Memory Chipmaker Micron Raises Q2 Guidance Above Street Forecasts

Micron Technology, Inc. MU shares see-sawed in Wednesday's sessionas investors weighed bullish news from the company against the backdrop of an extended tech sell-off.

What Happened: Ahead of CFO David Zinsner's participation in a fireside chat at the Morgan Stanley Media & Telecon conference, Micron said it is upwardly revising its guidance for the second quarter ending March 4.

The Boise, Idaho-based company lifted its 2021 revenue guidance from $5.6 billion-$6 billion to $6.2 billion, which is above the consensus estimate of $5.86 billion.

The GAAP gross margin guidance was increased from 26% to 27% and the non-GAAP gross margin is now seen at 33%, up from the 32% estimated previously.

The non-GAAP EPS guidance was increased from 68-82 cents to 93-98 cents. Analysts, on average, estimate non-GAAP EPS of 79 cents.

The company also raised its GAAP EPS guidance from 34-48 cents to 51-56 cents.

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Why It's Important: The chip industry is going through a phase in which demand is outstripping supply, leading to chip shortages.

DRAM volume and pricing are better than anticipated, while in terms of NAND chips, volume was strong but ASPs were about in line, Micron's Zinsner said at the Morgan Stanley event.

"Things are really tight, particularly in DRAM. You will see when we report our inventories are likely to be within our optimal range, with DRAM tighter than NAND," the CFO said.

"We lived a bit from a volume perspective on the upside, we live off the inventory as well as supply. But we will not have that inventory luxury in the second quarter."

Zinsner conceded that it's a challenging environment in terms of tightness around DRAM as well as on NAND.

The tightness seen in DRAM across the industry bodes well for pricing, he added.

Micron is scheduled to report second-quarter results March 31.

MU Price Action: Micron shares closed Wednesday's session down 2.17% at $89.11 but were gaining back 2.02% in the after-hours session at the time of publication. 

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