Dec. 23 (Bloomberg) -- Micron Technology Inc., the top U.S. producer of memory chips, posted a wider first-quarter loss than analysts anticipated after falling prices forced it to write down the value of its inventory. The shares plunged in late trading.

The net loss more than doubled to $706 million, or 91 cents a share, Boise, Idaho-based Micron said today. Analysts surveyed by Bloomberg had estimated a loss of 45 cents a share. Sales sank 8.7 percent to $1.4 billion in the period, which ended Dec. 4.

The report marks Micron’s eighth consecutive quarterly loss as chipmakers battle falling prices and shrinking demand in the recession. The company wrote down $369 million in inventory that had lost value. Even today’s rock-bottom prices for dynamic random access memory, the main memory in personal computers, are failing to entice buyers, said Gary Hsueh, an analyst at Oppenheimer & Co. in San Francisco.

“People just aren’t buying PCs right now,” said Hsueh, who expects Micron shares to perform in line with their peers and doesn’t own any. “It’s not like you’ll sell more DRAMs at a lower price.”

Average selling prices for DRAM dropped 34 percent last quarter, Micron said. The price of its flash chips, used in portable electronics, dropped 24 percent.

Shares Drop

Micron fell 31 cents, or 13 percent, to $2.05 in late trading after declining 9.6 percent on the New York Stock Exchange. The shares have dropped 67 percent this year.

Offsetting the inventory writedown, Micron sold $157 million worth of products in the period that it had previously written off. The company reported profit of $262 million, or 34 cents a share, in the year-earlier period.

Micron announced in October that it would cut about 2,850 jobs in the next two years and reduce production to trim expenses. The company said today that its capital spending for this fiscal year will be $750 million at most, compared with a previous estimate of at least $1 billion. The company can’t curb spending much more than that, Chief Executive Officer Steve Appleton said on a conference call.

“We have cut everything that could possibly be cut,” Appleton said, adding that he expects competitors’ capital expenditures to fall as well.

Industry Slump

Global semiconductor sales will tumble 16 percent next year as consumers curb spending, Gartner Inc. said this month. Total revenue will fall to $219.2 billion, from about $261.9 billion in 2008, the Stamford, Connecticut-based research firm said.

Intel Corp. and National Semiconductor Corp., two bellwether chipmakers, both slashed their revenue forecasts last month.

Appleton is trying to acquire more production capacity, a bid to prevent the memory industry from building up too much inventory in the future. The company agreed in October to pay $400 million to buy a 35.6 percent stake in Inotera Memories Inc. from Qimonda AG.

The company is still interested in consolidating with other chipmakers, even though some governments have shown interest in providing aid to the industry, Appleton said.

“I’m not under the belief that consolidation goes away now that some of the governments are trying to help out the industry,” he said. “It would be a mistake if there is not consolidation.”

To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

Last Updated: December 23, 2008 18:14 EST