Micron lowered its revenue forecast for the current quarter on Tuesday and warned that free cash flow for the next three months will be negative as demand for chips used in personal computers and smartphones weakens and customer inventories increase.
The day before, Nvidia warned that its gaming business was weak, fueling concerns about the chip industry's slump for the first time since 2019. This caused Micron shares and the Philadelphia SE Semiconductor Index to drop 5.7% and 4.3% as investors saw US President Joe Biden sign a landmark bill providing $527 billion in subsidies for semiconductor production and research. Micron CEO Sanjay Mehrotra (Sanjay Mehrotra) attended the signing ceremony.
Micron also announced an investment of $40 billion in memory chip manufacturing in the US, but said it expects FY2023 capital expenditure to be lower than in 2022. Fourth-quarter revenue is likely to be at or below the low end of the company's previous forecasts. Its earlier $6.8-$7.6 billion range fell short of Wall Street's June target.
According to IT research firm Gartner, PC shipments are expected to drop 9.5% this year. This, along with the cooling demand for smartphones, has raised demand-related warnings from Micron and other companies including Intel, UltramicroDevices, Qualcomm, and Nvidia. Micron sees cloud, industrial, and automotive customers are also...