Micron Technology said it expects lower pricing for NAND memory chips but pointed to signs of improvement as demand for the chips used in smartphones, tablets and solid-state hard drives grows.
Micron, the top U.S. maker of memory chips for computers, said on Wednesday it sold more NAND in its fiscal first quarter ended December 2 but that average prices fell 15 percent sequentially.
The company expects prices for NAND to drop another 10 percent in the current quarter but Chief Executive Steve Appleton told analysts on a conference call he also saw hints that prices would begin to recover.
There are some pretty bright spots, (solid-state hard drives) in particular for us have gone well ... Smartphones are holding up, Appleton said.
Shares of Micron, which competes with industry leader Samsung as well as Elpida and Hynix Semiconductor, fell 3.6 percent in extended trading following its earnings report, after closing up 1.7 percent at $8.28 in the regular session.
Prices for NAND memory have slumped in recent quarters in part due to improving technology, and manufacturers including Micron are adding more capacity in anticipation of explosive demand from tablet and smartphone makers.
It is unclear how quickly future demand for NAND will fill the industry's new manufacturing facilities.
You're bringing more capacity to this market? Are you not just going to accelerate the price declines that we're seeing?, said Doug Freedman, an analyst at Gleacher & Company.
Freedman said Micron's revenues were likely to decline in the current quarter as NAND prices fall faster than unit sales grow.
Micron said prices for DRAM memory, which is used in personal computers, would fall about 25 percent in the current quarter.
Sales of personal computers, which use DRAM memory, have grown at a slower pace in recent months as some consumers hold off on large purchases and others choose tablets over notebooks.
Micron said its net profit was $155 million, or 15 cents per share, in the quarter compared with $204 million, or 23 cents per share, a year earlier.
Revenue in the first quarter was to $2.3 billion, up from $1.7 billion in the year-earlier period.
Micron's revenue from sales of DRAM memory, which is used in personal computers, fell 19 percent sequentially in the quarter due to a 23 percent drop in selling prices.
(Reporting by Noel Randewich; Editing by Gary Hill and Tim Dobbyn)