(Image courtesy of Micron Technology).
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Micron Lifts Sales Forecast as Demand in Data Centers Soars

June 4, 2020
The top US memory chip vendor has been largely unscathed by the global health crisis. But it is facing significant uncertainty over whether demand for chips designed for use in data centers and personal computers will continue in the second half of 2020.

Micron Technology lifted its revenue forecast for the latest quarter to between $5.2 billion and $5.4 billion from a range of $4.6 billion to $5.2 billion, buoyed by booming demand for memory chips used in in data centers, as the coronavirus crisis pushes more businesses to rent out tools and services over the cloud and support workers staying at home.

Micron, the top US manufacturer of memory chips, said in a filing it anticipates adjusted earnings of 75 cents and 80 cents per share, on the higher end of the former forecast of 40 cents to 70 cents per share. Profit margins are projected to be in the range of 33% to 34% in its third fiscal quarter as global prices for DRAM and NAND continue to rebound.

The move signals that one of the world's largest vendors of memory chips has been able to weather the economic fallout from the virus no worse for the wear. But it is also facing uncertainty over whether the demand for its chips will continue into the second half of the year. Spending by consumers has collapsed in the wake of the lethal virus, which has led to lockdowns that cascaded to major economies around the world starting in early 2020.

In March, Micron said it was shifting production to chips designed for use in data centers despite unforeseen delays in the global supply chain. In early 2020many governments where it operates ordered any business that was not indispensable to close to combat the virus. The company said it was forced to shut down its testing and packaging plants shortly in Southeast Asia before it was given the green light to restart production lines.

Sanjay Mehrotra, Micron's chief executive officer, said last month that it has been taking advantage of robust demand for DRAM and NAND used in private corporate servers and cloud data centers. Microsoft, Google, Amazon, Apple, and other cloud and technology giants are pushing ahead with upgrades to the colossal data centers they operate. Sales of personal computers have soared, counteracting a dip in the global smartphone sector.

“Our business continues to be stable,” Mehrotra said at an investment conference in May. But he added that the lethal virus "will likely continue to be a negative factor in second half of 2020. And much will depend on the pace and rate of recovery around the world from lockdowns and Covid-19," referring to the illness induced by the novel coronavirus.

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