Micron Technology Inc Forecasts 60% Revenue Drop in Q3, Plans for a Record 2025 with AI Boosting Sales

Discover how Micron Technology Inc. (MU.O) plans to use artificial intelligence to boost sales in 2025. Learn about their headcount reduction, capital investments and how generative AI is fueling the need for storage. Find out about the record calendar year 2025 market size, the two planned factories, and how their revenue and profits have been affected by the chip glut.

Despite an industry-wide chip glut, Micron Technology Inc (MU.O) on Tuesday forecasted that its third-quarter revenue would drop by nearly 60% from the prior year, a figure in line with Wall Street expectations.

Company executives also reported a positive outlook for 2025, citing the growth of artificial intelligence as a sales booster. As part of its strategy to weather the economic downturn, Micron is targeting a 15% reduction in headcount and will keep investments at $7 billion for the 2023 fiscal year. Matt Bryson, Wedbush Securities chip analyst, praised the firm’s decision to lower capital expenses as a move that could “pull forward the timing and breadth of a future recovery”.

During the earnings call, Micron President and CEO Sanjay Mehrotra was confident about the memory chip industry’s future, predicting a record size for the calendar year 2025. The need for data centers is also on the rise due to the proliferation of generative AI chatbots, such as Microsoft Corp (MSFT.O)-backed OpenAI’s ChatGPT, and this is having a mitigating effect on the demand for chips. The utilization of AI is creating a surge in storage needs, with Chief Business Officer Sumit Sadana noting that a typical AI server requires eight times the amount of DRAM and three times the amount of NAND of a standard server. Micron reported a 53% drop in second-quarter revenue to $3.69 billion and a net loss of $2.3 billion, compared to a profit of $2.26 billion last year.

The company expects to incur a loss of $1.58 per share in the current quarter, plus or minus 7 cents, which is in line with analyst predictions. The firm also said customer inventories are improving and that it anticipates gradual improvements to the industry’s supply-demand balance, as well as improvements to gross margins.