UPDATE 2-Micron posts loss on memory chip price declines

(Recasts; adds details, analyst comments)

By Duncan Martell

SAN FRANCISCO, Oct 2 (Reuters) - Memory chipmaker Micron Technology Inc (MU.N: Quote, Profile, Research, Stock Buzz) posted a quarterly loss on Tuesday, hit by lower prices for chips used in digital cameras, music players and other devices, sending the stock down 3.1 percent.

Micron, whose stock had risen 3.9 percent in regular trade, said average selling prices for both DRAM and NAND memory chips fell about 15 percent from the preceding quarter.

DRAM chips are the most widely used in personal computers and NAND microchips are used in digital music players, cameras and other gizmos.

Micron is the largest U.S. maker of memory chips, but has also been working to reduce its reliance on the memory market. It is now one of the biggest makers chip image sensors used in digital cameras.

The company also said that for its current quarter ending in November it expects industrywide prices for DRAM and NAND chips to decline 10 percent and 25 percent, respectively.

Micron's costs are dropping, but not enough to drive significant gross profit margin improvements in the tough price environment, one analyst said. The memory chip market is highly volatile, often whipsawed by rapid changes in supply and demand, and, consequently, in pricing as well.

"Their cost reductions are going to be pretty closely in line with where their pricing is going to be," said American Technology Research analyst Doug Freedman. "So there's not much improvement available on the gross (profit) margin line."