FILE PHOTO: Memory chip parts of U.S. memory chip maker MicronTechnology are pictured at their booth at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach
(Reuters) – Micron Technology Inc beat analysts’ estimates for quarterly revenue and profit on Tuesday, and the chipmaker said it is seeing early signs of demand improvement, sending shares up as much as 7% in extended trading.
Stocks in chipmakers have fallen in the past few months as demand for Apple’s iPhones declined and prices for DRAM and NAND memory chips sank due to an oversupply, adding to concerns that a two-year-long semiconductor upswing was coming to a halt.
“While we are seeing early signs of demand improvement, we plan to reduce our capital expenditures in fiscal 2020 to help improve industry supply-demand balance,” Chief Executive Officer Sanjay Mehrotra said.
To soften the blow from the market glut, Micron reduced its output to prop up prices and has been investing more in its next generation of chips.
The oversupply along with concerns of a slowdown in China, the world’s No.2 economy, exacerbated by an escalating trade war with the United States, will continue to squeeze sales and profits of chipmakers.
Net income attributable to Micron fell to $840 million, or 74 cents per share, in the third quarter ended May 30, from $3.82 billion, or $3.10 per share, a year earlier.
Revenue fell to $4.79 billion from $7.80 billion, beating analysts’ estimates of $4.69 billion, according to IBES data from Refinitiv.
On an adjusted basis, the company earned $1.05 per share. Analysts were expecting a profit of 79 cents per share.
Reporting by Sayanti Chakraborty in Bengaluru; Editing by Shounak Dasgupta