According to Zhito Finance APP, Micron Technology (MU.US), the largest computer memory chip manufacturer in the USA, plummeted in Post-Market Trading on Wednesday because the company's revenue forecast for the second quarter is about 1 billion dollars lower than analysts' expectations, mainly due to the weak demand for smart phones and PCs.

The company stated in a release on Wednesday that sales for the second quarter ending in February will reach approximately 7.9 billion dollars. In comparison, analysts' average expectation is 8.99 billion dollars. The profit per share, excluding certain items, will not exceed 1.53 dollars, far below the expected 1.92 dollars.

Although Micron has seen strong orders for components used in AI computing, the company still faces low demand from mobile phone and PC manufacturers—these two markets account for the majority of its chip production.

As of Wednesday's close, Micron's stock price has risen 22% this year, but following the release of the Earnings Reports, as of the time of writing, the stock plummeted more than 14% in Post-Market Trading.

CEO Sanjay Mehrotra stated in a release: "While the consumer-oriented market is weak recently, we expect to see a recovery in growth in the second half of this fiscal year."

For the first quarter ending on November 28, the company's sales grew by 84%, reaching 8.71 billion dollars. The profit per share, excluding certain items, was 1.79 dollars. Analysts' average expectations were 8.71 billion dollars and 1.76 dollars, respectively.

The company stated that revenue related to the Datacenter grew 400% year-on-year this quarter. This department currently accounts for more than half of the company's total sales. However, Micron indicated that this surge is not enough to offset the weakness in Orders from Consumer device manufacturers.

In this field, customers have been dealing with an excess of inventory.

Micron stated in an investor report: "We are now seeing the impacts of reduced customer inventory more clearly. We expect this adjustment period to be relatively short, and anticipate that by spring, customer inventory will reach a healthier level."

The company predicts that by 2025, the PC market will grow by about 5%, with most of the growth occurring in the second half of the year. The company noted that the user refresh rate for these devices is slower than expected.

Micron indicated that due to inventory reduction, its mobile business segment decreased by 19% quarter-on-quarter. Sales in the Autos and industrial sectors also saw a decline.

In the fiscal year 2025, this chip manufacturer has budgeted $14 billion in capital expenditures for new plants and equipment. This amount includes cuts to planned expenditures for producing new storage chips.

For a long time, storage chip manufacturers have been accustomed to the industry's boom and bust cycles, and they are now pinning hopes on sustained demand for a new type of product called High Bandwidth Memory (HBM). This technology has garnered significant attention from AI computing system manufacturers, allowing Micron and other memory companies to charge higher prices, despite its complex production and deployment.

Other types of memory remain subject to substantial price fluctuations, depending on supply and demand balance. However, the three major memory firms—Micron, along with South Korean rivals SK Hynix and Samsung Electronics (SSNLF.US)—are more stringent in increasing new capacity. Micron stated that this means the issue of inventory surplus will not be as painful as in the past.

In 2023, when prices fell below production costs, the company reported billions of dollars in net losses.

Micron produces dynamic random-access memory (DRAM), which is a type of chip used for temporary storage of information that works alongside processors from NVIDIA (NVDA.US), Intel (INTC.US), and AMD (AMD.US). The company also produces NAND flash memory—a type of semiconductor that stores information in devices ranging from datacenter computers to Smart Phones.