Micron Hasn’t Memory-Holed the Chip Shortage Just Yet

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The chipmaker’s disappointing launch still leaves some questions about the health of the memory market

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Now the question is whether all the bad news is over. Shares of Micron fell a further 2% on Wednesday morning. The company acknowledged on its earnings call Tuesday that PC makers are beginning to cut memory orders specifically, as a lack of other components hampers their production output. Those reductions are also directly affecting the micron; Chief executive Sanjay Mehrotra said the inability to procure adequate controllers and analog chips would hamper some of Micron’s production in the current quarter.

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But Micron is still more optimistic than others in key segments of the market. Mr Mehrotra said the inventory levels in the data-center segment are in “decent shape”. But market research firm Trendforce predicted last week that server DRAM prices would drop 5% in the calendar’s fourth quarter, as the cloud provider had “massively” over the past few quarters to outweigh any production shortfalls. are buying. . Morgan Stanley’s Joseph Moore said that even if cloud providers don’t start reducing that inventory, they can use their reserves “as a lever in price negotiations.”

Still, most of Wall Street is positive on Micron, with about 85% of analysts rating the stock as a buy. At about 8 times forward earnings, the shares are cheap relative to peers and their own history over the past two years. Micron also said it expects record revenue in fiscal 2022 — meaning growth of at least 10% from the recently ended year. But more clarity on DRAM pricing trends may be needed for the stock to work again. Even chip makers are not safe from chip shortages.

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Dan Gallagher [email protected] . Feather

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