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Micron upbeat about future of its industry

BOISE — Officials with Micron Technology Inc., which has a huge, mostly empty semiconductor plant in Lehi, said this week that some aspects of the semiconductor industry are improving for the company.

The company reported that net sales for its semiconductor operations were down during the quarter ended March 1 — from $1.5 billion to $1 billion, compared with the prior quarter.

And while the company is experiencing a soft market with networking and communications customers who have large inventories already, personal-computer customers have worked through an inventory and are ordering memory chips.

The company will release its consolidated results for the quarter next week.

"Fiscal Q2 seemed to be a transition quarter for Micron and the rest of the memory market as we continue to ride a downward curve of our historical memory business cycle," said Fred Waddel, director of sales for the computing and consumer group.

Waddel said the quarter began with two major negatives. PC customers had large inventories because a previously tight market for supply and an expectation that would continue, plus PC manufacturers sold fewer-than-expected PCs in the fourth quarter.

"This double whammy, if you will, of lower demand and customer-owned inventory put pressure on pricing," he said, noting that memory prices fell by 50 percent despite the company shipping 33 percent more than in the prior quarter.

Those PC customers are back to a more-traditional buying pattern, he said.

Micron built the Lehi plant in anticipation of manufacturing silicon wafers used in the chips, but a downturn in the markets had kept that work from starting. The Boise-based company has more than 800 workers there doing testing but plans to produce prototype 12-inch wafers also has been put on hold.

Company officials said networking and communications customers built up memory component stockpiles because of slack demand for their products.

"Simply put, with virtually all our customers in the net-com market market, Micron is facilitating a rebalancing of inventories and as a result we are experiencing a relative slowdown in shipments to customers in this space," said Mike Sadler, vice president of the company's networking and communications group.

"From a tactical standpoint, I will not attempt to predict when we will see the markets come back to life."

Micron plans to spend more than $2 billion this fiscal year on capital projects, up from about $1.4 billion last year, with nearly all in the semiconductor portion of the company's business. Much will be spent on an expansion project in Boise.


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