Micron Technology (NASDAQ:MU) stock has witnessed a massive crash since the beginning of May, as investor sentiment has turned negative despite the chipmaker's assurances that things are improving. Fool.com contributor Leo Sun recently pointed out that the Trump administration's clampdown on Huawei and the trade war against China could cause a fall in DRAM prices.

This will dent Micron's prospects further because it is the third-largest DRAM manufacturer in the world. The memory maker is already facing a ton of trouble thanks to weak chip demand and a supply glut of memory chips, and things could get even worse when Micron releases its fiscal third-quarter results on June 25.

Frustrated man in front of a stock chart.

Image source: Getty Images.

Another painful drop is in the cards

Wall Street expects a 38.4% decline in Micron's third-quarter revenue to $4.8 billion, while earnings are forecast to shrink to $0.85 per share compared to $3.15 a year ago. The numbers are in line with Micron's own guidance, but don't be surprised if its results don't pass muster.

I'm saying this because the demand for PCs and smartphones -- the two main drivers of DRAM demand -- has been dropping at a faster pace now. According to market research firms IDC and Gartner, PC shipments during the first quarter of 2019 fell to 58.5 million units.

Gartner's estimate puts the PC market's Q1 decline at 4.6% compared to the prior-year period, worse than the 4.3% drop seen in the final quarter of 2018. PC sales fell 1.3% in 2018, so there's a chance that the decline might accelerate this year.

Smartphone sales are tanking as well. According to IDC, smartphone shipments in the first quarter of 2019 were down 6.6% year over year. This is yet another red flag for Micron investors, as IHS estimates that smartphones will account for 28% of overall DRAM consumption through 2023.

Looking ahead, both these markets are expected to remain under pressure. The PC market, for instance, is reeling from Intel's CPU shortage, a phenomenon that's expected to last into the third quarter of the year. Meanwhile, smartphone shipments could also take a beating thanks to the problems faced by Chinese smartphone giant Huawei, which is the second-largest smartphone maker in the world.

All told, Micron is heading into its third-quarter report without any concrete catalysts that could revive its growth, and there's a good chance that its outlook will be worse than its upcoming results.

It's about to get worse

According to Yahoo! Finance, analysts estimate that Micron's revenue will see a steeper drop of 40% in the fourth quarter, and its earnings will crash from $3.53 per share a year ago to $0.87 per share. It isn't surprising to see analysts projecting a larger decline at Micron given the U.S.-China trade war has the potential to hurt the DRAM market big time.

That's because China is the largest importer of memory products, with TrendForce estimating that the country consumes 20% of global DRAM production. What's more, Chinese consumers accounted for 57% of Micron's sales last year, up from 51% in 2017 and 43% in 2016. But this is not where the company's problems end, as Huawei accounted for 13% of its revenue for the six months that ended in February.

Now that Micron has stopped shipping chips to Huawei and is facing a backlash from Chinese chipmakers that are looking to push foreign chipmakers out of their economy, its fourth-quarter outlook won't be pretty.

Micron management had promised sequential growth in DRAM shipments during the third and fourth quarters. The end-market conditions suggest that the company might not be able to deliver on that front, and that would trigger another sell-off in Micron stock.

As such, it would be a good idea to stay away from Micron shares because the company might disappoint with both weak results and outlook later this month.