Should Micron Technology, Inc. (NASDAQ:MU) Bother About Microchip Technology Inc. (MCHP)’s Comment On Correction In Semiconductor Industry?

Boston, MA 10/13/2014 (wallstreetpr) – Will Micron Technology, Inc. (NASDAQ:MU) be one of the companies to witness a slowdown in the consumer demand in the coming quarters? Will its performance be lower than the expectations? If there is going to be slow down, not just Micron, but the entire industry would face it. Undoubtedly, the comments made by Micron Technology, Inc. (NASDAQ:MU) has not only hurt the sentiments of investors but also made analysts’ to look for reasons.

Comments From Micron

The industry, as a whole, got a jittery after Micron CEO, Steve Sanghi, commented recently that the industry has started to witness another round of correction, Bloomberg reported. He believed that the correction would become more visible broadly across the industry in the coming quarters. This was just enough to hurt the sentiments.

Interestingly, Intel Corporation (NASDAQ:INTC) would be reporting its September quarter results on October 14, which should throw some additional information on the outlook of the industry. Any gain from the PC segments should benefit Micron too.

Weak Demand In China

The comments came on the backdrop of the revenue miss by Microchip due to weak demand in China. The company’s CEO said that September quarter was normally the strongest in China. The CEO has reportedly said that the company was always ahead of others in seeing the turn of the semiconductor industry.

China was the biggest market for semiconductor companies since most of the world’s electronics productions were happening there. This included smart devices. As far as Micron was concerned, it produced DRAM, NAND Flash, as well as NOR Flash memory apart from other innovative memory technologies.

Analyst Take

Citigroup Inc (NYSE:C) analyst David Phipps and Ashish Nair disclosed that the correction in inventory happens when the demand drops for a reasonable time and can happen either in economic expansion or contraction. They said that the corrections would last two – three quarters

While releasing fourth quarter results recently on September 25, Micron Technology, Inc. (NASDAQ:MU) CEO, Mark Durcan, sounded more optimistic. He said that continued favorable market conditions apart from the stable execution contributed to its sales volume in the August quarter results.

Contrasting Comments

Within a fortnight from Micron’s results announcement, Microchip announced weak demand being witnessed in China. The comments from both the CEOs were in total contrast.

None-the-less Micron and investors cannot take the comments lightly, and Micron needs to convince its investors only by announcing better than expected results.

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