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By | Kelly Fiveash 3rd April 2008 11:18

Micron burned by cooling chip market in Q2

Revenue falls 11% amid price attrition

Micron Technology Inc yesterday posted a second quarter decline in revenue brought on by the current price erosion in memory chips and a painful "goodwill" write-off.

The firm, which is the biggest memory maker in the US, saw total sales drop 11 per cent to $1.36bn for its second quarter, ended 28 February this year.

Boise, Idaho-based Micron said in a statement (pdf) that it had written-off $463m in a goodwill payment tied to its memory segment in its Q2.

The company notched up a net loss of $777m, or $1.01 a share, compared to $52m, or seven cents a share for the same quarter a year ago.

Micron added that average selling prices for the company’s core products declined in the second quarter. It shaved 15 per cent off the price tag of its DRAM and slashed NAND Flash memory costs by 30 per cent compared to Q1.

However, it said it had somewhat offset the lower selling prices due to increased production of memory products.

Late last year Gartner analysts downgraded worldwide semiconductor spending and sales expectations by some 10 per cent amid oversupply woes, high energy costs, and credit crunch fears.

It said the tech market had been flooded with too much DRAM in 2007, which forced the industry to scale back spending.

On Monday, Japanese memory maker Elpida said it would raise its DRAM prices by 20 per cent in April. Whether other chip giants will follow that lead remains to be seen, however. ®

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