Here’s Why Micron’s Earnings Signal Bad News for the Chip Industry

Memory chip maker Micron Technology (NASDAQ:MU) reported a larger than expected loss in its fiscal second quarter as DRAM prices remained flat and NAND chips fell compared to the previous quarter.

Micron reported a net loss of $224 million (23 cents a share) compared to a net profit of $72 million (7 cents a share) in the same period last year. Gross margin declined to 13 percent from 15 percent in the previous quarter, primarily due to lower realizations on its NOR flash sales in the wireless market.

Revenues fell to $2.07 billion against $2.26 billion in the previous period. However, analysts had expected sales of $2.02 billion as per Thomson Reuters I/B/E/S. According to the company, though its sales of NAND and DRAM chips rose 20 percent in volume compared to the previous quarter, the increased turnover came at the cost of lower average sales prices.

Recently appointed Chief Executive Mark Durcan said on a conference call on Thursday that the outlook for memory chip prices was improving – “Recently we’re seeing improvements in the DRAM market…I think concerns over supply seem to be having a positive or at least stabilizing effect,” Durcan said. “Overall, we see generally healthy supply/demand outlook for NAND moving forward.”

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