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Micron yet to regain license to sell to Huawei, pressuring sales

(Reuters) - Micron Technology Inc has not yet obtained new licenses needed to sell its memory chips to China’s Huawei Technologies Co Ltd, which will cut its sales over the next two quarters, company executives said on Tuesday.

FILE PHOTO: Micron Technology's solid-state drive for data center customers is presented at a product launch event in San Francisco, U.S., October 24, 2019. REUTERS/Stephen Nellis/File photo

Boise, Idaho-based Micron, one of the world’s biggest makers of DRAM chips, said it had previously obtained licenses from the U.S. government to sell chips for mobile phones and servers from its factories outside the United States to Huawei, which has been the target of U.S. restrictions on chip sales since last year.

Huawei accounted for about $600 million of Micron’s $6.06 billion in sales for the fiscal fourth quarter ended Sept. 3, or just under 10%.

But a new round of restrictions that took effect in September barred sales of any chip made using U.S. tools or software, which rendered Micron’s earlier licenses invalid and halted sales on Sept. 14.

“The manufacturing equipment in those fabs are obviously from U.S.-based companies,” Micron’s chief business officer, Sumit Sadana, told Reuters in an interview. These included Applied Materials Inc and Lam Research Corp.

Sadana said Micron has applied to the U.S. government for new licenses to sell to Huawei but does not yet have them and does not know if or when they will be approved. The company is shifting to selling to other smart phone customers but the shift will take until Micron’s fiscal second quarter to complete.

“As soon as we get the license, we would work with Huawei to determine how we can resurrect the business,” Sadana said.

Micron shares, which were volatile in extended trading, were down 2% at $49.84 after the company disclosed the Huawei hit.

Revenue jumped over 24% to $6.06 billion in the fiscal fourth quarter, beating analysts’ estimate of $5.89 billion, according to IBES data from Refinitiv.

The company expects fiscal first-quarter sales to be $5.2 billion, plus or minus $200 million, while analysts on average were expecting $5.31 billion.

Net income attributable to the company rose to $988 million, or 87 cents per share, in the last quarter, from $561 million, or 49 cents per share, a year earlier. (bit.ly/2EP3qEo)

Excluding items, Micron earned $1.08 per share, beating analysts’ estimates of 99 cents.

Reporting by Akanksha Rana in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila and Richard Pullin

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