Micron Technology (MU) - Get Micron Technology, Inc. Report shares jumped higher Wednesday following reports that its main rival in memory chip production has suspended operations at a key factory in China amid an accelerating Covid outbreak.
Samsung Electronics is 'temporarily adjusted' operations at a manufacturing facility in Xi'an, which the government locked down last week amid a series of Covid infections that ripped through the western city of 13 million people. According to multiple media reports, Xi'an accounts for around 40% of Samsung's NAND, or flash memory chip output, and 15% of total global production.
Micron could be a major beneficiary of any prolonged shutdown of the Xi'an factory, just as the global semiconductor market begins to recover from its year-long component shortage trigged by the 2020 pandemic.
Micron, which makes chips across an array of sectors, including PCs, mobile phones, data centers and autos, said earlier this month supply chain issues should start to ease over the first half of the year, helping current quarter revenues rise to around $7.5 billion, plus or minus $200 million with adjusted earnings in the region of $2.16 per share.
The group said it sees NAND bit demand growth of around 30% for its current fiscal year, which ends in the fall, and a prolonged shutdown by Samsung could boost average selling prices and improve margins for Micron in its quickly developing memory division.
Micron shares were marked 2.5% higher in early Wednesday trading to change hands at $95.52 each, a move that would extend the stock's six-month gain to around 15%.