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Micron Forecasts Strong Revenue Growth Driven by High AI Memory Chip Demand

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Micron Technology (MU.O) has forecasted a robust third-quarter revenue, exceeding Wall Street estimates, driven by growing demand for its high-bandwidth memory (HBM) chips crucial to artificial intelligence (AI) models. This surge in AI-related demand sent Micron’s shares up by 2% in after-hours trading.

The company highlighted that AI demand is significantly boosting the need for HBM chips, a specialized form of dynamic random access memory (DRAM) vital for advanced AI systems, particularly those powered by Nvidia’s (NVDA.O) processors—one of the major beneficiaries of the AI boom.

Micron’s Chief Business Officer, Sumit Sadana, told Reuters that the company expects continued sequential growth through 2025, driven by increased capacity and market share in HBM production. Notably, Micron’s HBM chips for 2025 are already sold out, reflecting strong demand.

In addition to HBM chips, Micron also provides flash memory NAND chips, with demand expected to rise across both data center and consumer markets. The company forecasts significant profitability improvements for fiscal 2025, which ends in August.

Michael Ashley Schulman, Chief Investment Officer at Running Point Capital, emphasized Micron’s key role in supplying essential memory components for AI infrastructure, noting that the company’s positive outlook underscores its importance in the rapidly expanding AI sector.

Micron’s forecast includes anticipated revenue of $8.80 billion, with a margin of plus or minus $200 million for the third quarter. This exceeds the consensus estimate of $8.5 billion. For the second quarter ending February 27, Micron posted revenue of $8.05 billion, surpassing the $7.89 billion estimate, with earnings per share of $1.56, well above the $1.42 forecast.

However, Micron also acknowledged the uncertainty surrounding potential new tariffs imposed by the Trump administration, stating that it has not factored the potential impact into its forecasts but plans to pass any costs on to customers.

Samsung Q4 Earnings Expected to Be Hit by Nvidia AI Chip Supply Delay

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Samsung Electronics (005930.KS), the world’s largest memory chip maker, is forecasted to report slowed profit growth in the fourth quarter, as it struggles to meet Nvidia’s (NVDA.O) soaring demand for AI chips. Despite an expected operating profit of 8.2 trillion won ($5.6 billion) in the quarter ending December, up from 2.8 trillion won a year ago, this figure represents a decline from the previous quarter’s 9.18 trillion won.

Analysts have recently revised their earnings forecasts downward, with some projecting Samsung’s operating profit to fall below 8 trillion won. A key issue has been delays in Samsung’s supply of high-end AI chips to Nvidia, which has continued to impact Samsung’s earnings, despite an October apology from the company for its third-quarter performance and an earlier pledge to address the chip shortage.

In November, Samsung reshuffled its chip division leadership, naming its chip division chief co-CEO and granting him direct control over the struggling memory chip business. Meanwhile, Samsung’s shares fell 32% last year, underperforming the broader market’s 10% decline.

Contrastingly, SK Hynix (000660.KS), a major supplier of advanced AI memory chips to Nvidia, is expected to report record earnings for the fourth quarter, benefiting from strong demand for its products.

The broader semiconductor market is facing additional pressure, with weaker demand for traditional chips used in smartphones and PCs, and rising competition from Chinese chipmakers, leading to declining chip prices. DRAM prices, particularly DDR4 chips used in personal computers, have dropped as much as 13% in Q4 and are expected to fall another 15% in the current quarter, according to TrendForce.

The South Korean won’s depreciation in December to its weakest level in 15 years, fueled by political instability and concerns over U.S. tariffs under President-elect Trump, has provided some relief in the form of increased overseas earnings, but this has not been enough to offset weak chip prices.

Samsung is expected to release detailed results later in January, offering a breakdown of its earnings by business segment.

Samsung’s Q4 Profit Misses Expectations as Chip Issues and Rising Costs Weigh on Earnings

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Samsung Electronics has reported a significant shortfall in its preliminary fourth-quarter operating profit, primarily due to challenges in its semiconductor business. The South Korean tech giant estimates an operating profit of 6.5 trillion won ($4.5 billion) for the three months ending Dec. 31, well below analyst expectations of 7.7 trillion won. Although the expected profit represents a 131% year-on-year increase, it marks a 29% decline compared to the previous quarter.

The company’s earnings were affected by rising research and development (R&D) costs and the ramp-up of manufacturing capacity for advanced semiconductors. Additionally, weak demand for conventional memory chips used in PCs and mobile phones further contributed to the dip in profits.

Samsung’s efforts to provide high-end chips to Nvidia have also posed challenges. Unlike its rival SK Hynix, which is Nvidia’s main supplier of high-bandwidth memory (HBM) chips used in AI GPUs, Samsung has struggled to meet the tech giant’s chip requirements. Nvidia’s CEO, Jensen Huang, mentioned that Samsung needs to “engineer a new design” to supply HBM chips, although he expressed confidence in Samsung’s ability to meet this challenge.

The disappointing earnings also extended to Samsung’s logic chip division, which designs and manufactures chips for mobile phones. Analysts estimate losses could have widened to about $1.5 billion in the fourth quarter due to lower production yields and reduced demand for mobile devices, including Samsung’s premium foldable phones.

Despite the weak earnings, Samsung’s shares saw a slight uptick, with analysts noting that the company’s woes were already factored into stock prices. Competition in the chip and mobile sectors remains intense, and analysts are cautiously optimistic that chip demand may have bottomed out.