Micron Technology Inc., a major U.S. memory manufacturer, faced competition from Samsung Electronics Co., which deliberately lowered the price of DRAM. Its stock price plummeted below the bottom, and it has fallen by more than 28% so far this year!
barron`s.com reported that Drexel Hamilton analyst Rick Whittington issued a research report on the 9th stating that Micron’s competitor Samsung Electronics is driving down prices through cost savings, and it is expected that DRAM selling prices will continue to weaken. Weak pricing for PC DRAM has spread to mobile DRAM, he said.
Whittington also believes that Micron's process technology is not progressing fast enough. It is currently almost one process node behind its rivals, and its 20-nanometer process conversion time will not be until early next year. The gross profit margin of its main DRAM products may seriously shrink. In addition, Huayake is also facing risks because the supply contract with Micron has changed from the original market price concept to the profit and loss sharing concept.
The securities revised Micron's DRAM gross profit margin estimate down by 220 basis points to 35% in the third quarter (March-May) (equivalent to a quarterly decrease of 440 basis points). In Q4, it may further decrease by 400 basis points to 31% quarterly. %, worse than the original forecast of being flat.
Micron fell 2.82% after hearing the news on the 9th, closing at $25.19, a new closing low since April 29, 2014, and the largest decline among the 30 constituent stocks of the Philadelphia Semiconductor Index.
(This article is reprinted with permission from MoneyDJ News)
Extended reading:
- Samsung’s largest investment! South Korea's Pyeongtaek plant breaks ground
- Micron's 2015 Q2 financial forecast is worse than expected, and the stock price may hit the lowest in a year
- Huayako has signed a contract with Micron to change the purchase price to profit and loss sharing starting next year
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