Micron Technology is finally accepting the reality of the memory-chip downturn, and investors appear to be breathing a sigh of relief.
Micron Technology Inc. is finally accepting the reality of the memory-chip downturn, and investors appear to be breathing a sigh of relief.
Micron’s move to cut its capital spending also was a bit of a shift in stance by CEO Sanjay Mehrotra, who has categorized the current slowdown as a temporary blip in an industry that is no longer cyclical, due to so many different demand drivers. With this move, he showed he is willing to react to big changes in the market, rather than fight the ongoing slowdown.
“Many investors see the slowing wafer starts and lowering capex as a recognition by Micron management that this is a downturn and that they are focused on reducing supply rather than ignoring it,” said Eric Ross, an analyst at Cascend Securities. In addition, the company is still pointing to a strengthening in the second half of the calendar year, he said.
All chip makers say the second half will be better, but at least investors know now that Micron’s top executives are prepared to change based on the facts, versus their beliefs.
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