker in the smartphone and PC markets. The market glut of chips led to a fall in chip prices, which put an end to a two-year boom in memory chips. SK Hynix and Samsung (SSNLF) also warned investors about weak demand and lower chip prices due to softness in the global demand for mobile and other electronic devices.

NVIDIA (NVDA) and Intel (INTC) are also facing supply constraints. NVIDIA’s guidance was weaker than expected for the December quarter. NVIDIA even halted the production of its mid-range Pascal GPUs.

Article continues below advertisement

Weak demand for Apple’s iPhone models

Apple sees uncertainties related to the demand for its latest iPhone models. Apple has ordered its suppliers to slash the production of its newest iPhones. Sluggish iPhone demand and production cuts are expected to hurt Micron and Western Digital (WDC), which have exposure to Apple’s iPhone business. Lower-than-expected demand for iPhones would lower iPhone memory chip sales and might reduce Micron and Western Digital’s profits over the next two quarters.

Soft earnings and revenue guidance

As a result of falling chip prices, Micron’s revenue and earnings forecast was below analysts’ estimates. The company expects the second-quarter revenues to be $5.7 billion–$6.3 billion—compared to analysts’ estimates of $6.6 billion. Micron expects an EPS of $1.75 plus or minus $0.10 per share—compared to the analysts’ estimate of $2.06 per share.

Micron thinks that the headwind could continue for the next few quarters. As a result, the company plans to reduce its production output.


More From Market Realist

  • Honeywell sign
    Earnings Report
    CNBC Pro Stocks to Buy Before Q1 Earnings
  • Men walking by Morgan Stanley headquarters
    Morgan Stanley’s (MS) Stock Forecast Before Q1 Earnings
  • Carnival cruise ship sailing
    Carnival's (CCL) Stock Forecast Before Q1 Business Update
  • GameStop store
    GME's Earnings Are Coming: Will It Be Mayday for Shorts or WallStreetBets?
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.