Semiconductor Revenues Will Be Higher-Than-Expected In 2011 Due In Part to Japan Disaster, DRAM Will Lead the Way (MU)
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Price: $966.78 -0.77%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.8%
EPS Growth %: +928.4%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.8%
EPS Growth %: +928.4%
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According to research from IHS iSuppli, in an ironic twist, supply disruptions related to the Japan earthquake will contribute to higher than expected global semiconductor revenue in 2011 as shortages boost prices for memory.
IHS iSuppli now sees 2011 semiconductor revenue growth of 7.0 percent, up from their prior forecast of 5.8 percent.
The biggest contributing factor to the rise will be dynamic random access memory (DRAM) devices. The firm increased their 2011 DRAM revenue forecast by 6.6 percentage points, and now see the area down just 4 percent on the year versus a prior view of 10.6 percent decrease.
"The earthquake will result in a 1.1 percent reduction in global DRAM shipments in March and April," said Mike Howard, principal analyst for DRAM and memory at IHS. "This reduction, along with other factors, contributed to a steadying in contract prices for DRAM in March, which typically is a weak month for sales when prices were expected to decline by as much as 3 percent. The impact of the prices holding steady during this period is dramatic-and will represent a major boost for DRAM revenue for the entire year."
Higher DRAM prices will likely benefit U.S.-based Micron Technology Inc. (NYSE: MU), although upward pressures on DRAM prices will likely ease during the second half of the year.
IHS iSuppli now sees 2011 semiconductor revenue growth of 7.0 percent, up from their prior forecast of 5.8 percent.
The biggest contributing factor to the rise will be dynamic random access memory (DRAM) devices. The firm increased their 2011 DRAM revenue forecast by 6.6 percentage points, and now see the area down just 4 percent on the year versus a prior view of 10.6 percent decrease.
"The earthquake will result in a 1.1 percent reduction in global DRAM shipments in March and April," said Mike Howard, principal analyst for DRAM and memory at IHS. "This reduction, along with other factors, contributed to a steadying in contract prices for DRAM in March, which typically is a weak month for sales when prices were expected to decline by as much as 3 percent. The impact of the prices holding steady during this period is dramatic-and will represent a major boost for DRAM revenue for the entire year."
Higher DRAM prices will likely benefit U.S.-based Micron Technology Inc. (NYSE: MU), although upward pressures on DRAM prices will likely ease during the second half of the year.
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