Micron Technology Inc (MU.O) on Wednesday beat Wall Street estimates for quarterly profit and forecast fourth-quarter revenue above expectations, as tight supplies of memory chips and continued strong demand kept prices high.
The chipmaker forecast current-quarter revenue of $8.2 billion, plus or minus $200 million, while analysts on average were expecting $7.87 billion, according to IBES data from Refinitiv.
Micron makes NAND memory chips that serve the data storage market and DRAM memory chips that are used in data centers, smartphones and other computing devices. It has benefited from the pandemic-induced global shift toward remote work as demand for laptops and other electronic devices soared.
In prepared remarks, Micron Chief Executive Sanjay Mehrotra said the company expects industry-wide supplies of both kinds of chips to remain tight until the end of next year, keeping prices high.
“We believe Micron’s strong financial performance will continue cross-cycle, and over the long term, our revenue growth will outperform the broader semiconductor industry,” Mehrotra said.
Shares rose 0.6% in after-hours trading.
The company’s revenue for the third quarter ended June 3 rose 36% to $7.42 billion, beating estimates of $7.24 billion, according to IBES data from Refinitiv.
Excluding items, the company earned $1.88 per share in the quarter, above estimates of $1.72.
The company also said it will sell a plant in Lehi, Utah, to Texas Instruments Inc (TXN.O). Micron said it expects to get about $1.5 billion for the plant, $900 million of which will be in cash and $600 million of which will be in the value of tools it can either sell to outsiders or move to its other factories. Micron had said it would sell the Utah facility, which it shared with Intel Corp (INTC.O), under a joint venture formed nearly a decade ago, as part of a broader technology strategy shift.
The company took an impairment charge of $435 million because the $900 million in cash was below the book value of the factory, but Chief Business Officer Sumit Sadana told Reuters in an interview that the factory was on track to generate almost $500 million in losses this year because it was underutilized.
Micron also said that its capital expenditures for fiscal 2021 would rise above $9.5 billion, partly driven by pre-payments as it starts to acquire extreme ultraviolet lithography (EUV) machines from Dutch maker ASML Holding NV (ASML.AS). The machines are necessary for making the most cutting-edge chips but can cost more than $100 million each.
The company stretched out its use of cheaper chipmaker techniques as long as it could but will start using the EUV machines in production in 2024, officials said.
“EUV is a very big and important tool in the manufacturing line. And EUV itself is a tool that has a long lead time for manufacturing from ASML. The orders have to be placed just about now,” Sadana said.
Reporting by Akanksha Rana and Niket Nishant in Bengaluru and Stephen Nellis in San Francisco; Editing by Devika Syamnath, Lisa Shumaker and Sonya Hepinstall