In an earnings call with analysts, Memory chip maker Micron said it expects to see meaningfully lower sales than had been expected, due to softening consumer demand as the economy slows, consumers reduce spending due to inflation, and users rely less on their computers and phones for work as they return to the office.
CEO Sanjay Mehrotra said he expects smartphone sales volume to be down about 5% compared to last year. Analyst expectations had been for about 5% growth this year. He also said it was expected PC sales might decline by 10%, and the company was looking to adapt production to meet the lower demand.
He added that some of the company’s customers were “adjusting their inventories,” for the second half of the year
Mehtotra said, “If you were to translate it into units, it amounts to like 130 million units reduction versus expectation earlier in the year for smartphone. Similarly, for PC, let’s say 30 million kind of reduction in terms of total units versus the projections earlier in the year.”
The market for computers and phones had been being fueled by the pandemic, which forced people to rely on their devices to take classes or work from home, and teleconference instead of meeting face to face. Now as we exit that phase, it would appear consumers are less motivated to buy new devices.
Since Micron is a supplier to Apple, Motorola, and Asus, it has a unique window into sales trends.
Mehrotra continued, “Near the end of [the quarter] we saw a significant reduction in industry bit demand, primarily attributable to end demand weakness in consumer markets, including PC and smartphone. These consumer markets have been impacted by the weakness in consumer spending in China, the Russia-Ukraine war, and rising inflation around the world.”
Micron’s estimates jibe with other estimates from other experts. Gartner had predicted earlier this week that global mobile phone sales would be down by 71% in 2022, as opposed to its older estimate of 2.2% growth.
Micron shares were down more than 2% in extended trading after its report for the third fiscal quarter of 2022, ending June 2. Sales were up 16% annually to $8.64 billion, as the per share earnings beat estimates at $2.59.
But the company revised down revenue guidance for the current quarter to $7.2 billion, whereas the consensus expectations were $9 billion.
