Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Top Stories

Micron’s warning of weak demand rattles chip stocks

Micron's warning of weak demand rattles chip stocks 3

By Chavi Mehta

(Reuters) – Micron Technology cut its current-quarter revenue forecast on Tuesday and warned of a negative free cash flow in the coming three months as customer inventories pile up amid waning demand for chips used in PCs and smartphones.

The dismal forecast comes a day after Nvidia warned of weakness in its gaming business, accentuating fears of the first chip industry downturn since 2019.

That sent Micron’s shares and the Philadelphia SE Semiconductor index down 5.7% and 4.3%, as investors looked past U.S. President Joe Biden signing a landmark bill for $52.7 billion in subsidies for semiconductor production and research. Micron Chief Executive Sanjay Mehrotra was among the attendees at the signing.

Chip stocks underperform on Wall Street: https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwynomvo/Pasted%20image%201660062203404.png

Micron's warning of weak demand rattles chip stocks 4

Micron also announced a $40 billion investment in memory chip manufacturing in the United States, but said capital expenditure was expected to decrease in fiscal 2023 from 2022.

Fourth-quarter revenue is likely to come in at or below the low end of the company’s prior forecast. Its earlier range of $6.8 billion to $7.6 billion had fallen short of 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.

Surging prices have forced consumers to curb their spending on electronic gadgets, prompting production revaluations at companies sitting on excess inventory of chips and other components in anticipation of strong post-pandemic demand.

Shipments of PCs are expected to drop 9.5% this year, according to IT research firm Gartner. That, and cooling demand for smartphones, has drawn demand-related warnings from Micron and others including Intel, Advanced Micro Devices, Qualcomm and Nvidia Corp. Micron is seeing cloud, industrial and automotive customers also make “inventory adjustments” due to macro uncertainty, finance chief Mark Murphy said at the Keybanc Technology Leadership forum on Tuesday.

“It’s a challenging setup for this quarter.”

(Reporting by Chavi Mehta in Bengaluru; Editing by Anil D’Silva and Devika Syamnath)

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now