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Micron Unsure About US License For Selling Chip To Huawei., Sales To Be Hit

Micron Unsure About US License For Selling Chip To Huawei., Sales To Be Hit
The licenses that it would need to sell its memory chips to the Chinese tech giant Huawei are yet to be obtained by Micron Technology even as Huawei has said that it would reduce its sales during the next two quarters, said company executives.
Huawei has been put under sanctions by the United States administration last year which has effectively banned all American companies from doing business with the Chinese firm without a prior license from the U S government.
Micron, based at Boise, Idaho, is one of the largest manufacturers of DRAM chips and it had got license previously form the US government to sell its chips for mobile phones and servers to Huawei from the companies manufacturing facilities situated outside of the US, the company said.
For the fourth quarter ended September 3, about 10 per cent of $600 million of Micron's $6.06 billion revenues in sales was accounted for by its business with Huawei.
However a new set of sanctions imposed on the Chinese firm by the US president Donald Trump’s administration in September this year effectively banned sale of any chip to Huawei that are made with American technology or tools or software which meant that the previous license of Micron to sell to its chip to Huawei illegal. Micron had stopped selling chip to Huawei since September 14.
"The manufacturing equipment in those fabs are obviously from US-based companies," Micron's chief business officer, Sumit Sadana, said in an interview opt the media. These included Applied Materials and Lam Research.
While the company has already applied for new licenses with the Trump administration for selling its chip to Huawei, it is yet to get the licenses in hand and is unsure about whether the application will be approved or not and whether it will be given a license to sell to Huawie, Sadana said. the company is therefore seeking to find other customers for its chips but that shift in customer base will take Micron's fiscal second quarter to complete.
"As soon as we get the licence, we would work with Huawei to determine how we can resurrect the business," Sadana said.
There was a 2 per cent drop in the share price of the company after it announced the license issue for its business with Huawei.
According to IBES data from Refinitiv, in the fiscal fourth quarter, the revenues of the company increased by more than 24 per cent to $6.06 billion and comfortably beating estimates of the market of $5.89 billion. For its fiscal first quarter, the company expects to clock sale revenues of $5.2 billion, plus or minus $200 million, compared to expectations of analysts of $5.31 billion.
In its latest completed quarter, the company reported an increase in its net income attributable to the company at $988 million, or 87 cents per share, compared net income of $561 million, or 49 cents per share, for the same period a year earlier.
Excluding items, Micron earned US$1.08 per share, beating analysts' estimates of 99 cents.

Christopher J. Mitchell

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