(Bloomberg) — Micron Technology Inc. gave a surprisingly downbeat forecast for the current quarter after demand for phones and computers weakened, but vowed to move aggressively to stave off a chip glut.

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The company — the largest US maker of memory semiconductors — warned that sales will be about $7.2 billion in its fiscal fourth quarter, far below the analyst estimate of $9.14 billion. Excluding certain items, profit will be about $1.63 a share, the company said, compared with the $2.57 predicted by analysts.

The outlook overshadowed generally positive results from last quarter and renewed concerns about a slowdown in two key markets for Micron’s memory chips: computers and smartphones. Consumers and businesses have been reining in spending amid fears that the major world economies are headed for recession.

“The world is in a rapidly changing and uncertain environment, and consumer spending is certainly being reallocated away from electronic devices,” Chief Executive Officer Sanjay Mehrotra said in an interview. “Look at us: We just delivered a record quarter, and we’re so quick to take action to adjust our total supply to meet demand. This has never happened in this industry this fast.”

Micron’s shares fell more than 8% in extended trading following the report, before recovering somewhat to a decline of about 3%. They had already lost 41% this year through the close, part of a rout for semiconductor stocks that had rallied over the last five years.

Mehrotra and his executives told analysts on a conference call that they are cutting spending on new plants and equipment to slow increases in factory output. For their part, the company’s customers — electronic device makers — are scaling back orders to reduce their inventory.

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Similar actions in the past have typically taken two quarters to be completed and Micron is projecting a rebound in orders “sometime in fiscal year 2023,” Mehrotra said. That period begins in September for the chipmaker.

During the call, Micron executives emphasized that the company is rapidly taking action to make sure the slump in demand doesn’t fuel an industry glut. By burning through existing stockpiles, slowing production increases and walking away from orders when customers demand steep price cuts, Micron can moderate the impact on its earnings, Mehrotra said in the interview.

The action plan helped reassure investors, who are wary of the memory-chip industry slipping into another boom-and-bust cycle. Micron and its rivals have a history of overproducing chips during good times, leading to painful downturns where the companies have to burn through cash reserves.

In the three months ended June 2, Micron’s revenue grew 16% to $8.64 billion, its smallest increase in more than a year. Net income was $2.63 billion, or $2.34 a share. Profit and sales were roughly in line with analysts’ predictions.

“The long-term trends absolutely bode well for memory and storage,” Micron’s CEO said. “The industry will have cycles, but across the cycles the fundamentals of the industry will keep strengthening.”

Micron’s memory chips perform a crucial role in electronic devices — one that’s grown as the amount of data generated has accelerated. And Mehrotra has argued that more money will flow to its category of chips as that trend continues.

The US company competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc., as well as Japan’s Kioxia Holdings Corp., in a market that has historically been perilous and unpredictable. Many of their products are sold as interchangeable commodities, which can suffer rapid price fluctuations — sometimes trading for less than they cost to produce.

There are two main types of memory chips. The DRAM variety holds information temporarily, helping processors crunch data. Nand flash memory, meanwhile, acts as permanent storage in phones and computers. Micron, based in Boise, Idaho, is a smaller contender to Samsung in both types of chips, with the South Korean company dominating the industry.

(Updates with additional CEO comments starting in fourth paragraph.)

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