MU - Micron Technology pops as Samsung memory cut is seen as 'last piece' of recovery

2023-04-10 09:30:06 ET

Micron Technology ( NASDAQ: MU ) shares rose more than 5% in early trading on Monday as Samsung's ( OTCPK:SSNLF ) announcement that it would cut memory production by a significant amount is seen as the "last piece" of the recovery for the dynamic random access memory market, investment firm Citi said.

Analyst Christopher Danely, who reiterated his buy rating and per-share price target of $75 on Micron ( MU ) in light of the announcement, added the announcement should have wide ranging impacts, considering Samsung ( OTCPK:SSNLF ) is 50% of the DRAM market.

"We believe the cuts to both capex and production by the three DRAM providers [Samsung, Micron and Hynix] should help ensure a DRAM recovery beginning in the [second-half of 2023], especially considering PC demand (roughly 10% of DRAM) appears to have stabilized and we expect both data center demand (roughly 40% of DRAM) and handset demand (roughly 30% of DRAM) to both stabilize in [the second-half of 2023]," Danely wrote in an investor mote.

Danley also noted that even though Samsung ( OTCPK:SSNLF ) did not give specifics on how much DRAM supply it would cut, he still expects demand will grow 8% this year and 21% in 2024.

Last month, Micron ( MU ) CEO Sanjay Mehrotra said he was "confident" in the company's long-term demand outlook .

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