March 21 (Reuters) - Micron's shares fell 8% on

Friday, as its dour margin forecast took the shine off a robust

quarterly revenue outlook driven by demand for its

semiconductors used in artificial intelligence tasks.

Micron, one of only three providers of high-bandwidth memory

(HBM) chips for data-intensive generative AI applications,

forecast adjusted gross margin below estimates on Thursday, as

lower pricing for consumer memory chips hits profitability.

After a 1.4% drop in 2024, Micron's shares have gained more

than 13% this year as investors bet on improving consumer memory

chip pricing and expected the company to benefit from its

essential position in AI supply chains.

"NAND Flash oversupply remains a drag on margins,"

Rosenblatt analysts said in a note on Friday, referring to a

type of memory chip used in consumer electronics like

smartphones and personal computers.

Soft end-market demand and aggressive buying by electronics

suppliers during the pandemic led to oversupply of the consumer

memory chips, resulting in weaker pricing.

Micron forecast third-quarter adjusted gross margin of about

36.5%, marginally below analysts' average estimate of 36.9%,

according to data compiled by LSEG. The forecast represents a

sequential drop of 3 percentage points.

"There has been a challenging industry environment in NAND,"

Micron's chief business officer Sumit Sadana said on Thursday

during a post-earnings call.

Micron has been cutting back on NAND production, resulting

in underutilization which spreads fixed costs over a smaller

output, hurting margins.

AI DEMAND PERSISTS

The ramp-up of HBM production to meet strong demand for its

AI memory chips from GPU market leaders like Nvidia ( NVDA ),

has also pressured margins.

Micron forecast third-quarter revenue above estimates, owing

to AI-linked strength.

"We see high-bandwidth memory as a key growth driver,"

Morningstar analysts said, adding that they expect "continued AI

and data center demand."