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Micron shows how cloud can save chip manufacturers



Memory chip maker Micron Technology Inc. was saved by the prosperity of the data center. As the pandemic forced more companies to expand their cloud computing capabilities, the growth of chip manufacturers was promoted.

Monday, Micron
Acres,
+1.35%

Although the COVID-1

9 pandemic caused problems in the global supply chain, the performance of the second quarter financial report was better than expected, and the outlook for the next quarter is more optimistic. In after-hours trading, Micron’s stock price rose nearly 6%. At the close on Monday, Micron’s share price was $49.15, a 8.62% decline throughout the year, but it rebounded sharply from the plunge in March, when the stock price fell to a low of $31.13 in the early days of the pandemic.

Micron CEO Sanjay Mehrotra told analysts on the conference call: “In the second half of the year, we will still see healthy cloud demand trends.” “Cloud is actually still in the early stages, and the long-term trend of the cloud is strong.” The The company said that in the second quarter, the home office economy, e-commerce and video game streaming have driven strong demand for more cloud computing capabilities.

Micron’s comments echo those of other chip giants such as Intel.
INTC,
+ 1.33%

And Nvidia Corp.
NVDA,
+ 0.49%

NVDA,
+ 0.49%
,
Last quarter. On Monday, Xilinx.
XLNX,
+ 1.03%

When it updated its guidance for the first fiscal quarter, it joined the crowd, noting that the strong performance of wireless and data centers compensated for the weakness in the consumer sector.

Micron Technology said it expects demand for consumer technology products such as personal computers and smartphones to improve in the second half of the year. Part of the reason is the continuous introduction of 5G networks, which will drive the demand for new smartphones with more dynamic random access memory (DRAM) chips than 4G network phones. The company said that the average sales prices of DRAM chips and NAND flash memory have increased from the previous quarter.

The growing inventory of Micron and its customers, especially in the smartphone market, is a problem that plagues the company and even most chip manufacturers. When asked by an analyst about inventory growth, Mehrotra said its customers are preparing for consumer demand to pick up.

He said: “Customers want to be prepared when smartphone demand recovers.” “So, in general, this is related to customer inventory. Cloud inventory is in good condition,” while mobile inventory “expects demand to some extent.” .

NVDA,
+ 0.49%

During the corona virus pandemic, the resilience of the chip industry was surprising. Most demand was due to data centers and the need for more cloud computing. If the PC and smartphone markets resume growth, chipmakers such as Micron will have more room to rise. But for now, the sure thing is around the data center.


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