Micron Rallies After Chip Demand Drives Bullish Forecast

(Bloomberg) -- Micron Technology Inc., the largest U.S. maker of memory chips, jumped in late trading after giving an upbeat forecast for the current quarter, helped by demand from networking, data-center and automotive customers.

Sales will be about $7.5 billion in the period ending in February, Micron said Monday in a statement. That compares with analysts’ average estimate of $7.32 billion, according to data compiled by Bloomberg. Excluding certain items, profit will be about $1.95 a share, the company said. Analysts projected $1.86.

Under Chief Executive Officer Sanjay Mehrotra, Micron is benefiting from the use of memory chips in a wider range of products -- from cars to home appliances. That’s made the Boise, Idaho-based company less dependent on the personal computer and smartphone market for revenue. 

Strong demand for chips used in data center computers and industrial machinery underscored Micron’s success pushing into new areas, Mehrotra told analysts on a conference call. More availability of other types of components is also helping PC makers begin to build more machines, improving orders from those customers. They had struggled to make enough computers to meet demand because of a shortage of parts.

Micron’s fiscal first quarter puts it on course for record annual revenue and healthy profits, Mehrotra predicted. 

“Today it’s not just the data center -- it’s all end markets that are fueling the data economy,” Micron’s CEO said in an interview. Memory and storage will continue to grow faster than the rest of the chip industry, propelled by these new markets, he predicted. “These things are not just about calendar 2022. They’re even beyond that.”

In the three months ended Dec. 2, the company posted revenue of $7.69 billion, up 33% from a year earlier. Net income was $2.3 billion, or $2.04 a share.

Micron’s shares rallied as much as 7.3% to $88 in extended trading following the report. They had gained 9.1% this year through Monday’s close, lagging behind an overall surge in chip-related stocks. The Philadelphia Stock Exchange Semiconductor Index has climbed 34% this year.

Micron competes with South Korea’s Samsung Electronics Co., SK Hynix Inc. and Japan’s Kioxia Holdings Corp. in a memory chip market that has consolidated over the past decade. Samsung dominates production of both major types of chips. DRAM chips hold data temporarily, helping processors crunch data. Nand flash memory, meanwhile, acts as permanent storage in phones and computers.

Producers have tried to be more disciplined about expanding factory output, trying to avoid the industry’s famous boom-and-bust cycles. As a result, there will be a healthy balance between demand and supply in 2022, Micron predicted. The company will spend $11 billion to $12 billion on new plants and equipment this fiscal year. 

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