Marvell Technology flags carrier, enterprise segment weakness — Shares in Marvell Technology (NASDAQ:) fell in premarket U.S. trading on Friday after the chipmaker flagged that it expects soft customer demand to impact revenue at its enterprise and wireless carrier infrastructure segments in the first quarter.

In a call with analysts, Chief Executive Officer Mat Murphy said that both businesses are currently facing headwinds from a tough macroeconomic environment.

Marvell, which helps companies build out custom semiconductors, has also been hit by a “normal inventory correction cycle [that is] taking a little bit longer than we thought if you went back to the beginning of the year.” Inventory clearing has threatened to weigh on demand for Marvell’s chips.

“[W]e see […] having to work through that issue for the next couple of quarters,” Murphy noted.

Meanwhile, the company’s data center division, which includes its custom artificial intelligence chip unit, saw revenue fall 11% to $555.8 million in the third quarter from a year earlier. However, the figures topped Wall Street expectations, while Murphy added that the data center business is projected to grow to account for over 50% of Marvell’s total sales in its current quarter.

“The good news is cloud/AI is solidly on track,” analysts at Bank of America (NYSE:) Securities said in a note. “The negative is that the remaining segments – carrier […], enterprise […], and consumer – are all going through significant decline near-term.”

The company expects to report fourth-quarter adjusted per-share earnings of $0.41 to $0.51. Wall Street estimates had called for $0.49. Revenue is seen at $1.42 billion, give or take 5%, compared with expectations of $1.46B.

For the quarter ended on Oct. 28, Marvell adjusted income per share of $0.41 on revenue of $1.42B, roughly in line with Wall Street estimates of $0.40 and revenue of $1.4B.

Yasin Ebrahim contributed to this report.


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