A significant supplier of memory chips for PCs and smartphones said on Thursday that for the rest of 2022, smartphone sales will be significantly lower than originally anticipated due to a decline in customer demand. Sanjay Mehrotra, CEO of Micron, predicted a 5% decrease in smartphone unit volume from the previous year during an earnings call with analysts. According to Micron, analysts were anticipating growth of about 5%.
The company also stated that it anticipated a 10% drop in PC sales from the previous year and that it was adjusting its production growth to account for the weaker demand. In the second half of the year, he continued, several PC and smartphone clients “adjusted their inventory.” According to Mehtotra, “If you were to translate it into units, it corresponds to about 130 million units less than forecast earlier in the year for smartphone.”
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Similarly, let’s imagine that the total number of PCs sold is down by, say, 30 million units from earlier in the year’s estimates. After two years in which the epidemic boosted growth as more people worked from home and attended school online, Micron’s warning is the most recent indication that the market for new computers and phones is beginning to decline. Micron has insight into larger sales trends because it supplies memory to manufacturers of smartphones including Apple, Motorola, and Asus.
According to Mehrotra, “at the end of [the quarter], we noticed a considerable decline in industry bit demand, mostly attributable to end demand difficulties in consumer markets, including PC and smartphone.” These consumer markets have been hit by the slump in Chinese consumer expenditure, the conflict in Russia and Ukraine, and global inflationary pressures. The chipmaker’s outlook is consistent with some industry forecasts from outside sources.
This week, Gartner revised its earlier projection of 2.2% growth and forecast a 7.1% decline in worldwide mobile phone sales in 2022. As a result of the company’s announcement for its fiscal third quarter 2022, which ended on June 2, Micron shares dropped more than 2% in extended trade. Sales increased 16% annually to $8.64 billion, and the business topped expert estimates with earnings per share of $2.59. In contrast to consensus estimates of $9 billion, the corporation, however, decreased its sales outlook for the upcoming quarter to $7.2 billion.