Memory chip maker (NASDAQ: MU) has been fighting through a brutal downturn since its pandemic-era boom came to an abrupt end. Demand for PCs fell off a cliff; the smartphone market contracted; sales of gaming graphics cards slumped after the cryptocurrency bubble burst; and Demand for servers weakened.

Memory chips are largely commodities, so pricing ebbs and flows along with supply and demand. During times when supply heavily outstrips demand, a manufacturer like Micron will generally lose money on every bit of memory it ships. During the fiscal third quarter, which ended on June 1, Micron reported a 57% year-over-year revenue decline to $3.8 billion and a gross margin of negative 17.8%.

One problem with tumbling memory chip prices and production that exceeds demand is that Micron must continually write down the value of its inventory to reflect prevailing market conditions. In the nine months that ended on June 1, Micron booked a total of $1.8 billion of inventory write-downs.

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Source Fool.com