MICRON Technology forecast quarterly revenue above market estimates on Wednesday (Dec 20), and its shares jumped nearly 5 per cent in extended trading on signs of memory chip recovery in 2024 after one of the most significant downturns in years.

Demand for flash storage and dynamic random access memory should keep improving next year, while at the same time the supply levels of the chips will begin to approach historically normal levels, the memory chipmaker said.

Memory prices, which slumped this year, will improve next year and rise further in 2025, Micron CEO Sanjay Mehrotra said.

Micron forecast revenue of US$5.3 billion, plus or minus US$200 million, for the second quarter, compared with estimates of US$5.03 billion, according to LSEG data.

Micron said it expects the supply of chips for PCs, mobile devices and other chips to approach normal levels in the first half of next year.

Businesses have begun to incorporate generative artificial intelligence (AI) into various products and services that has boosted demand for Micron’s high-bandwidth memory chips, which are necessary to train large language models that form the foundation of AI tech.

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“Demand for AI servers has been strong as data centre infrastructure operators shift budgets from traditional servers to more content-rich AI servers,” Micron Data centre operators are shifting purchases to AI chips that require more member from traditional servers, Mehrotra said.

On an adjusted basis, the company expects a loss of 28 US cents per share, plus or minus seven US cents, for the second quarter, compared with estimates of a loss of 62 US cents per share.

Micron’s results reflect the beginning of a recovery in the memory market for memory and flash storage.

Rival SK Hynix has supplied AI giant Nvidia. Mehrotra said Micron is in the final stages of qualifying for its HBM3E chips to be used in Nvidia’s next-generation Grace Hopper GH200 and H200 platforms.

Micron expects “several hundred million” dollars worth of high-bandwidth memory revenue in fiscal 2024, and continued growth of such revenue in 2025.

Earnings of major chipmakers Intel and Advanced Micro Devices offered evidence of a recovery in PC demand gathering pace following a post-pandemic supply glut. REUTERS