Boise, Idaho – Micron Technology Inc., the largest US manufacturer of computer memory chips, projects its most significant gain in over 12 years, attributing this optimism to a robust revenue forecast for the current quarter fueled by the demand for artificial intelligence hardware.
In a statement released Wednesday, Micron announced that it expects fiscal third-quarter revenue to range from $6.4 billion to $6.8 billion, surpassing the average analyst estimate of $5.99 billion. The company anticipates earnings of approximately 45 cents per share, excluding certain items, exceeding the projected 24 cents per share.
Micron and its industry counterparts are bouncing back from a challenging period for the memory chip sector, which was exacerbated by diminished demand for personal computers and smartphones. However, executives are optimistically looking forward to the future as the surge in demand for AI hardware enables chipmakers to resume growth and profitability.
“We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multiyear opportunity enabled by AI,” stated Chief Executive Officer Sanjay Mehrotra. This positive outlook has propelled Micron’s shares to soar by 18% to $113.30 in premarket trading on Thursday, positioning the company for its most substantial leap since December 22, 2011, and reaching its highest historical level.
Mehrotra has vowed stakeholders that 2024 will herald a resurgence for the industry, with record-breaking sales projected for 2025. To meet these ambitions, Micron must ramp up production of ultrafast memory that complements Nvidia Corp. chips, aiding data center operators in AI software development.
The success of AI systems rely on high-bandwidth memory (HBM), a newer and less common form of chip that allows Micron to command a premium price. The company anticipates generating “several hundred million” dollars in revenue from HBM products in fiscal 2024, with the majority of chip production already sold out for 2025.
Furthermore, Micron’s recent revenue boost was sparked by the introduction of HBM3E memory in the last quarter. These semiconductors are integral to Nvidia graphics chip-based AI accelerators, highlighting Micron’s pivotal role in driving forth technological advancements.
In a bid to diversify, Micron is expanding into new markets, targeting data centers, automotive applications, and a growing array of devices to offset fluctuations in phone and PC demand. As the industry shifts toward new horizons, Micron and its competitors are endeavoring to diminish their reliance on traditional markets and venture into emerging sectors.
In a parallel development, the US Department of Commerce disclosed plans to allocate Intel Corp. $8.5 billion in grants and up to $11 billion in loans to boost its domestic semiconductor operations, a strategic move aimed at bolstering the nation’s chip manufacturing capabilities.
As Micron maps out its fiscal 2024 trajectory with a budget stretching between $7.5 billion and $8 billion for new plants and equipment, the company remains committed to projects spanning China, Japan, and India. Proposed expansions in the US, specifically in New York State and Boise, hinge on securing adequate government backing to bridge the cost disparities relative to overseas expansion endeavors.
The current momentum enjoyed by Micron underscores a broader resurgence in the semiconductor industry, fueled by AI innovation and a concerted drive towards technological advancement. As the company charts a path towards sustained growth, stakeholders eagerly await the unfolding narrative of Micron’s evolution in the ever-evolving landscape of memory chip manufacturing.