(Reuters) – Micron Technology Inc said on Wednesday it expected a recovery in 2020 after a “cyclical bottom” in the second quarter, and that it had received all requested licenses to supply some products to its largest customer, Huawei.
FILE PHOTO: Micron Technology’s solid-state drive for data center customers is presented at a product launch event in San Francisco, U.S., October 24, 2019. REUTERS/Stephen Nellis
Shares of Micron rose nearly 4% in extended trading, after its quarterly earnings beat Wall Street estimates on an uptick in demand for memory chips after a tepid year.
Struggling to grow sales amid a slowing memory market, Micron faced more uncertainty when Washington placed Huawei on a so-called entity list in May that effectively banned U.S. firms from supplying to it.
Wednesday’s announcement about Huawei licenses comes amidst a tepid forecast for the second quarter, but Chief Executive Officer Sanjay Mehrotra said he expects the business to recover in the third quarter of fiscal 2020.
“Recent trends in our business give us optimism that our fiscal second quarter will mark the bottom for our financial performance… with continued recovery in the second half of calendar 2020,” Mehrotra told analysts on a post-earnings call.
In June, Micron said it had determined that some of its products could be legally shipped to Huawei, while others remained barred. It did not, however, disclose if it had received a license when U.S. officials began granting them in November.
The chipmaker said on Wednesday it had received all requested licenses that enable it to provide support for certain products and qualify new products for Huawei’s mobile and server businesses.
The licenses are not expected to have a material impact on the company’s revenue in the next couple of quarters, Micron said.
The Idaho-based company forecast second-quarter revenue between $4.5 billion and $4.8 billion, while analysts were expecting $4.78 billion.
Chipmakers have faced harrowing 17 months as United States and China traded tariff blows that reduced access to the Chinese market – one of the largest for U.S. companies.
For the first quarter, Micron earned 48 cents per share on an adjusted basis, a cent above expectations.
Net income attributable to the company fell to $491 million in the quarter ended Nov. 28, from $3.29 billion a year earlier.
Revenue also fell to $5.14 billion from $7.91 billion, but beat estimates of $5.01 billion, according to IBES data from Refinitiv.
Reporting by Neha Malara and Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli