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Micron (MU) +3.5% after memory chip rival Samsung’s factory shutdown
Micron (MU) shares traded up on Wednesday after its main rival in memory chips, Samsung, was forced to shutter a key production factory due to Covid-19.
Tech component producer Micron (MU) climbed 3.5% on the Nasdaq on Wednesday after its memory chip production rival Samsung said it had been forced to shut down a key factory in China due to a Covid-19 outbreak.
Micron is likely to benefit from a slowdown in production from any of its key rivals after it said in early December that its supply chain issues, which also affected many tech companies, could soon be behind them.
The Idaho-based producer posted its fiscal Q1 report just before Christmas with an impressive $7.69bn in revenue and $2.16 earnings per share that topped the Wall Street consensus.
CEO Sanjay Mehrota touched on its supply chain in a post-earnings conference call last week, noting that the “current tight” conditions are on course to “gradually improve” during 2022.
News of Samsung’s struggles meant investors were ready and willing to buy into Micron in midweek, especially as the company seems to have the fundamentals in place to thrive next year.
Samsung said it had “temporarily adjusted” the output at its factory in Xi’an, but that could have a major impact as the facility reportedly accounts for around 40% of the memory chips the company manufactures.
That is a blow for the South Korean tech giant, which trades on the Korea Exchange (KRX), as experts believe the global semiconductor market could soon finally bounce back after an 18-month long bout of shortages and issues linked to the pandemic.
Micron said its average selling prices and margins are likely to rise in the coming months if Samsung’s factory shutdown drags on.
During trading on Wednesday, Micron shares rose 3.5% to $96.10 by mid-afternoon.
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