Micron has warned that continued oversupply of DRAM chips will weigh on its margins.
Already investors are worried about tepid PC sales and casting a shadow on expectations for the upcoming holiday season. Avian Securities analyst Win Cramer told Reuters that DRAM supply has been building throughout the year, causing an oversupply and leading to average selling prices declining faster than the slowdown in PC sales.
Micron's competitors, including Hynix, Elpida and Samsung have been shifting production to NAND flash chips used in tablets and smartphones. Meanwhile Micron said that its DRAM revenue fell 12 percent in the fourth quarter from the third quarter. NAND sales rose 11 percent but they account for only a fourth of the company's sales compared to DRAMs which contribute more than half.
Micron thinks that the Halloween and Christmas holiday seasons will spur NAND sales. Ronald Foster, chief financial officer, said that demand remains relatively strong for smartphones, SSDs, tablets.
Micron, America's sole maker of dynamic random-access memory chips, also posted a surprise quarterly loss. Net loss for the fourth quarter was $135 million, while analysts on average had expected a profit of 1 cent a share.