US company Micron Technology forecast sales to fall by one to several percent at today’s conference after China banned sales of its memory chips to key domestic industries. In addition, Mark Murphy, Micron’s CFO, said China’s decision to ban purchases of the company’s products had no clear basis.
Image source: Micron
On Sunday, China’s regulator said Micron, the largest US maker of memory chips, failed cybersecurity reviews of its products, prompting China to ban key infrastructure operators from buying the company’s products. The statement did not detail what risks had been identified and which of the company’s products would be affected. Analysts said they don’t see a significant impact on Micron because most of its key customers in China are device makers, but warned that the move could prompt some companies to sever their supply chains of Micron products due to political risks.
Micron’s CFO Mark Murphy said on today’s conference call that it’s not clear what Beijing is concerned about. “We currently estimate that the impact on overall company revenue will range from a few percent to larger single-digit percentages.‘ Murphy said. In other words, we’re talking about a 1-9% drop in sales. Performance helped Micron stock pare losses as the stock fell just 3.4% to $65, compared with a 6% decline pre-market.
Micron is the first US chipmaker to be targeted by Beijing after Washington imposed a series of export controls to China on certain US electronic components and chip manufacturing facilities. Note that direct and indirect sales to companies headquartered in China account for about a quarter of Micron’s sales. However, as mentioned above, these are mainly manufacturers of household appliances and electronics that are not intended for the critical infrastructure to which the ban applies.
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