NEW YORK (TheStreet) -- Shares of Micron Technology (MU - Get Report) fell 6.15% to $29.47 in morning trading Tuesday on a report from The Korea Times that Samsung (SSNLF) has reached a deal with Apple (AAPL) and LG Electronics to supply advanced DRAM chips for the companies' new smartphones.
The news would take market share away from Micron, which also manufactures DRAM chips.
The Korea Times reported the deal is estimated to be worth billions of dollars.
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"Under the agreement, Samsung will start providing LG Electronics with 100% mobile DRAM chips it needs for LG G4 smartphone, which will be unveiled in April," an industry official who is familiar with the deal told The Korea Times. "Also, Samsung will handle at least half of the amount that Apple needs for its new iPhone, tentatively named iPhone 6S."
Apple could ask Samsung for more chip supply depending on the situation, the official said. Another official told the Times the contract would last for a minimum of one year. "Samsung has no problems meeting growing client demand for advanced mobile DRAM chips," he said.
The Times also notes the agreements could "signal the start of a thaw in the recent icy relationship between Samsung Electronics and Apple, as well as LG Electronics and Samsung Electronics."
Samsung and Apple have recently agreed to drop several cases against each other in locations outside the U.S., in which the two sides continue to fight over patents. Samsung also had legal issues with LG Electronics over the latter's alleged vandalism of some Samsung washing machines at a trade fair.
Separately, TheStreet Ratings team rates MICRON TECHNOLOGY INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICRON TECHNOLOGY INC (MU) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MU's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 13.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MU has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MICRON TECHNOLOGY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Powered by its strong earnings growth of 180.00% and other important driving factors, this stock has surged by 25.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full analysis from the report here: MU Ratings Report