Although Micron Technology‘s profitability will take a hit due to President Donald Trump’s latest round of tariffs on Chinese imports, CEO Sanjay Mehrotra told CNBC’s “Squawk Alley” that the company will be able to “easily mitigate” their future impact.
Micron shares fell 5 percent before the market opened on Friday following revelations a day earlier that the semiconductor company’s gross margins would suffer as a result of Trump’s trade war. The stock tumbled despite Micron’s strong fourth-quarter earnings report that beat expectations on the top and bottom lines.
“In our fiscal first quarter we will have an impact of 50 to 100 basis points in our gross margins,” Mehrotra said. That’s equivalent to between 0.5 percent and 1 percent. “Of course this is related to some of the product that we import into the U.S. that is manufactured in China, and we are very much focused on mitigating that manufacturing.”
Mehrotra expects that Micron will be able to smooth out the results “over the course of the next three to four quarters.” He also said that because the company manufactures all over the world, “within our existing supply chain footprint we can easily mitigate this supply chain impact.”
Regarding the computer chip shortage at Intel, Mehrotra said that Micron’s first-quarter sales would be impacted but that’s not a “long-term trend.”
Apple‘s newest iPhones went on sale Friday, with its XS and XS Max models containing as much as 512 GB of storage, a boon for Micron, which supplies components to the iPhone. “The day is not far when you have a terabyte” of storage in smartphones, Mehrotra said.
Micron shares fell 2.8 percent to $44.75 as of mid-day on Friday.