Micron Technology Inc. shares were falling more than 4% in premarket trading Tuesday after the memory-chip company said that it expects “challenging” market conditions for the current quarter and the following one.
Ahead of an investor presentation that will take place later Tuesday, Micron
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executives disclosed in a filing that they expect that revenue for the company’s fiscal fourth quarter, which ends in August, “may come in at or below the low end of the revenue guidance range provided in our June 30 earnings call.”
The company had called for $6.8 billion to $7.6 billion in revenue in its June earnings report.
The executives noted in Tuesday’s filing that they have recently seen “a broadening of customer inventory adjustments” that have caused the Micron management team to lower expectations for industry bit demand growth in DRAM and NAND relative to the June 30 earnings call.
“[W]e expect a challenging market environment in FQ4 22 and FQ1 23,” the company said in its filing.
Micron executives now expect bit shipments to drop off sequentially in the fiscal first quarter, “and we expect significant sequential declines in revenue and margins.” They further expect negative free-cash flow in the fiscal first quarter.
The company announced that it would institute capital-expenditure reductions for wafer-fab equipment when looking at fiscal 2023, “adding to the WFE capex reductions discussed in our June 30 earnings call.”
Executives “now expect FY23 total capex to be down meaningfully versus FY22,” per the filing.
Micron executives join those at fellow chip company Nvidia Corp.
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who issued a revenue warning Monday.
Despite the more muted view on short-term dynamics, Micron executives seemed more upbeat about the long run, announcing earlier Tuesday that they planned to invest $40 billion in U.S. manufacturing through the end of the decade, tapping grants and credits available through the CHIPS and Science Act.
The company intends to help grow domestic production of memory from less than 2% of the global market currently to “up to 10%” within the next decade, Chief Executive Sanjay Mehrotra said in that announcement.
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Shares of Micron have fallen 9.5% over the past three months as the S&P 500
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has gained 3.7%.
