Micron's Great Results Aren't Great for Chip Buyers
March 31 2021 - 6:38PM
Dow Jones News
By Dan Gallagher
If Micron's numbers are any guide, the chip industry should have
a strong year. Buyers of chips: less so.
Micron reported strong results Wednesday for its fiscal second
quarter ended March 4. Revenue jumped 30% year over year to $6.2
billion, in line with a pre-announcement earlier this month. But
the company also projected a 31% jump to $7.1 billion for the
current quarter ending in May. Analysts were expecting a little
under $6.8 billion for the quarter, according to FactSet. Micron's
shares rose about 2% after hours.
Nearly three-quarters of Micron's revenue comes from DRAM
memory. Revenue in that segment surged 44% year over year to about
$4.4 billion. But Chief Executive Sanjay Mehrotra also noted in the
company's call Wednesday that the DRAM segment is "facing a severe
undersupply," as demand has boomed. Memory is also affected by
production shortages elsewhere in the semiconductor space, as DRAM
is a key component for products like central and graphics
processors. Mr. Mehrotra said memory demand "would have been even
greater" without those shortages. Micron expects the DRAM market to
remain tight all year.
Production shortages have been plaguing the chip market and were
worsened by disasters such as freezing weather in Texas and a fire
at an auto chip plant in Japan. Micron hasn't been free of those
worries. Mr. Mehrotra noted that a drought in Taiwan limited the
water supply at one of its chip-fabrication facilities there though
hasn't yet affected production.
That is still a bad sign for battered chip customers waiting for
the shortages to ease. Ford said Wednesday that it is slowing
production at several U.S. factories for want of needed chips.
Other car makers are feeling similar strains. President Biden's
infrastructure plan, announced on Wednesday, includes a proposed
$50 billion to boost domestic chip production -- more good news for
U.S. chip makers such as Micron. But funding is uncertain and won't
ease the near-term situation anyway. Meanwhile, Micron will have to
be content selling every chip it can make.
Write to Dan Gallagher at dan.gallagher@wsj.com
(END) Dow Jones Newswires
March 31, 2021 18:23 ET (22:23 GMT)
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