By Sonam Rai
(Reuters) – Shares in chip equipment maker KLA-Tencor Corp fell 9 percent, dragging along rivals, after the company’s chief financial officer said September is still a “drought” in terms of memory-chip shipments and that a recovery might not be as strong as expected.
Memory chipmakers’ production plans and outlook are closely tracked due to concerns that a two-year industry super-cycle may be skidding to a halt. The $121 billion global memory chip industry has enjoyed an unprecedented boom since late 2016.
“We thought that December quarter would snap back pretty strongly, when we look at it today … feels like it will be up a little less than what we thought,” Chief Financial Officer Bren Higgins said at the Citi 2018 Global Technology Conference in New York.
“We see September is still is a drought…,” he said.
KLA’s shares were down 8.6 percent, while those of the top two chip gear makers, Applied Materials and Lam Research Corp, were down 3 percent and 6 percent, respectively.
KLA’s grim forecast follows downbeat sentiment expressed by Micron Technology Inc’s Chief Financial Officer David Zinsner at the conference.
“NAND pricing did decline in the third quarter,” Zinsner said.
Micron’s shares fell 9.2 percent.
Average prices for NAND flash memory chips, which are found in mobile devices and memory cards, have nearly halved from a peak in 2017.
However, prices of DRAM memory chips, which help servers, gaming PCs and cryptocurrency mining devices process large amounts of streaming data, are up more than 20 percent.
KLA-Tencor now expects second half 2018 shipments to be flat to down a few single digits, compared with its earlier guidance of mid-single digits growth.
Analysts also highlighted weakening demand for memory chips.
“DRAM pricing is likely peaking in CQ3…NAND oversupply has worsened recently,” said Baird analyst Tristan Gerra in a client note.
(Reporting by Sonam Rai in Bengaluru; Editing by Sriraj Kalluvila)