Micron Technology, the first major chipmaker to sound an alarm about falling demand for PCs and smartphones earlier this year, on Thursday warned of even tougher times ahead and said it was cutting its investments.
“We made significant reductions to capex and now expect fiscal 2023 capex to be around $8 billion, down more than 30% year over year,” Chief Executive Sanjay Mehrotra said on an earnings call.
Still, Micron forecast strong revenue growth in the second half of fiscal 2023 as demand starts to recover early next year.
Shares of the Boise, Idaho-based company, which have slumped about 45% so far this year, fell 1.5% in extended trading.
Red-hot inflation, rising interest rates, geopolitical tensions and COVID-19 lockdowns in China have led businesses and consumers to rein in expenses, hitting the PC and smartphone market.
Micron said it would reduce wafer fabrication equipment investments by 50% in the new fiscal year. Chip equipment maker Applied Materials Inc’s shares dropped 2% on the news in after-hours trading.
“Net times are really bad now, but traditionally production cuts and capex reductions are a sign that memory markets are approaching trough fundamentals,” said Matt Bryson, analyst at Wedbush Securities.
Citing a possible turnaround in a few quarters, Kinngai Chan, Summit Insights Group analyst upgraded Micron’s stock to a “buy” recommendation.