Micron releases strong outlook data center business drives memory chip sales

According to reports, Micron, the largest memory chip maker in the United States, made optimistic expectations for the current quarter. This shows that demand growth from data center customers remains strong. In a Tuesday announcement, Micron said third-quarter revenue would be about $8.7 billion, above the $8.2 billion average expected by analysts in a Bloomberg survey. Excluding one-time items, Micron's profit for the quarter is expected to be $2.46 per share, also beating analysts' average estimate of $2.24.

Memory chips are widely used in various devices, so demand is not easily affected by fluctuations in the PC and smartphone markets. It also helped Micron continue to grow despite a slowdown in the PC market. The data center business has been a particularly bright spot in Micron's results, growing more than 80% last quarter. In the same period, Micron's industrial sales rose about 60%, while automotive revenue also hit a new record. The company's CEO, Sanjay Mehrotra, also said that while shipments of PCs and smartphones have not grown, the storage capacity needed for these devices is still expanding.

"Micron expects fiscal 2022 to be a record year. We have strong end-market demand, strong customer demand, but supply chain constraints," he said in an interview.

Micron shares rose 6.5% in after-hours trading on U.S. stocks following the report. Shares of Micron are down 12% so far this year as shares in the tech sector tumbled across the board. The Philadelphia Stock Exchange Semiconductor Index is down 8.1% for the year.

In the three months ended March 3, Micron's revenue rose 25% year over year to $7.79 billion. Net income was $2.26 billion, or $2 a share, up from $603 million, or 53 cents a share, a year earlier.

Samsung currently dominates the production of two types of memory chips, DRAM and NAND. Historically, the PC market has driven demand for memory chips. Growth in the PC market accelerated during the COVID-19 pandemic as many people needed to work from home, but the trend has slowed recently. Micron said on Tuesday that it expects PC shipments this year to be on par with 2021.

Like many companies, Micron has seen recent increases in energy, transportation, raw materials, and worker payroll costs, Merotra said. However, he also said that Micron could offset inflationary pressures by improving production technology to increase efficiency. Micron is moving faster than its competitors in this regard.

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