Now for both types of memory chips in the market there is a fairly healthy balance of supply and demand. The situation with the shortage of non-memory chip components is also improving. Micron Technology is ready to meet all the demand from the market. The company is also betting on a strong growth in supplies in the second half of the fiscal year: DRAM chips – within 15-19% and NAND chips – about 30%. Cost reductions (higher than industry-wide) are expected due to the introduction of top-notch 1α DRAM and 176nm 3D NAND technologies.
Over 90% of the global random access memory (DRAM) market is controlled by three companies: Samsung, SK hynix and Micron Technology. In the flash memory (NAND) market, Micron Technology is one of the top 5 market players.
The company continuously invests in the development of new products and processes. This allows it to remain among the world leaders in the industry, as well as provides revenue growth and a technological reserve for the future.
The situation in Ukraine, according to company representatives, will not affect production. But the role of the region as a source of gas and some minerals used in the production of chips is great. This means that some costs may still increase.
The resumption of quarantine measures in China related to the coronavirus outbreak poses a risk to the electronics supply chain. As with many companies, prices for energy, transportation, raw materials and wage costs will rise against this backdrop.
However, Micron Technology can offset this inflationary pressure by improving manufacturing techniques to increase its efficiency. In technological leadership, the company is faster than its competitors.
We maintain our buy recommendation for Micron Technologies stock with a target price of $113 over the next 12 months.