Shares of Micron Technology (MU) hit a new 52-week high of $17.95 on Sep 27, eventually closing at $17.62. The closing share price represents a staggering one-year return of 205.37% and year-to-date return of 165.76%.
Micron’s innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.
Micron has recently announced the shipping of 2GB Hybrid Memory Cube (HMC) engineering samples, which provides 160 GB/s of memory bandwidth and uses approximately 70% less energy per bit than the current technologies. These features are expected to help Micron’s customers to lower technology costs.
Moreover, the company has unveiled its new replay-protected monotonic counter (RPMC) feature for serial peripheral interface (SPI) NOR Flash memory devices, which facilitates secure data storage.
The other positive factor for Micron is the Elpida acquisition, which is expected to increase the wafer manufacturing capacity by approximately 50%, helping it to capitalize on any demand shortage. The company is also optimistic about supply/demand balance for DRAM and NAND memory chips in 2013 and 2014, which should support prices.
We believe tight expense control (Micron is expected to cut approximately 5% of its 30k strong workforce by fiscal 2014), manufacturing efficiency and the secular shift toward mobile DRAM will benefit Micron’s fundamentals in the coming quarters.
Though Micron’s prospects in the mobile DRAM market look promising, it will not be easy to outpace Samsung. Samsung has held the largest share of this market for years and there are indications that it will continue to do so in the next few years as well.
The DRAM market is already seeing supply constraints due to the rising demand for the memory chip by smartphone makers such as Samsung and Apple (AAPL).
It will also not be easy for Micron to capture share from SanDisk Corp. (SNDK), a key player in the NAND zone. Nevertheless, with support from its prime NAND customers – Apple and Intel Corp. (INTC) – the situation could become favorable for Micron, going forward.
Currently, Micron has a Zacks Rank #1 (Strong Buy).
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