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The decline in demand faced by the electronics industry worsened this year, mainly due to economic uncertainty, which also affects ancillary businesses such as semiconductor companies. Memory chip company Micron Technology Inc. Poor financial performance of (NASDAQ: MUUnderscoring the severity of the crisis in the early months of the 2023 fiscal year.
Micron’s first-quarter report, one of the most eagerly awaited announcements this earnings season, paints a grim picture of the current memory chip market. Adding to the pessimism, management slashed its guidance and announced a 10% layoff for next year.
Stock falls
After closing Wednesday’s session, Micron’s stock lost significantly in the extended session as first-quarter results prompted a selloff. It was only six years ago that stocks fell to such lows. It has now been in losses for more than 12 months, and the current value is sharply below the January peak. It’s safe to assume the stock will recover most of its losses next year, but chip market volatility should be cautious. MU seems to be in a buying phase now.
Micron is undoubtedly a much better company than it was a few years ago, and it continues to dominate the market in both DRAM and NAND chips. It is worth noting that the current regression is not company specific. The Semiconductor industry Moves are cyclical, and Micron’s Q1 performance can be attributed in large part to the seasonal nature of the business. Given the demand issues related to memory chips, Micron’s problems run deeper than the broader semiconductor industry.
Supply versus demand
Some chip segments are seeing a drop in orders; At the same time, demand recovery has been sluggish in most regions. A deteriorating price environment adds to the problem. While the supply-demand imbalance is likely to persist in the near future, inventory levels are slowly improving at customers’ end. However, the recovery is not fast enough to lift Micron’s profits, which will remain under pressure throughout 2023.
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Commenting on the results, Micron’s CEO Sanjay Mehrotra said: “Over the longer term, we expect continued strong demand growth across diverse end markets, with DRAM bit demand CAGR in the mid-teens percent range and NAND bit demand CAGR in the low-to-20s percent range. Our long-term demand bit growth expectations for both DRAM and NAND are down from our expectations earlier this year, primarily due to lower growth expectations from the PC and smartphone markets and some moderation in the cloud’s strong long-term growth.
Q1 results miss
This week, Micron made its statement First quarter loss The first income in about six years was missed in several years. On a per-share basis, the first-quarter adjusted loss was four cents as all four operating segments experienced double-digit contraction. Total revenue was down 47%, just above $4 billion. Taking a cue from broad-based weakness and squeezing cash flows, Micron executives cut their near-term outlook.
The company’s shares were down 4% on Thursday afternoon, following a series of declines. They went through a series of ups and downs over the past six months, ultimately losing 13% over that period.
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