Micron widens loss forecast, shares drop; chipmaker hopes to supply Nvidia
2023.09.27 17:24
© Reuters. FILE PHOTO: A smartphone with a displayed Micron logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
By Samrhitha A and Stephen Nellis
(Reuters) -Micron Technology on Wednesday forecast a wider than expected first-quarter loss, and its shares sank 2.4% even as it prepares to ramp up production of new product lines and said it was working to become a supplier to Nvidia (NASDAQ:)
The Idaho-based chipmaker’s first-quarter revenue forecast exceeded Wall Street estimates, powered by demand for its memory chips from the rapidly growing artificial intelligence sector.
The company’s shipments have benefited from strong demand for AI servers and processor suppliers promoting large language models that enable generative AI. The company said it was working with Nvidia, the world’s most valuable chip company, to qualify its newest high-bandwidth memory chips for use in Nvidia’s computing chips.
The qualification process is common among technology firms and does not itself indicate how much business a supplier might win with a customer.
Demand for high-bandwidth memory chips, a market led by Nvidia supplier SK Hynix, for use in AI has also raised investor hopes that Micron (NASDAQ:) will be able to weather a slow recovery in other end markets. Micron said that next year it expects to start production of lucrative high-bandwidth memory, which is used in many AI chips.
Some of Micron’s products have been banned among certain Chinese customers after China’s government said the products had failed a security review.
“While there is near-term impact to our demand due to these challenges in China, we remain focused on maintaining Micron’s global market share,” Micron Chief Executive Sanjay Mehrotra said in a statement.
Micron expects adjusted revenue of $4.40 billion, plus or minus $200 million, for the current quarter, compared with estimates of $4.20 billion, according to LSEG data.
The company forecast an adjusted loss per share of $1.07, steeper than the analyst estimates of a 95 cents per share loss.
Revenue for the fourth quarter stood at $4.01 billion, compared with estimates of $3.91 billion.
