Micron Expects Revenue Drop, But AI to Boost Sales in 2025

Memory chip manufacturer Micron Technology Inc has announced a forecasted tumble in third-quarter revenue, almost 60% less than the previous year. Despite this, industry analysts expected this drop, and the company has already painted a rosy picture for 2025, with artificial intelligence (AI) set to boost sales.

Micron’s revenue drop comes at a time when the chip industry is facing a glut, which means that there is currently an oversupply of chips in the market. To combat this, Micron plans to keep its investments at around $7 billion for fiscal year 2023, which is at the lower end of its previously stated range. The company is also targeting a 15% headcount reduction this year, which is more significant than its previous target of 10%.

Despite the drop in revenue, Micron’s shares were up by about half a percent in after-hours trading. This is likely because the cut in capital spending is a positive move for investors, as it will “pull forward the timing and breadth of a future recovery,” according to Matt Bryson, a Wedbush Securities chip analyst.

Micron Technology’s President and CEO, Sanjay Mehrotra, expressed confidence in the long-term outlook for the memory chip industry. He said that he expects the industry to see a record market size in 2025, thanks to the growth of AI.

In conclusion, Micron’s expected revenue drop is in line with what industry analysts predicted. Despite the current oversupply of chips in the market, Micron remains confident in the long-term outlook for the memory chip industry, with AI expected to drive growth in 2025. While the company plans to reduce its headcount and investment, this move is viewed positively by investors who believe it will bring forward the timing of a future recovery. Overall, Micron’s future looks bright, and the company is well-positioned to thrive in the years ahead.