Micron (MU) Defended at Odeon as Shares Weaken Pre-Market
Weakness in Micron Technology (NASDAQ: MU) Tuesday morning was tied to comments from SK Hynix suggesting 3% to 5% higher DRAM wafer capacity, which spooked the market, said Odeon analyst Jahanara Nissar.
Nissar noted that SK Hynix missed DRAM/NAND bit growth guidance for the quarter it just reported, so the higher DRAM wafer capacity of 3%-5% they mentioned is catching up vs meaningfully increasing supply.
Additionally, node transitions are increasingly challenging, which limits capacity increases, the analyst pointed out.
"Hynix plans its 2017 DRAM bit shipment growth to be in the low 20% range. This is in line with Micron's expectations of industry DRAM bit growth of 15%-20%.," said Nissar, adding, "What the street is missing is capacity comes online in 2019 and already demand at > 20% y /y dram bit growth outstripping Hynix supply in the 20% range."
Odeon added that Seagate Technology's (NASDAQ: STX) disaster this morning is company specific and has nothing to do with Micron.