Influencing Factors for Micron Technology Earnings
Microelectronics Corporation Relationship.....
On Nov. 25,
Micron and the Taiwanese semiconductor foundry United Microelectronics
(NYSE:UMC) reached a settlement in a long-standing intellectual property
dispute. To settle the claim by Micron that UMC stole secrets and leaked them
to a Chinese customer, UMC agreed to make an undisclosed one-time payment to
Wednesday, December 01, Micron and UMC announced an enhanced strategic
partnership. According to the press release, Micron will expand its business
relationship with UMC, especially for customers in the automotive and mobile
head of global operations, Manish Bhatia, said: "Expanding our relationship with UMC helps us strengthen our
customers' supply chains and is a great opportunity to increase collaboration
across the semiconductor industry. ... This expanded relationship provides
Micron continuing access to products that are critical to our automotive and
mobile customers, and we look forward to working with UMC in the coming years
to deliver our industry-leading memory and storage solutions to our customers
metaverse works out or not, one solid bet is the continued buildout of data
centers, communications equipment, and consumer devices that will need more and
more computing power. Enter Micron Technology, one of only three producers of
DRAM memory and one of only six major producers of NAND flash storage.
DRAM and NAND as the "oil" that drives the "horsepower" of
computing. The more computing power you need, the more bits of DRAM. The more
data that needs to be stored, whether in devices or the cloud, the more NAND
flash you need.
commodity-like properties of DRAM and NAND flash, prices per bit can fluctuate.
That volatility and cyclicality has caused Micron Technology to trade at a huge
discount to the rest of the tech industry: Currently, just 9 times next year's
you think about not just metaverse investments, but also 5G phones, artificial
intelligence and machine learning, cloud computing, and autonomous vehicles,
demand for memory is only increasing and broadening across a range of
management believes we're entering a new era in which chip and memory demand
becomes steadier; to highlight this prediction, management recently instituted
a dividend this past summer. The new dividend, more share repurchases, and
hopefully more consistency could spell a valuation rerating higher for Micron
in the "metaverse era."
Factors Effecting Micron Technology Earnings.....
Micron has solid
memory chip demand across all its end-markets. The pandemic-led work-and-learn
from home trend has fueled significant demand for personal computers (PCs) and
remote-working and online-learning trend amid the COVID-19 crisis has also
stoked demand for cloud storage.
lockdowns and social distancing measures have fueled the usage of online and
e-commerce services globally, compelling data-center operators to enhance their
capacities in order to accommodate the demand spike for cloud services.
been a solid uptick in the dynamic random access memory (DRAM) bit shipments
for the cloud, graphics, PC and notebook, 5G and automotive markets.
should also be getting even more cash in the door this quarter in particular
selling its plant in Lehi, Utah, to Texas Instruments for $900 million.
Thoughts on Micron Technology Earnings.....
Micron was named one of Citigroup's "top picks" in the
semiconductor space for 2022. Micron had sold off over the summer, as investors
grew wary of potential softening of PC memory demand amid shortages of other
chips. In addition, some had feared companies had double-ordered and built
inventory in the strong first half.
However, Citigroup's Christopher Danely said inventories may stay high,
as semiconductor companies have moved toward long-term agreements, and most are
solidly booked through 2022. Micron had also said on its September conference
call that its customers may choose to hold higher levels of inventory than they
did before the pandemic, as the costs of higher inventory are less than those
of lost sales experienced amid shortages this year.
Additionally, DRAM demand in particular, which is where Micron gets most
of its revenue, was just revised upward by research firm Trendforce, as
notebook demand has come in better than feared. Micron is perhaps the most
sensitive to booms and busts, so continued strength in demand next year would
make it one of the bigger winners in the space.