Market Overview

Chipmaker Micron Expects To Recover By Q3 On The Back of Huawei License

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Chipmaker Micron Expects To Recover By Q3 On The Back of Huawei License

Idaho-based chipmaker Micron Technology (NASDAQ: MU) is expecting to recover the business by its third financial quarter of 2020.

The company's chief executive officer Sanjay Mehrotra told Reuters on Wednesday that Micron was one of the companies to receive the U.S. Department of Commerce license to export to Beijing-based Huawei Technologies Co Ltd. in November, alongside Microsoft Corporation (NASDAQ: MSFT).

Huawei was placed on the "entity list" by the Commerce Department in May, which hurt the business of some of the U.S. companies exporting to the troubled technology giant.

After posting bleak, but better than expected numbers in the first financial quarter, Mehrotra told Reuters, that the company is anticipating the second quarter to mark the "bottom" for its business.

“Recent trends in our business give us optimism that our fiscal second quarter will mark the bottom for our financial performance ... with continued recovery in the second half of calendar 2020,” Mehrotra told Reuters.

Earlier on Wednesday, Micron said that it is expecting a revenue between $4.5 billion and $4.8 billion, against the analyst expectations of $4.78 billion.

The chipmaker posted $5.14 billion in sales for the first quarter, down 35.04% year-on-year, but beat the analyst consensus of $5.03 billion, causing the shares to surge.

Mehrotra told Reuters that the company is not expecting Huawei exports to have a significant impact on its sales for the next two quarters, as Micron will need to ensure that its chips are compatible with Huawei's new phones.

“We believe that we’ll be able to get back to working with them and qualifying our products, and then within a few months we should be in a much better place - assuming of course that no changes occur in terms of the U.S. trade policy as it relates to Huawei,” Mehrotra said.

Price Action

Micron's shares traded 4.62% up at $55.49 in after-hours trading on Wednesday. The shares closed the regular session 0.075% higher at $53.04.

Posted-In: Government News Politics Legal Markets Tech Media General Best of Benzinga

 

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