(Bloomberg) — Micron Technology Inc. and Xilinx Inc. gave strong sales forecasts, suggesting demand is recovering as parts of the global economy emerge from the pandemic lockdown. Shares of both chipmakers jumped in extended trading.
Micron, the largest U.S. memory chip maker, said revenue in the current period will be $5.75 to $6.25 billion, well ahead of analyst estimates.
Xilinx, which makes programmable chips for wireless networks, reported preliminary revenue of $720 million to $734 million for the fiscal first quarter. That was up from a previous forecast.
“While we have seen some Covid-19 related impacts during the June quarter, our business has generally performed well overall,” Victor Peng, Xilinx’s chief executive officer, said in a statement.
Micron makes memory chips for computers, and similar components that store data in mobile devices. The company competes with Samsung Electronics Co., SK Hynix Inc. and Kioxia.
The Covid-19 pandemic has sparked a deep recession and dented consumer demand for the tech gadgets that use Micron chips. However, millions of people are working from home and going online more. That has spurred demand for Micron components in servers that power much of this digital activity.
Micron’s stock rallied about 6% in extended trading on Monday. It earlier closed up 1.4% at $49.15. That left the shares down about 9% so far this year, compared with a 5% gain by the Philadelphia Semiconductor Index.
Xilinx’s improved performance also reflects demand for components to handle rising online activity. The company is also benefiting from investment to build new fifth generation, or 5G, wireless networks. Xilinx stock climbed more than 7% in extended trading.
In May, Micron raised its revenue guidance due to the boom in online data traffic. However, it also cautioned that overall demand was still weaker than at the beginning of the year and warned that the economy may deteriorate in the second half of 2020.In Micron’s fiscal-third quarter, net income was $803 million, or 71 cents a share, down from $840 million, or 74 cents a share, in the same period a year earlier. Revenue was $5.43 billion, a gain from a year ago. Wall Street was looking for earnings of 65 cents a share and sales of $5.3 billion.
“First, we expect the data center outlook to remain healthy. Second, we expect smartphone and consumer end-unit sales to continue to improve,” Micron Chief Executive Officer Sanjay Mehrotra said.
New video game consoles will also drive demand for Micron’s DRAM and NAND chips, he added, while noting that short-term visibility is limited due to the pandemic, trade tensions and macro-economic uncertainty.
Some analysts see the virus lockdown helping Micron and its peers. Some chipmakers have struggled to get all the machinery they need to equip new production lines. That has slowed output gains and may limit supply while supporting prices, they argue.
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