All right, let's have a look at the micron. We've got micro Technology, the largest maker of memory chips in the US. It came up with a week forecast for the current quarter. Let's get to Ian King Bloomberg News u S Semiconductor Reporter and in a what's behind it and you know, to have sales, they're saying about four and one quarter of one billion dollars in the period compared with the analysis of it's of six billion. That's
a huge, huge miss. How come you know what they're saying wish is that you know, look, this is a lot worse than we thought, and we're taking drastic action. So we're just not going to put chips out there into the market. We're going to cut our production, and you know, our sales and our shipments are going to be sort of even worse than en demand and consumption
for a short period. And we're doing that because we want to get rid of infantry in the market and get things back to a more reasonable balance between supply
and demands. So, yes, very bad, a lot worse in the short term, but they're arguing that this is the way to clean things open and get the market back towards a balance quicker, and as you've seen, the stock initially on those numbers went down very badly, reacted really aggressively badly, down as much as like four or and has come back on their explanation of how this is
going to play out going forward. Ian For for for those people that weren't paying too much attention to this space, it must seem incredible because you know, it wasn't too long ago we were talking about all these shortages in semiconductors and and some of the supply chain restrictions and issues, and now all of a sudden, we've got what massive
inventory over supply. Yeah, I know, that's absolutely right. I mean, and you know the business that micron in is in um and some sort of electronics and and he Nicks and Kioxy in Japan is typically the most you sort of volatile market. You are literally a couple of quarters from you know, fast to famine. And that's that's what's happened again this time. I mean, and it's a classic case of you know, demand can shift in a matter
of weeks, but production takes months. And that's the you know, an inventory, because production takes months to go through a cycle. What you ordered, you don't get for three four months, this is what you end up with. And and here we are again, but we're joking memory chips. I must say, I'm a little bit ignorant of what all these various ships do. Do. Give you tell me how they stack up next to some of the other ones out there, which you know, of course flash and things like also
d RAM. Yeah, And I mean you're asking a good question here. Flash and de ram are two type the two main types of memory chips. One access storage. That's flash memory, so that's storage in your iPhone, storage in your computer. De Ram access the short term kind of holder for memory which helps process data predominantly in computers
but also in phones. The particular sort of characteristic of this market what makes it so volatiles that they get traded like a commodity, because you could, in theory, pull a deer own chip made by Samsung out of your PC and take something that you brought from Micron and plug it into the same thing and they would work in exactly the same way. Ian we used to look at the at the transports as a very good indicator of the sexicality in economies, and people now say that
chips do this for us? Does does this sort of bode well for for growth in the global economy, say over the next year. Well, uh, you know, if you're a chip investor, as you're seeing in the Microns stock reaction after hours, you're looking for the bottom. Right, the bottom in chips kind of anticipates the record worry by
sort of two quarters. So what people are looking at today is saying, look, we've seen this rapid fall off and will get worse, but that you know, if Micron is right, and if this isn't an extended recession, then usually within two quarters or so we'll start to see things growing again. And that's what Micron is indicating. So maybe this is the worst. Maybe this is a turning point. And as we've seen, chip stocks have absolutely been open the last twelve months, and maybe this is industry w
memory tends to anticipate the rest of the industry. Yes, I wanted to ask you about the plans that some of these big companies have for expanding production in the United States. I guess because what we're talking about here is real cyclicality, So maybe it doesn't affect these plans for these new plants, which are a couple of years down the road, but um is there much of an impact on that. Micron said that they're going to cut
their spending on equipment by which is a lot. That means that the factories will still get built, but they won't be equipped. So in theory, you've got this shell ready so that when things appeared to pick up, you need that kind of six months lead time. You stick in the machinery in time for that and get that going then. So what they're saying is, you know, kind of a double sided thing. Yes, we're going to build
these plants. Thank you very much you as government for the money, but maybe they won't come on this line as quickly as we perhaps thought I might. Alright, Ian, thanks very much. A lot of this was pre announced, I suppose, so that's why the market reaction after hours wasn't too dramatic losses but only a little under one percent. I guess. We've been chatting with Ian King, and he is our top reporter on semiconductors Bloomberg News u S Semiconductor reporter with US Live