Computer chipmaker Micron Technology Inc. delivered its largest quarterly loss on record today after announcing an inventory writedown of more than $1.4 billion, but its stock price stayed flat as executives stated their belief that the memory chip market has bottomed out.

The company reported a net loss for the second quarter of $2.31 billion, surpassing its previous biggest loss of $1.94 billion way back in the same quarter of fiscal 2003. After taking into account stock-based compensation and restructuring costs, Micron posted a loss of $1.91 per share. Revenue for the period came to $3.69 billion, down from $7.79 billion in sales one year earlier.

The results were not great, with Wall Street analysts targeting a smaller loss of just 67 cents per share on sales of $3.71 billion. However, Micron executives insisted that the company is about to turn things around, and the stock held up in after-hours trading.

Micron specializes in dynamic random-access memory and NAND flash memory chips. DRAM is the kind of memory that’s commonly used in personal computers and servers, while NAND is the flash memory that’s found in smaller devices such as smartphones and USB drives.

The company has suffered as the market for memory chips has imploded over the last 12 months. After experiencing a huge bump in sales in the early days of the COVID-19 pandemic, demand for many of the items using its chips has faltered amid an economic slowdown, resulting in increased inventories and rapidly declining prices for memory chips.

“The semiconductor memory and storage industry is facing its worst downturn in the last 13 years, with an exceptionally weak pricing environment that is significantly impacting our financial performance,” Micron Chief Executive Sanjay Mehrotra (pictured) said in a conference call with analysts.

However, the CEO indicated that the worst of that downturn is at hand. On the call, he discussed the data center market, where cloud computing giants had largely paused purchases of new chips. According to Mehrotra, there are signs that could soon change, as demand is increasing with the rising demand for generative artificial intelligence programs such as ChatGPT. Such programs require numerous memory chips to run, he said.

“In data center, we believe that our revenue bottomed in fiscal Q2, and we expect to see revenue growth in fiscal Q3,” Mehrotra told analysts. “Data-center customer inventories should reach relatively healthy levels by the end of calendar 2023.”

Micron’s inventory writedown was far higher than most analysts were expecting, and followed similar moves by memory chip competitors Samsung Electronics Co. Ltd. and SK Hynix Inc. In addition, Mehrotra said, the company is now planning to shrink its workforce by 15%, as opposed to the 10% figure that was mentioned earlier.

Analyst Holger Mueller of Constellation Research Inc. said Micron is a perfect example of the roller-coaster ride that is the semiconductor industry, bringing in less than half of the revenue it did from one year ago.

“Micron made $90 million in cost savings but that was almost completely eaten up with restructuring charges and asset impairments, so it has lost almost $2.5 billion for the current fiscal year, just two quarters in,” Mueller said. “Compare that to one year ago, when Micron delivered a $4.5 billion profit in the first six months. That’s a swing of almost $7 billion in just 12 months. The good news is that Micron has managed to restructure its debt and it looks like Mehrotra and team think all will be well again by fiscal 2025.”

For the next quarter, Micron said it expects another writedown of roughly $500 million as gross margins remain negative. As a result, the company is forecasting a fiscal third-quarter loss of between $1.65 and $1.51 per share on sales of $3.5 billion to $3.9 billion. That compares badly with Wall Street’s forecast of a 90-cents-per-share loss on $3.7 billion in sales.

Even so, investors were clearly reassured by comments from Micron Chief Financial Officer Mark Murphy, which suggested that a turnaround in fortunes might not be far off.

“We believe we are close to a transition to sequential revenue growth in our quarterly results,” Murphy said. “We are focused on significantly improving profitability and returning to positive quarterly free-cash flow within fiscal 2024.”

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