Micron Technology, a chipmaker, expects third quarter revenue of $7.1 billion, plus or minus $200 million.
The anticipated increase in revenue is due to a rise in demand for memory chips thanks to 5G smartphones and artificial intelligence software that is pushing memory chip prices upward.
Micron Technology’s revenue for the fiscal second quarter ended March 4 rose to $6.24 billion. Second-quarter adjusted profit was 98 cents per share.
The Boise, Idaho-based company, which makes NAND memory chips that serve the data storage market as well as DRAM chips that are widely used in laptops and other computing devices, benefited from the coronavirus pandemic as a global shift to remote work boosted chip demand.
A global chip shortage has spurred buyers such as personal computer makers to begin snapping up supplies, sending memory chip prices upward, Reuters reported.
Analyst firm Trendforce said prices for DRAM rose between 3 percent and 8 percent in the first calendar quarter and predicts prices will rise between 13 percent and 18 percent in the second calendar quarter.
Micron said the overall DRAM chip market is in shortage and will tighten through the year. Micron itself is still working through a production disruption caused by an earthquake and power outage at one of its DRAM plants in Taiwan in December.
The company also said that a drought in central Taiwan has forced it to secure alternative sources of water for its factory but that it expects no immediate effect on production.
The chip shortage means that non-memory chips are experiencing shortages forcing makers of cars, PCs and smartphones to produce fewer units than they would like to in order to meet end demand.
“We believe memory demand would have been even greater without these shortages,” Sanjay Mehrotra, chief executive officer of Micron, said during a conference call with investors.
Micron CEO said data center, AI and data-centric workloads will drive long-term growth, with memory and storage becoming an increasing portion of server BOM cost.
Micron is positioned for success in this market. Enterprise demand, which had been anemic for the last few quarters, is starting to improve as IT budgets increase in anticipation of economic recovery, Micron CEO said.
Enterprise DRAM bit shipments grew sharply quarter-over-quarter, but were still down year-over-year. Cloud DRAM bit shipments also grew quarter-over-quarter and we anticipate robust demand from U.S. hyperscale customers, especially as we enter the second half of calendar 2021.
In data center SSDs, revenue declined sequentially as customers in certain segments reduced their higher than average inventory levels. Micron is expanding its data center NVMe SSD portfolio with internally developed controllers and have new product introductions planned in the coming quarters.
In PC, Micron benefits from the remote work and learning trend that drove healthy notebook and Chromebook demand in FQ2. Micron delivered record PC DRAM bit shipments despite pockets of non-memory component shortages experienced in the PC OEM supply chain. Micron also began sampling 1-alpha-based DDR4 products.
In client SSDs, Micron is on track to begin customer qualification of our next-generation client SSDs using 176-layer NAND in the fiscal second half of 2021. By the end of calendar 2021, Micron expects to cover multiple segments of the market, including consumer, value OEM and premium OEM with our 176-layer-based client portfolio.
In graphics, revenue declined quarter over quarter from an exceptional fiscal first quarter, which benefited from the launch of new gaming consoles. FQ2 revenue grew significantly year-over-year. Micron has an excellent position in this market with a broad product portfolio and deep customer partnerships.
In mobile, revenue grew 21 percent sequentially, driven by strong execution coupled with better-than-seasonal demand due to continuing recovery in smartphone volumes. Micron has achieved record MCP revenue and nearly tripled our LP5 revenue sequentially.
Micron said it also begun sampling the industry’s first 1-alpha LPDRAM and 176-layer NAND with mobile customers.
In auto, Micron delivered a second consecutive record-revenue quarter as auto manufacturing recovers around the globe and as memory and storage content per vehicle continues to grow.