Chipmaker Micron resumes shipments to Huawei after nosedive in quarterly revenue

Friday, 28 Jun, 2019

The Trump administration banned the sale of American technology to the Chinese tech giant Huawei in May but us companies including Intel and Micron are selling computers chips to Huawei once again, according to a report in the New York Times.

For Micron's fiscal third quarter ended on May 30, the company beat analysts' estimates for quarterly revenue and profit.

Revenue - In terms of revenue, MU generated $4.79 billion in the third quarter.

The Chinese firm has never been asked by a court to pay intellectual infringement damages and has been granted 87,805 patents of which 11,152 are USA patents, Huawei's chief legal officer, Song Liuping, said at a news conference at the company's Shenzhen headquarters on Thursday. According to a recent report from the New York Times citing people familiar with the situation, chipmakers such as Micron, Intel and Qualcomm plan to continue to do business with China-based Huawei, which has gotten the ire of the U.S. government and defense departments as of late, by exploiting a labeling loophole. However, Micron resumed sales two weeks ago after it reviewed the entity list rules and "determined that we could lawfully resume" shipping a few products.

Micron, Intel and other industry leaders had managed to partly circumvent the ban by avoiding labelling goods as American-made, the New York Times reported on Tuesday.

Mehrotra noted that Huawei was Micron's No. 1 customer and that the ban cost the company as much as $200 million in missed sales during the third quarter.

Also last week, a report said that American processor firms were lobbying the government to ease the ban on Huawei.

Intel declined to comment, while Micron and Huawei didn't immediately respond to requests for comment. But David Zinsner, Micron's chief financial officer, said the company's losses would have been less. Even when companies have headquarters in the U.S., they may be able - through ownership of overseas subsidiaries and operations - to classify their technology as foreign, according to Cross Research analyst Steven Fox. The company had a trading volume of 28,471,769 shares, compared to its average volume of 29,239,311.

Mehrotra said he expects strong growth in the fourth quarter as inventory levels lower because of stronger sales.

But Micron executives said they expected demand for its chips to recover in the second half of calendar 2019. Micron makes chips used as the main memory in computers and as storage in mobile devices.

Last quarter, the company said it would idle 5% of production for DRAM and NAND memory chips because of weaker demand and reduce its planned capital expenses in the fiscal year to about $9 billion.

On average, analysts expect that Micron Technology will report full year sales of $22.93 billion for the current year, with estimates ranging from $22.25 billion to $23.56 billion.

Reporter John Sowell has worked for the Statesman since 2013. The business is scheduled to issue its next quarterly earnings report on Tuesday, June 25th. He grew up in Emmett and graduated from the University of Oregon.If you like seeing stories like this, please consider supporting our work with a digital subscription to the Idaho Statesman.