Micron Technology Cont'd To Fall Today?

JC888
2023-05-23

It came as a “surprise” that China has decided to ban $Micron Technology(MU)$ chips from being imported into China, citing the “US often used alibi” of “national security” as the reason.

This came about after a security review conducted by the Cyberspace Administration of China.

The ban is on operators of “critical information infrastructure” in China from buying products from the US chip giant.

China’s Top Semiconductor Chip Supplier:

  1. $Intel(INTC)$

  2. Samsung

  3. SK Hynix

  4. Micron Technology - it is the 4th largest supplier of chips to the Chinese market.

  5. $Qualcomm(QCOM)$

What Is Unknown?

With the announcement coming out of the blue, there are still many unknows:

  • Duration of ban?

  • Availability of alternative supplier/s.

  • Response from US government. Doubtful response will be forthcoming as the Biden admin will be too “busy” negotiating US Debt Limit crisis. LOL!

Financial / Earnings Impact On Micron Technology:

It is without a doubt that Micron Technology is the scapegoat caught in the line of fire. However the same could be said about US massive ban on technology firm Huawei as well rght!

With the ban enforced, its impact on this chip maker’s earnings will definitely be impacted.

Q2 2023 quarterly earnings reported in Mar 2023

Looking at Micron Technology’s Q2 2023 - Top line & Bottom line.

  • Both top line and bottom line are in the “red”.

  • Doesn’t require much imagination on how going forward, Micron’s earnings will be further impacted.

  • In its quarterly earnings report, there is no breakdown of business by countries or regions. Hence I will not be able to accurately forecast the exact financial impact.

  • As it is the Top 4th supplier of chips to China, it is not unreasonable to estimate a -12% to -18% financial impact to Micron’s future earnings.

In conclusion, I think Micron Technology’s stock price will continue to slide in the foreseeable future.

Stock Price Will Stop Falling When:

  • China lifts the ban on sale of Micron chips to the mainland.

  • Micron is able to find a new customer whose order-volume could cover or eclipse China’s order-volume.

  • Do you think Micron Technology stock price will continue to fall?

  • Do you think Micron Technology will be able to find a new customer to cover the sales void left by China?

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Comments

  • phongy 45
    2023-05-24
    phongy 45
    why surprised at all!! ... USA can bullies others, high time others sanctions 0r ban USA thingy too !!!
    • gleezy: 
      How can I identify stocks that have the potential to give me high returns in the long run?
  • Moolele
    2023-05-25
    Moolele
    Went up instead 🤦🏻‍♂️
    • Moolele: 
      I sold half earlier the week 🤣
    • JC888: 
      Isn't this even scarier? Lots of punters out to make a quick buck.
      U dare to join in the "fun"? Lol!
  • Cory2
    2023-05-24
    Cory2
    It won’t be long before China starts doing most tech in-house IMHO. They want to be cutting edge in Blockchain tech and AI and are already funding the R&D departments accordingly. China is jittery about national security, so it only stands to reason…
    • wubbie: 
      Is China investing more in tech than other countries?
    • jazzyco: 
      What advancements in Blockchain and AI can we expect to see from China?
  • zookie
    2023-05-23
    zookie

    The one underappreciated bright spot in Intel's portfolio is sapphire rapids (and even more so, it's successor chips to come); Intel made significant architectural updates to sapphire rapids (in fact this was one of the reasons given for the multiple delays)

    • JC888: 
      If the product is excellent, the sales will follow
  • AugustineMac-
    2023-05-23
    AugustineMac-

    Intel is only rising in sympathy with tech in general. AMD up another 1.7% today. AMD is almost valued 50% higher than Intel market cap.

    • JC888: 
      Would you agree that chips for notebooks are "equally" distributed between INTC and AMD? LOL.
  • 袋鼠哥
    2023-05-25
    袋鼠哥
    I believe the whole semi cobductor industry in the US will be concerned.  Their profitability and  sustainabiliy  paticitally  come from their competitiveness on R&D, and also from long arm administration of the US government-it abused its power and attacked/ sanctioned strong competitors from overseas which brought in huge unfair benefit to the whole industry sector. Take Micron as an example, it pursuaded US government to sanction a number of chinese storage chip manufacturers during the past years when it was making huge prifit from that market.  I can tell that in the coming decade,  the semiconductor industry in America will gradually lose its lead on technology,  the competitiveness and value for money on its products,  and gradually it will follow the track of the automobile industry in America-going down the long way. US  government  has been bullying chinese government and chinese high tech companies for too much, too long.
    • JC888: 
      Disagree.
      Chip industry will cont'd to grow with US reaping the benefits due to Intellectual Property advantage.
      Only when China is able to buildi the lithographic machine that makes these chips that gets tinier each time, will the hurdle be crossed.
      The machine is the X-factor to solve.
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