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Micron warns of component shortages

by on30 March 2022

Prices will rise

Chipmaker Micron Technology warned that while production will not drop due to component shortages driven by the Ukraine crisis, costs are expected to rise.

Ukraine's two leading neon suppliers, which produce about half the world's supply of the key chip-making ingredient, have halted their operations, threatening to drive up prices and worsen an ongoing semiconductor crunch.

Global chip output was already under pressure after the pandemic drove up demand for mobiles, laptops and cars, forcing some firms to scale back production.

That same demand helped Micron forecast current-quarter revenue above estimates and deliver higher-than-expected results in the second quarter, sending shares up more than four per cent.

Chief Executive Officer Sanjay Mehrotra said:"We currently do not expect any negative impacts to our near-term production volumes because of the Russia-Ukraine war, but we do expect an increase in our costs as we secure supply of certain raw materials that could be addressed.”

Recent efforts to diversify supply and maintain inventories of raw materials and noble gases helped contain the blow, he added.

Summit Insights Kinngai Chan, managing director said that the impact from Ukraine-driven supply shortfalls will not show up until about seven to nine months later, when global raw material inventories run out.

Micron forecasts current-quarter revenue of $8.7 billion, plus or minus $200 million, compared with analysts average estimate of $8.06 billion, according to Refinitiv data.

Revenue rose 24.8 per cent to $7.79 billion, beating estimates of $7.52 billion.

Micron charged more for its NAND and DRAM memory chips, helping gross margins as a percentage of revenue rise to 47.2 per cent from 26.4 cent last year. Excluding items, net income was $2.14 per share, higher than estimates of $1.97.


Last modified on 30 March 2022
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