Micron warns that weakening consumer demand will hurt smartphone sales

Sanjay Mehrota, President and CEO of Micron Technology, at the WEF in Davos, Switzerland on May 24, 2022.

Adam Galica | CNBC

Micron Technologiesa major supplier of memory chips for PCs and smartphones, said on Thursday it expects smartphone sales to be significantly lower than previously expected through the end of 2022, citing declining consumer demand.

Micron CEO Sanjay Mehrotra said in a phone call with analysts that he expects smartphone sales to decline by about 5% year-over-year. Analysts had expected growth of about 5%, Micron said. The company also warned that it believes PC sales could be down 10% year-over-year and that it is adjusting production growth to match weaker demand.

He added that some PC and smartphone buyers “adjusted their inventories” in the second half of the year.

“If you translate that into units, that amounts to a reduction of about 130 million units from what was expected earlier this year for smartphones,” Mehtotra said. “Similarly, for PC, let’s say 30 million fewer total units compared to forecasts earlier this year.”

Micron’s warning is the latest sign that the market for new computers and phones is starting to fall after two years in which the pandemic accelerated growth as people worked and went to school from home.

Micron supplies memory to smartphone makers including Apple, Motorola and Asus, so it has an understanding of broader sales trends.

“Closer to the end [the quarter] “We saw a significant decline in industry demand, primarily due to weakness in end-demand in consumer markets, including PCs and smartphones,” Mehrotra said. , and rising inflation around the world.

The chipmaker’s forecast is in line with some third-party industry estimates. Earlier this week Gartner predicted that global mobile phone sales will fall by 7.1% in 2022, revising its earlier estimate of 2.2% growth.

Micron shares fell more than 2% in extended trading on the company’s fiscal third quarter 2022 report ending June 2. Sales rose 16% year-on-year to $8.64 billion, and the company’s earnings per share of $2.59 beat analysts’ expectations.

However, the company lowered its current-quarter revenue guidance to $7.2 billion from the consensus estimate of $9 billion.