The increasing demand for memory chips and launches of various smartphones has caused Micron Technology Inc.’s outlook for rising above Wall Street’s estimates. Micron rising from its tear has gone up by 44% since January, outshining the S&P 500 Index SPX, -0.86% with the increase in memory-chip prices due to scarce supply and growing high-end demands.
According to the new chief executive officer of Micron’s MU, -2.39%, Sanjay Mehrotra, pointed out that the future introduction of new phones is a will cause a speed up in its outlook. FactSet Micron said it hopes that its fourth quarter’s income ranges between $5.7 billion and $6.1 billion, from the present $5.6 billion.
The need for greater memory chips
In a conference call by an analyst, Thursday with Mehrotra, the envisaged introduction of more smartphone will require more memory chip densities ranging from four to six gigabytes. The upcoming phones will feature higher resolution displays, several camera functionalities and even additional reality applications.
Several users and analysts think that Apple Inc. AAPL, -1.47% will bring out its next iPhone during the fall. Following Apple’s release of developers’ kit during its last WWDC in June, it indicated that augmented reality features would be seen in its future products.
Micron gains back its stand
Notwithstanding all the good news, Micron shares dropped and bounced back after some hours of trading. Executives of Micron told investors that its growth cannot be compared with that of the firm at large. They further reminded investors that Dynamic Random Access Memory (DRAM) supply rate for the company in 2017 would be less than its planned demand.
Mehrotra added that about 15% – 20% of DRAM bit supply which is less than the market growth perspective is expected in 2017. Likewise, for NAND, a supply growth of about 30% to 40% is expected, and this is contrary to the high demand that would have been.
While investors look forward to seeing rising inventories or drop in memory prices, analysts question inventory levels. Mehrotra said that inventory stages are within good limits. Investors are getting curious, but Micron executives appear to be calming the tension indicating that everything remains good in the world of memory chips.