U.S. News

Micron Sees Falling Margins for Some Memory Chips


Micron Technology forecast that prices for memory chips used in consumer electronics would be down 30% to 40% this quarter from the previous one, sending the company's shares tumbling.

The news also contributed to a broader weakness in technology stocks Friday. Micron has a joint manufacturing agreement for flash memory with tech bellwether Intel , which lost ground. Shares of rival SanDisk also declined.

Mike Sadler, the company's head of sales, said the falling prices come after Micron boosted production of NAND memory chips and amid an industry glut. Micron is the largest U.S. maker of computer memory chips.

He did not detail the potential impact on the company's earnings and said he did not see any signs of strengthening demand for the chips that store information on devices such as digital cameras and digital music players.

"It just happens that it is not ideal timing with our ramp up of output when the market is depressed," Sadler said in a telephone interview.

Sadler also said that prices for the company's core product -- dynamic random access memory chips used in personal computers -- would fall about 15% from the previous quarter. Sales of those chips make up about 60 to 70% of the company's revenue while NAND chips contribute less than 20%.

Micron shares finished down 34 cents, or 2.64%, to close at $12.56 in trade on the New York Stock Exchange.