SanDisk's memory chip sales weak, shares fall

Mon Jan 12, 2015 11:38am EST
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By Lehar Maan and Anya George Tharakan

(Reuters) - SanDisk Corp said it expects fourth-quarter revenue to be lower than its forecast, citing weaker-than-expected sales of retail products and flash memory storage chips.

Shares of the company, which supplies memory chips for Apple Inc's iPhones, fell nearly 14 percent in heavy trading on Monday. SanDisk's warning also spooked investors in rival Micron Technology, whose stock was down 5 percent.

Analysts said SanDisk's weak revenue forecast was partly due to a glut in the memory chip market as market leader Samsung Electronics Co Ltd shifts focus to its chip business to help make up for declining smartphone sales.

Pacific Crest Securities Monika Garg said lower internal sales of flash memory chips, also known as NAND chips, at Samsung meant that the company was selling its chips in other markets, a move that was affecting pricing.

Micron said on its first-quarter earnings call last week that one of its competitors had moved NAND production away from its "own internal mobile consumption", without naming the company.

Several analysts estimated last week that Samsung's chip business earned more than its mobile business in October-December, buoyed by healthy demand for memory chips from personal computers and smartphones.

NAND memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data.

Raymond James analyst Hans Mosesmann said he expected the glut in the market to be a short-term issue that would ease once manufacturers start cutting capacity.   Continued...

Sandisk's new solid state drive is displayed at the Sandisk booth during the 2014 REUTERS/Pichi Chuang