Revenue for the fourth quarter may come in at or below the low end of its prior forecast, the company said, sending its shares down about 5% in premarket trading. Its earlier estimate of $7.2 billion, plus or minus $400 million, had missed Wall Street targets in June.
Micron, which last reported negative free cash flow in 2020 during the early days of the pandemic, warned it could see significant sequential declines in revenue and margins in its first quarter due to a fall in shipments.
Micron also joined chip firms Intel, Advanced Micro Devices, and Nvidia Corp in flagging a rise in customer inventories.
“For the second half of the year, the market will likely drop to a new lower base level – the third (calendar) quarter could be iffy depending on how much inventory there is to clear out,” said Dean McCarron, president of Mercury Research, which tracks market share among chipmakers.
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Data indicates the DRAM memory market will be severely oversupplied at least in 2023, according to research firm TrendForce.
No. 2 memory chipmaker SK Hynix Inc and Western Digital have warned of a slowing uptake from customers as they brace for a potential recession. Weaker demand for smartphones is also affecting the sector.
Micron’s forecast cut comes after it announced a $40 billion investment in memory chip manufacturing, which would boost its US market share from 2% to 10%.