Micron expects revenue impact following China ban

U.S.-based Micron Technology on Monday forecast a hit to revenue in the low-single to high-single digit percentage after a ban by China on sale of its memory chips to domestic industries.

Micron, according to its estimate on March 28, is targeting to achieve quarterly revenue of $3.7 billion during the current quarter. Micron has posted revenue of $3.69 billion in its second quarter of fiscal 2023, which ended March 2, 2023 versus $4.09 billion for the prior quarter and $7.79 billion for the same period last year.

Micron generated around 10 percent of its revenue from China. But it is not clear if the decision affects the company’s sales to non-Chinese customers in the country.

Micron generated $5.2 billion of revenue from China and Hong Kong last year, about 16 percent of its total revenue, according to Jefferies.

Micron did not reveal the likely impact on its investment plans.

China’s cyberspace regulator said on Sunday that Micron, the biggest U.S. memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company.

It did not provide details on what risks it had found or what products from the company would be affected.

Analysts said they saw limited direct impact on Micron as most of its customers in China are consumer electronics players, but warned the move could prompt some companies to rid their supply chains of Micron products due to political risks.

Micron Chief Financial Officer Mark Murphy said on Monday it was unclear what concerns Beijing had and direct and indirect sales to China-headquartered companies accounted for about a quarter of the chipmaker’s revenue.

“We are currently estimating a range of impact in the low single-digit percentage of our company’s total revenue at the low end, and high single-digit percentage of total company revenue at the high end,” Mark Murphy said.

Micron is the first U.S. chipmaker to be targeted by China following a series of export controls by the US on certain American components and chipmaking tools to block them being used to advance China’s military capabilities.

China launched the review in late March amid a dispute over chip technology and worsening relations between Washington and Beijing.

Other U.S. chipmakers with big exposure to China are Qualcomm, Intel and Broadcom.

“Since Micron’s DRAM and NAND products are much less in servers, we believe most of its revenue in China is not generated from telcos and the government. The ultimate impact on Micron will be quite limited,” Jefferies said.