Shares of Asian chipmakers rallied on Thursday after Micron Technology‘s bullish outlook overnight, which indicated the sector’s supply glut may finally be easing.

The U.S. chipmaker reported third quarter earnings that beat estimates, thanks to higher demand for its memory chips driven by the booming A.I. sector.

“We believe that the memory industry has passed its trough in revenue, and we expect margins to improve as industry supply-demand balance is gradually restored,” CEO of the U.S. memory chipmaker Sanjay Mehrotra said in a statement.

Shares of Japanese semiconductor company Electron rose 3.26%. Hong Kong-listed Hua Hong Semiconductor added 1.82%. South Korea’s SK Hynix traded 1.67% higher.

Micron’s shares rose 3% in extended trading hours.

However, China’s ban on Micron’s chips remains a “significant headwind” that is impacting the company’s outlook and slowing its recovery, Mehrotra cautioned.

Last month, Chinese authorities announced Micron products failed its network security review and declared it a “major security risk” to China’s critical information infrastructure.

Micron’s third-quarter revenue came in at $3.752 billion, beating Reuters’ estimates of $3.646 billion, data from Refinitiv showed.

“We have increased confidence that the industry has passed the bottom for quarterly revenue and year-on-year revenue growth,” Mehrotra added.

Patrick Moorhead, CEO of Moor Insights & Strategy is upbeat about Micron.

“If you’re looking long term, Micron is good bet because it has advantages technologically that its competitors don’t,” he told CNBC’s “Street Signs” on Thursday.

However, he highlighted that while Micron is going to get some lift from the advent of AI, the overall server market is still lagging, a view echoed by the company.

“Generative A.I. is driving higher-than-expected industry demand for memory and storage for A.I. servers, while traditional server demand for mainstream data center applications continues to be lackluster,” Micron’s statement said.