"Semiconductor Market Worse Than Expected," Grim Outlook from US Micron

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Following Samsung Electronics and SK Hynix, Micron, the third-largest player in the memory semiconductor DRAM market, issued a bleak semiconductor market outlook on the 9th (local time). It warned that the weak semiconductor demand caused by decreased consumer consumption in PCs and smartphones is gradually spreading to data centers and the industrial sector, and that earnings are expected to fall short of market expectations.

According to Bloomberg and others, Micron stated in documents submitted to authorities that its revenue forecast for the fourth quarter of fiscal year 2022 (June to August) is expected to fall below the previously anticipated $6.8 billion to $7.6 billion (approximately 8.9 trillion to 9.9 trillion KRW) as of the end of June. Micron said, "We expect the market environment to be difficult in the fourth quarter of fiscal year 2022 and the first quarter of fiscal year 2023 (September to November)."

Sanjay Mehrotra, CEO of Micron, said in an interview with Bloomberg TV, "Compared to the previous earnings announcement, we are seeing further weakening of demand as adjustments are spreading not only in the consumer sector but also in other market areas including data centers, industrial, and automotive sectors." Mark Murphy, CFO of Micron, also said at an investor event that "the market has deteriorated more than we thought," and "we are clearly witnessing the spread of weakness in the semiconductor market."

Micron's grim semiconductor market outlook aligns with forecasts from other global semiconductor companies such as Intel, AMD, and Nvidia. The Philadelphia Semiconductor Index, which reflects the stock prices of major semiconductor companies, fell 4.57% in a single day. It has dropped 27% on an annual basis. Micron's stock price also closed down 3.74% following the announcement.

Considering this outlook, Micron announced plans to reduce capital expenditures for new factory construction in fiscal year 2023. However, taking into account the signing of the U.S. Semiconductor Support Act on the same day, it announced plans to build a state-of-the-art memory semiconductor manufacturing plant in the U.S. worth $40 billion as part of a 10-year investment plan. CEO Mehrotra also attended the signing ceremony with President Biden.

The Wall Street Journal (WSJ) reported, "While semiconductor companies are cutting short-term spending, the White House has promised long-term expansion of the U.S. semiconductor industry."

This content was produced with the assistance of AI translation services.