Micron gives rosy sales forecast as AI spurs demand

Micron Technology Inc, the largest US maker of memory chips, has given an upbeat forecast for the current quarter, a sign that surging demand and supply shortages are allowing the company to charge more for products.Fiscal second-quarter revenue would be US$18.3 billion to US$19.1 billion, the company said in a statement on Wednesday.Analysts had estimated US$14.4 billion on average for the period.Excluding some items, profit would be US$8.22 to US$8.62 a share, compared with a projection of US$4.71.Micron shares rose about 10 percent in pre-market trading yesterday after the forecast was released. The shares were already up 168 percent this year, closing at US$225.52 on Wednesday. The voracious appetite for artificial intelligence (AI) computing components is outstripping supply, benefiting companies such as Micron.Micron is positioned as “an essential AI enabler,” chief executive officer Sanjay Mehrotra said in the statement. “And we are investing to support our customers’ growing need for memory and storage.”However, there have also been shortages of the less sophisticated memory used in PCs. That stems in part from the memory industry shifting production to more advanced technology for AI data centers.“This is the most significant disconnect between demand and supply in terms of magnitude as well as time horizon that we’ve experienced in my 25 years in the industry,” Micron executive vice president of operations Manish Bhatia said in an interview.Boise, Idaho-based Micron has been a key beneficiary of AI demand because its high-bandwidth memory is critical to the chips and systems that develop AI models. Micron is already sold out of those components for next year, Bhatia said.In the fiscal first quarter, which ended on Nov. 27, sales rose 57 percent to US$13.6 billion. Profit, excluding some items, was US$4.78 a share. Analysts had estimated revenue of US$13 billion and earnings per share of US$3.95.On a conference call with analysts, Mehrotra said that memory shortages would last for a while.“Sustained and strong industry demand, along with supply constraints, are contributing to tight market conditions,” he said. “We expect these conditions to persist beyond calendar 2026.”The chief executive said he was disappointed that he could not fill all the company’s orders.“We are only able to meet about 50 percent to two-thirds of our demand from several key customers,” he said. “So we remain extremely focused on trying to increase the supply here and making the necessary investments.”Those efforts include stepping up expenditure. The company now expects to devote US$20 billion to capital spending this fiscal year, up from a previous forecast of US$18 billion. The company spent US$13.8 billion on new plants and equipment in the last fiscal year.