US memory chip maker Micron soars after AI growth boosts revenue forecast

US memory chip maker Micron soars after AI growth boosts revenue forecast

US memory chip maker Micron soars after AI growth boosts revenue forecast

Micron Technology, the largest US maker of memory chips, jumped in late trading after giving a surprisingly strong revenue forecast for the current quarter, buoyed by demand for artificial intelligence (AI) hardware.

Revenue for its financial third quarter will be US$6.4 billion to US$6.8 billion, Micron said in a statement on Wednesday. That compares with an average analyst estimate of US$5.99 billion.

Micron and its rivals are emerging from one of the worst slumps the memory chip industry has suffered, triggered by weak demand for personal computers and smartphones. But executives are optimistic about the future as the booming market for AI gear helps chip makers return to growth and profitability.
“We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multiyear opportunity enabled by AI,” president and chief executive Sanjay Mehrotra said in the statement.
US memory chip maker Micron Technology’s sprawling headquarters and main production facility in Boise, Idaho. Photo: Shutterstock

The company’s shares gained 15 per cent in late trading after the results were released. They had climbed 13 per cent to US$96.25 this year through the close. Tech peers such as Western Digital Corp also gained in extended trading.

Mehrotra has promised investors that 2024 will mark a rebound for the industry and 2025 will see record sales levels. But Micron will need to make enough ultra-fast memory, which works with Nvidia’s chips to help data centre operators develop AI software.

AI-related systems use something called high-bandwidth memory (HBM). That type of chip is new and less of a commodity. That means companies like Micron can charge a much higher price for it.

Micron got its first revenue from a form of this memory known as HBM3E in its most recent quarter. The semiconductors are part of Nvidia’s graphics chip-based AI accelerators, Micron said.

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Boise, Idaho-based Micron expects “several hundred million” dollars of revenue from HBM products in its 2024 financial year. Most its production of such chips is sold out for 2025, it said.

AI systems are created by bombarding software with information. The process can involve trillions of parameters and is highly reliant on memory. To avoid bottlenecks and keep expensive processors working flat out, Micron and its competitors have developed chips that communicate with other components much faster than traditional memory chips.

Nvidia chief executive Jensen Huang said earlier this week that HBM was more than just a memory upgrade – it is a technical marvel that is vital to AI systems. He mentioned Micron as a leader in bringing the new technology to market.

In Micron’s financial second quarter, which ended on February 29, the company’s revenue rose 58 per cent to US$5.82 billion. It recorded earnings of 42 US cents a share, excluding certain items. That compares with estimated sales of US$5.35 billion and a projected loss of 24 cents a share.

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“Micron has returned to profitability and delivered positive operating margin a quarter ahead of expectation,” Mehrotra said on a conference call with analysts.

Micron competes with South Korea’s Samsung Electronics and SK Hynix in selling chips that provide short-term memory in computers and smartphones. Micron also makes flash memory, which provides longer-term storage in those devices.

Both types of memory follow industry standards, meaning that parts from different companies are interchangeable and can be traded like commodities. The downside is that prices can be volatile, and customers can switch from one supplier to another.

Memory chip makers have been trying to push into new markets, such as data centres, cars and an increasing array of gadgets – making them less dependent on smartphones and PCs. But they have not become diversified enough to offset the swings in demand within their core markets, as they experienced in 2023.


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Micron is looking to makers of PCs and smartphones to return to steady ordering. Many of them had scaled back demand to draw down the inventory they had on hand. Weak ordering from those customers pushed chip prices down below the cost of production last year.

Micron said it is maintaining its budget for new plants and equipment for its 2024 financial year at US$7.5 billion to US$8 billion. It will proceed with projects in mainland China, Japan and India.
Proposed US expansions – in New York State and Boise – “require Micron to receive the combination of sufficient Chips [and Science Act] grants, investment tax credits, and local incentives to address the cost difference compared to overseas expansion”, Mehrotra said.

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