Micron Technology Inc (NASDAQ: MU) blamed “waning demand” and lowered its outlook for the current financial quarter on Tuesday. Shares are down 5.0% at the time of writing.
Micron expects a bigger hit to revenue in fiscal Q4
The semiconductor company is no longer confident that it’ll be able to meet its previous guidance (in July) of $6.80 billion to $7.20 billion in revenue this quarter.
Citing weakening demand for chips, it said revenue will hopefully print at the lower end of that range, but a miss altogether was still on the cards. The softening, Micron added, could also hit margins and push its free cash flow into the “red” in the next quarter (Q1).
Micron, therefore, is cutting back on spending and expects FY23 capital expenditures to be down significantly on a year-over-year basis.
The stock is now down nearly 40% versus the start of 2022.
Micron commits $40 billion to domestic chip production
On the flip side, Micron committed $40 billion in investment to boost domestic chip production through 2030 after President Biden signed the “Chips and Science Act” into law on Tuesday.
Only 12% of the chips are currently manufactured in the United States versus 37% some twenty years ago. Speaking in favour of the $280 billion bipartisan bill, CEO Sanjay Mehrotra said on CNBC’s “Squawk on the Street”:
It’s levelling the playing field. Foreign countries particularly in Asia have invested billions on incentives to bring semiconductor manufacturing to their shores. This is what we have to reverse and build a resilient supply chain in the U.S. It’s a matter of national security.
The said investments, as per Micron, will realize in 2025 and beyond, and are expected to create up to 40,000 jobs in the United States.