Micron Technology Inc has not yet obtained new licenses needed to sell its memory chips to Huawei Technologies. Company executives on Tuesday said this will cut its sales over the next two quarters.
Based in Boise, Idaho, Micron is one of the world’s biggest makers of DRAM chips. It said it had previously obtained licenses from the U.S. government to sell chips for mobile phones. This includes chips for servers from its factories outside the United States to Huawei.
Huawei has been the target of U.S. restrictions on chip sales since last year. It accounted for about $600 million of Micron’s $6.06 billion in sales. That was for the fiscal Q4 ended Sept. 3, or just under 10%.
But new restrictions that took effect in September barred sales of any chip made using U.S. tools or software. Thus, rendering Micron’s earlier licenses invalid and halting sales on Sept. 14.
Micron’s chief business officer, Sumit Sadana said the manufacturing equipment in those fabs are obviously from U.S.-based companies. These included Applied Materials Inc and Lam Research Corp.
Sadana said Micron has applied to the U.S. government for new licenses to sell to Huawei. However, it does not yet have them and does not know if or when they will be approved.
The company is shifting to selling to other smartphone customers. But the shift will take until Micron’s fiscal Q2 to complete.
Furthermore, Sadana said, as soon as they get the license, they would work with Huawei. That is to determine how they can resurrect the business.
Beating Analysts Estimates
Micron shares were volatile in extended trading. Shares were down 2% at $49.84 after it disclosed the Huawei hit.
Revenue jumped more than 24% to $6.06 billion in the fiscal Q4. According to data, it beat analysts’ estimate of $5.89 billion.
The company expects fiscal Q1 sales to be $5.2 billion plus or minus $200 million. On average, analysts were expecting $5.31 billion.
Net income attributable to the company rose to $988 million, or 87 cents per share. That was in the last quarter, from $561 million, or 49 cents per share, a year earlier. Micron earned $1.08 per share, excluding items, beating analysts’ estimates of 99 cents.
Meanwhile, HUAWEI CONNECT 2020 opened on September 23, 2020 in Shanghai. Huawei hosts this annual flagship event for the global ICT industry, a platform where the company discloses its major strategies.
Huawei envisioned an intelligent world and called upon its partners worldwide in 2016. It was to build a diverse and thriving Costa Rica-like ecosystem together.
In 2017, the Chinese firm announced its goal of becoming one of the world’s five major cloud service providers. It revealed its AI strategy in 2018, and then in 2019, its computing strategy.
Huawei helps customers transform their businesses. It works with ecosystem partners in building the foundation of the digital world.
Huawei continues to move forward by working with industry customers and partners. That is in order to meet the needs of new changes and challenges in industry digitization.
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