Micron, Qimonda Upgraded

Citigroup sees growth for PC memory chips.
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Makers of computer memory chips are poised for growth as DRAM prices rebound.

That's the prognosis of Citigroup, which reversed its view on the DRAM sector Wednesday, and handed out upgrades to various players.

Micron Technology

(MU) - Get Report

and

Qimonda

(QI)

-- two stocks that have been battered by the Street in recent months -- were both upgraded to buy from hold.

Shares of Micron were up 2.2%, or 25 cents, at $11.51 in midday trading Wednesday; and Qimonda shares lost 24 cents on a rough day for technology stocks.

"Valuations are at or near-trough for some stocks, creating certain compelling value-based buying opportunities," Citigroup analyst Glen Yeung wrote in a note to investors.

Citigroup has provided investment banking services to Qimonda and noninvestment banking services to Qimonda and Micron in the past twelve months. The firm has also been involved in a Qimonda securities offering.

DRAM is the main type of memory used in personal computers.

After a strong run-up in DRAM chip prices ahead of the January launch of

Microsoft's

(MSFT) - Get Report

Vista, which requires high memory content to run properly, prices have slipped sharply in recent weeks.

"We expect a DRAM price bottom in the coming six to eight weeks as spot prices approach cash costs, limiting downside to DRAM share prices," Yeung wrote.

What's more, Yeung predicts that supply of DRAM could tighten in the second half of the year, pushing prices up.