Micron Technology sees immense growth for semiconductors in 5G and electric vehicles as global economies rebound from the pandemic, CEO Sanjay Mehrotra told CNBC on Thursday.
“Today’s markets are more diversified than ever. Automotive and electric vehicles that require more memory and storage (actually they will become data centers on wheels in the future) and certainly smartphones, data centers, games and industrial applications ”are contributing to a increased need for chips. Mehrotra said on “TechCheck.” “We really see a healthier and stronger demand environment than ever.”
Micron, which makes memory chips used for data storage, smartphones and a variety of other computing devices, reported better-than-expected quarterly sales and earnings on Wednesday. Its fourth-quarter revenue guidance also beat analyst projections.
The chipmaker forecast fourth-quarter revenue of $ 8.2 billion, roughly $ 200 million, while analysts on average were expecting $ 7.87 billion, according to IBES data from Refinitiv.
In its fiscal third quarter, Micron’s revenue increased 36% to $ 7.42 billion, when Wall Street had been seeking $ 7.24 billion, according to Refinitiv. Earnings per share of $ 1.88, excluding items, beat forecasts of $ 1.72.
The pandemic has resulted in an “acceleration of digital transformation,” Mehrotra said, and a pronounced shortage of semiconductors that has affected the global economy. On Wednesday, for example, Ford Motor announced another round of production delays due to the chip crisis.
However, higher prices due to reduced supply and the shift from the Covid era to remote work have helped Micron.
Looking ahead, Mehrotra expects new tailwinds for the company caused by technological changes in areas such as wireless networks. He said that 5G technology, particularly in smartphones, artificial intelligence, smart edge and smart user devices, have been key sources for the growth in demand, as they all require more memory and data storage.
Despite the optimistic outlook, Mehrotra said the company is being “extremely cautious” in its approach to plants and manufacturing capacity. “We want to increase our supply in line with long-term demand trends,” said the CEO.
But right now, he said, Micron’s inventories are “running very tight,” and the company expects the industry shortage to last through the end of this year and into 2022. “The shortage, as it eases, It will continue to open and demand also increases, “he said.
Micron shares closed down 5.7% Thursday at $ 80.11 apiece. The stock is up more than 6% so far this year.
– Reuters contributed to this report.