Due to tight supply and strong demand for memory chips, Micron expects its revenue and profit in the current quarter to exceed analysts' expectations. The company’s second-quarter profit also exceeded analysts’ expectations, prompting its share price to soar by 9.4% in after-hours trading on Thursday. As major companies are rushing to develop smaller, more efficient chips, causing supply bottlenecks, data storage needs for smartphones, artificial intelligence, driverless cars, and the Internet of Things are soaring. Leading global memory chip makers are experiencing what analysts call a "super cycle."
Micron Technology said on Thursday that the company's DRAM chip prices increased by 21% in the second quarter, which had risen by 5% in the previous quarter.
DRAM chips account for about 64% of Micron's revenue in the previous quarter.
At the same time, the company's NAND chip business also performed well, grasping the outbreak of smart phone storage capacity trends. In the second fiscal quarter ended March 2, Micron's NAND sales increased by 18%.
Micron Technology CEO Mark Duncan
Mark Durcan, Micron Technology's CEO, said in an analyst conference call: “We have seen client-side DRAM prices continue to rise, but we also benefit from the impact of mobile, cloud computing and corporate-side price increases.â€
Duncan said that once he finds a successor, he will retire. In December last year, he said that the average selling price of PC DRAM rose by 50% to 60% in the lower price range.
Micron expects the adjusted quarterly earnings per share to be between $1.43 and $1.57, far exceeding analysts' average expectations of $0.90. The company also expects revenue for the current quarter to be between 5.2 billion and 5.6 billion U.S. dollars, well above analyst expectations of 4.72 billion U.S. dollars.
Micron Technology completed a merger and acquisition of US$3.2 billion in Taiwan’s Hua Ya Technology last December. According to sources, the company is also a potential bidder for the Toshiba chip division.
Jagadish Iyer, an analyst at investment bank Summit Redstone Partners, said that higher prices have also contributed to gross profit.
The company expects the current quarter gross profit margin to be 44% to 48%, compared with 38.5% in the previous quarter.
Excluding specific items, the company's earnings per share was $0.90, which exceeded the average estimate of analysts of $0.86. Net revenue increased by 58.4% to US$4.65 billion, in line with analysts' expectations.
The stock closed at $26.47 on Thursday and has risen 21% this year, while the Philadelphia SE Semiconductor Index rose 10% over the same period.
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