Jul 2, 2021
Laura Berrill

Semiconductor growth for electric vehicles and 5G

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Micron Technology sees huge growth for semiconductors as cars become ‘data centres on wheels’ and in 5G rollout as economies recover from pandemic

The CEO of the memory chip company, Sanjay Mehrotra says the markets are more diversified than ever and that automotive and electric vehicles, along with smartphones, data centres, gaming and industrial applications are all contributing to the increased need for chips. He adds there is a healthier and more robust demand as a result.

Micron, which makes memory chips for data storage, smartphones and a range of other devices, reported better than expected quarterly sales and profit this week and its fourth-quarter revenue guidance also topped analyst projections. According to IBES data from Refinitiv, the firm forecast fourth-quarter revenue of $8.2 billion - plus or minus $200 million - while analysts on average were expecting $7.87 billion.

In its fiscal third quarter, Micron’s revenue jumped 36% to $7.42 billion, when Wall Street had been looking for $7.24 billion, also according to Refinitiv. But per-share earnings of $1.88, excluding items, beating forecasts of $1.72.

Digital transformation acceleration

The pandemic has resulted in a ‘digital transformation acceleration; Mehrotra added, as well as a stark shortage of semiconductors which has been felt across the global economy. For example, also this week, Ford Motor announced another round of delayed production as a result of the chip shortage. Despite this, higher prices resulting from the squeeze, along with the shift to more remote working have helped Micron.

The company expects further boosts sparked by technological shifts in wireless networks and 5G technology, especially in smartphones, artificial intelligence, intelligent edge and smart user devices. These areas have been key sources for demand growth because they all require more data memory and storage capabilities.

Future demand

Yet the business says it is being ‘prudent’ in its approach to fabrication and capacity, with inventories running very lean and an expectation of industry shortages lasting through to the end of this year and into 2022. However, the shortages, as they become alleviated, will open up pent up demand, the company adds. Shares of Micron closed down 5.7% this week, to $80.11 each, with stock up more than six per cent to date.

 

 

 

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