Needham & Company Remains Bullish on Micron Technology (MU) as Korean Vendor Scraps Wafers
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Needham & Company reiterated an Underperform rating on Micron Technology (NASDAQ: MU) as the company trades up 2% today. The boost follows an article by Digitimes citing a DRAM production slip-up that has forced a Korea-based vendor to scrap 30,000-50,000 wafers from its 21nm node.
Analyst Rajvindra Gill commented, "MU is up 2% today based on a Digitimes Article citing a "DRAM production slip-up has forced a Korea-based vendor to scrap 30,000-50,000 wafers from its 21nm node". Based on our conversations with our supply chain contacts, we believe this claim is unsubstantiated. While it's true that the DRAM pricing environment has improved, mainly driven by better PC DRAM pricing, we believe MU is sitting on a lot of excess inventory on its books and is having difficulty selling it, which could pressure gross margins. Moreover, as we discussed during our recent Asia trip, MU is still having qualification issues on its mobile DRAM 20nm product and is behind the competition. On the NAND side, MU has to cost-effectively transition to 3D NAND because it does not have a 14nm 2D NAND alternative, and here we remain cautious on that transition."
Shares of Micron Technology closed at $15.77 yesterday.
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