Micron Technology (MU.O) on Wednesday forecast a wider than expected first-quarter loss, and its shares sank 2.4 per cent even as it prepares to ramp up production of new product lines and said it was working to become a supplier to Nvidia (NVDA.O)

The Idaho-based chipmaker’s first-quarter revenue forecast exceeded Wall Street estimates, powered by demand for its memory chips from the rapidly growing artificial intelligence sector.

Micron said it is working with Nvidia, the world’s most valuable chip company, to qualify its newest high-bandwidth memory chips for use in Nvidia’s computing chips.

Demand for high-bandwidth memory chips, a market led by Nvidia supplier SK Hynix, for use in AI has also raised investor hopes that Micron will be able to weather a slow recovery in other end markets.

Micron Chief Executive Sanjay Mehrotra told analysts during a conference call that the company expects “several hundred million” dollars worth of revenue from its new high-bandwidth chips next year. The company expects its gross margins to become positive again in the second half of its fiscal 2024.

Micron essentially sat out the current generation of high-bandwidth chips and instead made a bet that it could profit by selling higher performing chips starting next year, Sumit Sadana, Micron’s chief business officer, told Reuters in an interview.

“We have samples in the hands of customers, that compared to samples from our competitors, blow away everyone,” Sadana said. “In fact, the power consumption is so much lower for higher performance that some of our customers didn’t believe the data till they actually tested it out.”

Micron expects adjusted revenue of $4.40 billion, plus or minus $200 million, for the current quarter, compared with estimates of $4.20 billion, according to LSEG data.

The company forecast an adjusted loss per share of $1.07, steeper than the analyst estimates of a 95 cents per share loss.

Revenue for the fourth quarter stood at $4.01 billion, compared with estimates of $3.91 billion.