Speaker 1: All right, let's have a look at the micron. We've
Speaker 1: got micro Technology, the largest maker of memory chips in
Speaker 1: the US. It came up with a week forecast for
Speaker 1: the current quarter. Let's get to Ian King Bloomberg News
Speaker 1: u S Semiconductor Reporter and in a what's behind it
Speaker 1: and you know, to have sales, they're saying about four
Speaker 1: and one quarter of one billion dollars in the period
Speaker 1: compared with the analysis of it's of six billion. That's
Speaker 1: a huge, huge miss. How come you know what they're
Speaker 1: saying wish is that you know, look, this is a
Speaker 1: lot worse than we thought, and we're taking drastic action.
Speaker 1: So we're just not going to put chips out there
Speaker 1: into the market. We're going to cut our production, and
Speaker 1: you know, our sales and our shipments are going to
Speaker 1: be sort of even worse than en demand and consumption
Speaker 1: for a short period. And we're doing that because we
Speaker 1: want to get rid of infantry in the market and
Speaker 1: get things back to a more reasonable balance between supply
Speaker 1: and demands. So, yes, very bad, a lot worse in
Speaker 1: the short term, but they're arguing that this is the
Speaker 1: way to clean things open and get the market back
Speaker 1: towards a balance quicker, and as you've seen, the stock
Speaker 1: initially on those numbers went down very badly, reacted really
Speaker 1: aggressively badly, down as much as like four or and
Speaker 1: has come back on their explanation of how this is
Speaker 1: going to play out going forward. Ian For for for
Speaker 1: those people that weren't paying too much attention to this space,
Speaker 1: it must seem incredible because you know, it wasn't too
Speaker 1: long ago we were talking about all these shortages in
Speaker 1: semiconductors and and some of the supply chain restrictions and issues,
Speaker 1: and now all of a sudden, we've got what massive
Speaker 1: inventory over supply. Yeah, I know, that's absolutely right. I mean,
Speaker 1: and you know the business that micron in is in
Speaker 1: um and some sort of electronics and and he Nicks
Speaker 1: and Kioxy in Japan is typically the most you sort
Speaker 1: of volatile market. You are literally a couple of quarters
Speaker 1: from you know, fast to famine. And that's that's what's
Speaker 1: happened again this time. I mean, and it's a classic
Speaker 1: case of you know, demand can shift in a matter
Speaker 1: of weeks, but production takes months. And that's the you know,
Speaker 1: an inventory, because production takes months to go through a cycle.
Speaker 1: What you ordered, you don't get for three four months,
Speaker 1: this is what you end up with. And and here
Speaker 1: we are again, but we're joking memory chips. I must say,
Speaker 1: I'm a little bit ignorant of what all these various
Speaker 1: ships do. Do. Give you tell me how they stack
Speaker 1: up next to some of the other ones out there,
Speaker 1: which you know, of course flash and things like also
Speaker 1: d RAM. Yeah, And I mean you're asking a good
Speaker 1: question here. Flash and de ram are two type the
Speaker 1: two main types of memory chips. One access storage. That's
Speaker 1: flash memory, so that's storage in your iPhone, storage in
Speaker 1: your computer. De Ram access the short term kind of
Speaker 1: holder for memory which helps process data predominantly in computers
Speaker 1: but also in phones. The particular sort of characteristic of
Speaker 1: this market what makes it so volatiles that they get
Speaker 1: traded like a commodity, because you could, in theory, pull
Speaker 1: a deer own chip made by Samsung out of your
Speaker 1: PC and take something that you brought from Micron and
Speaker 1: plug it into the same thing and they would work
Speaker 1: in exactly the same way. Ian we used to look
Speaker 1: at the at the transports as a very good indicator
Speaker 1: of the sexicality in economies, and people now say that
Speaker 1: chips do this for us? Does does this sort of
Speaker 1: bode well for for growth in the global economy, say
Speaker 1: over the next year. Well, uh, you know, if you're
Speaker 1: a chip investor, as you're seeing in the Microns stock
Speaker 1: reaction after hours, you're looking for the bottom. Right, the
Speaker 1: bottom in chips kind of anticipates the record worry by
Speaker 1: sort of two quarters. So what people are looking at
Speaker 1: today is saying, look, we've seen this rapid fall off
Speaker 1: and will get worse, but that you know, if Micron
Speaker 1: is right, and if this isn't an extended recession, then
Speaker 1: usually within two quarters or so we'll start to see
Speaker 1: things growing again. And that's what Micron is indicating. So
Speaker 1: maybe this is the worst. Maybe this is a turning point.
Speaker 1: And as we've seen, chip stocks have absolutely been open
Speaker 1: the last twelve months, and maybe this is industry w
Speaker 1: memory tends to anticipate the rest of the industry. Yes,
Speaker 1: I wanted to ask you about the plans that some
Speaker 1: of these big companies have for expanding production in the
Speaker 1: United States. I guess because what we're talking about here
Speaker 1: is real cyclicality, So maybe it doesn't affect these plans
Speaker 1: for these new plants, which are a couple of years
Speaker 1: down the road, but um is there much of an
Speaker 1: impact on that. Micron said that they're going to cut
Speaker 1: their spending on equipment by which is a lot. That
Speaker 1: means that the factories will still get built, but they
Speaker 1: won't be equipped. So in theory, you've got this shell
Speaker 1: ready so that when things appeared to pick up, you
Speaker 1: need that kind of six months lead time. You stick
Speaker 1: in the machinery in time for that and get that
Speaker 1: going then. So what they're saying is, you know, kind
Speaker 1: of a double sided thing. Yes, we're going to build
Speaker 1: these plants. Thank you very much you as government for
Speaker 1: the money, but maybe they won't come on this line
Speaker 1: as quickly as we perhaps thought I might. Alright, Ian,
Speaker 1: thanks very much. A lot of this was pre announced,
Speaker 1: I suppose, so that's why the market reaction after hours
Speaker 1: wasn't too dramatic losses but only a little under one percent.
Speaker 1: I guess. We've been chatting with Ian King, and he
Speaker 1: is our top reporter on semiconductors Bloomberg News u S
Speaker 1: Semiconductor reporter with US Live