The largest chip-equipment maker in the world, Applied Materials, said factory utilization at memory-chip makers fell, and customers see a further drop in the current quarter.
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The outlook for memory chip demand keeps deteriorating.
On Thursday, the largest chip-equipment maker in the world
Applied Materials
(ticker:
AMAT
) reported slightly better-than-expected overall results on the back of robust orders for its ICAPS business, which serves the auto and industrial markets, specializing in power, sensors, and communications chips.
But Applied Material’s management commentary on state of the memory market during the earnings call with investors was much less positive. The company said factory utilization at memory-chip makers fell, and all its memory customers are forecasting a further drop in the current quarter. Further, chip inventories are still rising, and Applied Materials is seeing “significant cancellations and [order] push outs” from its memory customers.
Two large memory makers,
Micron Technology
(
MU
) and
Samsung,
did not immediately respond to a request for comment on Applied Materials’ memory-market statements.
In Friday trading, Applied Materials stock is up 0.9% to $116.39, while Micron stock was down 0.6% to $59.72.
Memory chips are used in computers and smartphones. Those markets have been weak over the last several quarters. According to research firm IDC, worldwide shipments of PCs fell 28% in the December quarter from a year earlier, after a 15% year-over-year decline in the September quarter. IDC cited a continued unwinding of the pandemic-era boom. Research firm Canalys also said fourth-quarter worldwide shipments for mobile phones fell 18% year over year due to difficult economy conditions.
The latest commentary from Applied Materials means the worst isn’t yet behind the industry. It is clear demand continues to soften, which suggests any hope for a near-term memory-chip rebound is fading away.
Write to Tae Kim at tae.kim@barrons.com
Credit: marketwatch.com