Chipmaker Micron forecast quarterly revenues above analysts’ estimates as the novel coronavirus outbreak fuels demand for notebooks and data centre services.
In financial results for its Q2 2020, ended February 27, Micron posted revenue of $4.8bn, down 18 per cent from the same period last year. Roughly two-thirds of this came from DRAM sales, and a third from NAND sales, in line with previous years.
The company’s chief exec, Sanjay Mehrotra, said the novel coronavirus outbreak in China had had a significant impact on consumer demand in the region. The company added that “weaker sell-through of consumer electronics and our customers’ factory shutdowns in China were headwinds for us” late in the fiscal second quarter.
But Mehrotra said that the fall in consumer demand was offset by higher data centre demand thanks to the sudden increase in gaming, e-commerce, and remote working and learning as cities went into locksown down to contain the virus outbreak.
Micron has so far managed to weather the shutdowns that have affected Asia since as early as January this year. Its two Malaysian factories in Muar and Penang, which are primarily used for packaging NAND, were briefly shut down but are now back up and running on a limited basis, in compliance with the country’s orders.
The Idaho, US-based company said that two of its employees had tested positive for the virus and are receiving medical attention.
Looking ahead, the company expects strong data centre demand in all regions, leading to potential supply shortages. The chipmaker forecast third-quarter revenues in the range of $4.6bn to $5.2bn – a wider range than usual, given the outbreak of the pandemic.
In addition, the company said it was seeing “a recent increase in demand for notebooks used in the commercial and educational segments to support work-from-home and virtual learning initiatives occurring in many parts of the world.”
According to Zacks, Micron will report revenues of $4.68bn in the next quarter.
Mehrotra said in an earnings call that this forecast depends on how different countries contain the virus. “So, while we have seen, for example, last fiscal quarter, our demand in China, and the consumer and smartphone demand decline, we have also seen that China has contained this and in fact, production is coming back in China and the demand is being restored,” he said.
“[The] same thing will happen in other parts of the world as well that while there may be some impact on smartphone demand in different countries, eventually as the containment happens, the consumer demand will be back.”
Mehrotra said the company nonetheless expects demand for smartphones, consumer electronics, and automobiles to be below its prior expectations for Q2 of 2020, but expected a recovery later in the year and in 2021. ®
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