A prominent analyst said that Micron’s third-quarter profit and second-quarter performance expectations for next year fell short of expectations, which may indicate that the artificial intelligence PC and smartphone super cycle will not occur. Much of the company’s woes stem from a weakening market for memory products for PCs and smartphones, while multiple reports from other market analysts indicate that the AI PC “revolution” is simply not happening. At least not yet.
US memory manufacturer Micron Technology announced in its latest financial report that third-quarter revenue was US$8.709 billion, slightly lower than market expectations of US$8.721. To make matters worse, Micron’s guidance for the second quarter of 2025 was $7.9 billion, instead of the $8.98 billion Wall Street expected. As of this writing, its shares are down more than 16%.
Semiconductor calls mistakes, predictions ‘big problem’ Analyst Daniel Newman said in an X post This isn’t “the beginning of the end for the AI industry,” and companies like Nvidia have grown into some of the largest companies in the world since AI chips took off earlier this year.
Curious what happened to Micron? Is the artificial intelligence industry about to collapse? 👇🏻👇🏻👇🏻 Yes – the forecast for Micron Technology is wildly off, and it’s truly the worst day yet as hawkish rate cuts send much of the market into disarray. The problem with forecasting requires… pic.twitter.com/ckEA1lsU8ODecember 19, 2024
While high-bandwidth memory (HBM) will become a large market for Micron, with its total addressable market value expected to grow from $16 billion this year to $100 billion in 2030, Micron’s primary revenue source currently is delivering products for PC and Computers make memory chips.
“However, as PC and smartphone shipments lag, the core business is shrinking, and Micron is dealing with customer inventory that is slowly being sold off, resulting in even lower bookings/sold rates for this quarter and next,” Newman said. “The bad news is that the ‘super cycle’ of AI PCs and AI smartphones has more or less failed.”
In 2024 and 2023, people’s demand for AI PCs will greatly promote the development of the PC industry due to new AI-driven functions. However, things don’t seem to be going that way. A September report from IDC Research said Artificial intelligence is not driving demand for artificially intelligent computers. Rather, it’s driven by a general desire to upgrade, as new chips with AI hardware also feature faster CPU and GPU cores.
Trendforce released a report last month that reached similar conclusions: Customers are not interested in artificial intelligence computers. A market analysis company said that users upgrading to Windows 11 In the new year, PC sales of older Windows 10 devices will exceed those of artificial intelligence.
Qualcomm’s poor performance on its new Snapdragon X chips used in Copilot+ laptops suggests demand for AI PCs may not be great. In the third quarter of this year, Qualcomm only holds 0.8% of the PC market, selling only 720,000 units. Intel interim co-CEO Michelle Johnston Holthaus claimed last week Snapdragon X laptops have relatively high return ratesQualcomm denied the accusation.
Arm chip company appears to be concerned about the upcoming Snapdragon X PC will drop entry costs to $700 Without reducing the performance of the NPU, the NPU is an important source of artificial intelligence capabilities on Qualcomm PC chips. The cheapest Snapdragon X laptop costs $1,000, so a $300 price cut is quite significant.
However, it seems Qualcomm would be in a hurry to move to lower price ranges so quickly if there is a huge demand for AI PCs, mainly if these upcoming PCs come with the same high-end NPU as the Snapdragon X Elite and Plus. If high-end AI PCs are no longer of interest, it would make sense to focus on more budget-friendly parts of the market, but it’s also clear that Qualcomm is trying to gain scale.
There seems to be a major problem with AI PCs, as there aren’t many uses for running AI natively on PCs right now. Artificial intelligence software that runs directly on end-user devices is more popular among enthusiasts. Meanwhile, popular services like ChatGPT run in the cloud and don’t require a brand new AI PC.
As AI PCs become the default PC, having AI hardware will eventually cease to be an important selling point, just as multi-core CPUs, integrated graphics cards, and solid-state drives have become standard features in PCs. Consumers may not pay a premium for an AI computer, but they also may not buy a non-AI computer because that means it uses older chips from before the AI revolution. In other words, artificial intelligence becomes table stakes.
However, the lack of demand for artificial intelligence PCs and smartphones does not necessarily mean that the entire artificial intelligence industry is about to collapse. “The good news is that HBM is selling well and growing rapidly, which means that demand for AI chips remains stable,” Newman believes. “NVIDIA, Broadcom, AMD, Marvell, etc. Don’t panic. HBM is growing rapidly.
Of course, consumers are not interested in running artificial intelligence natively on their PCs and smartphones, which is not good news. However, there’s still a big market for running artificial intelligence in the cloud, especially since cellular devices can easily connect to the internet. Declining demand for HBM will be a more significant indicator of the problem, as HBM is critical to the AI chips made in data centers.
However, if AI turns out to be a bubble POPs, this may be the first warning sign: Currently, there is no explosive demand for artificial intelligence running on end-user devices.