Micron Gives Bullish Sales Forecast Indicating Strong Demand

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Micron Technology Inc., the largest U.S. maker of memory chips, gave a bullish forecast for the current period indicating improving demand for its products used in phones and computers.

Revenue will be $5.8 billion, plus or minus $200 million, in the fiscal second quarter, the Boise, Idaho-based company said Thursday in a statement. That compares with an average analyst estimate of $5.48 billion. Earnings per share, except certain items, will be 75 cents, plus or minus 7 cents, Micron said.

Micron’s chips act as storage in smartphones and are also an important part of computers, where they help process data and form the base component of new types of hard drives. Its earnings, which are a key indicator of demand for all devices that compute, suggest increasing sales across the industry.

Chief Executive Officer Sanjay Mehrotra is trying to broaden Micron’s reach into new markets such as cars. Demand related to artificial intelligence, cloud computing and fifth-generation, or 5G, wireless phone systems are driving the company’s current sales increases, Mehrotra said on a conference call.

The need for dynamic random access memory chips will likely exceed supply, Micron predicted. That type of chip accounted for 70% of the company’s revenue in its most recent quarter. The tightness of supply in DRAM is already driving up prices, Mehrotra said.

In Nand, chips that store data in phones, expected supply increases may exceed demand growth if suppliers don’t moderate their expansion plans, Micron said.

The company said last month that revenue and profit came in at the higher end of its previous forecasts for the three-month period ended Dec. 3, sending shares to a 20-year high. Revenue in the current quarter will be hurt because production was affected at factories in Taiwan by power outages and an earthquake, the company said.

For the year, Micron is planning to spend about $9 billion on new plants and equipment. Memory chipmakers are unusual in the chip industry in that they make their own products rather than outsourcing production.

Micron shares rose about 1.5% in extended trading following Thursday’s announcement. Earlier, they closed at $79.11 in New York. The stock has gained 36% in the past 12 months.

Micron competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc.

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