[1/2]The corporate logo is seen at the offices of Micron Technology Inc. in Shanghai, China, May 25, 2023.Reuters/Aly Song/File Photo
June 28 (Reuters) – Micron Technology (MU.O) beat analysts’ third-quarter sales forecasts on Wednesday, driven by demand for memory chips from the burgeoning artificial intelligence sector.
Shares of the company rose about 3% in after-hours trading. It’s up about 34% this year.
CEO Sanjay Mehrotra said customers continued to reduce excess inventories during the quarter, with inventories in the PC and smartphone divisions close to normal levels.
As a result, pricing trends have improved at Micron, increasing confidence that industry growth and earnings have bottomed out, he added.
Micron reported $3.75 billion in revenue for the quarter ending May 31, compared with an expected $3.65 billion, according to Refinitiv’s IBES data.
A surge in demand from the generative AI space, which has attracted investor attention following the viral popularity of OpenAI’s ChatGPT, is supporting Micron’s sales as the traditional smartphone and PC markets falter.
Analysts say the proliferation of generative AI could lead to a surge in demand for data to feed large language models, increasing the need for more storage chips.
U.S. chipmakers are also embroiled in the technology war between the U.S. and China. Last month, China’s cyberspace regulator failed a security review of Micron’s products, barring them from purchase by major infrastructure operators.
Micron, the largest U.S. memory chip maker, said it expects the ban to affect about half of its revenue from companies headquartered in China, a low-double-digit percentage of total revenue. Equivalent to.
The company reiterated that several customers, including mobile phone makers, have been contacted by Chinese government representatives about the future use of its products.
Micron’s fourth quarter revenue for the quarter ended August 31 was $3.9 billion plus or minus $200 million, broadly in line with expectations.
The company, which makes DRAM and NAND flash memory chips, reported a net loss of $1.9 billion in the third quarter, compared with a profit of $2.63 billion in the same period last year.
Reported by Akash Sriram of Bangalore.Editing: Sriraj Karvilla
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