To The Moon

In the wake of the devastating earthquake that struck Taiwan on April 3, 2024, the semiconductor industry, including key players like $Micron Technology(MU)$, has been impacted. MU stock is seeing a rise, but it might not be because of the devastating earthquake in Taiwan.

Taiwan's strongest earthquake in 25 years leaves nine dead, 1,000 injured

Following the earthquake, Micron halted negotiations with clients regarding memory chip pricing. While this might suggest a supply shortage, it's more likely a strategic pause to assess the impact of the disaster on their operations.

The memory chip market (DRAM and NAND) has been grappling with weak demand for weeks, even before the earthquake. While factory shutdowns due to the disaster might sound like a recipe for price hikes, the current supply glut seems sufficient to prevent any significant fluctuations.

The pause in pricing discussions might lead to a minor, temporary increase in memory chip prices. However, with underlying weak demand, analysts are doubtful about the sustainability of this rise.

While the stock shows positive movement, Micron's primary concern is employee safety. The company confirmed the well-being of its staff but is still evaluating potential damage to its operations and supply chain.

The earthquake's more substantial impact might be on $Taiwan Semiconductor Manufacturing(TSM)$, a major chip producer. They were forced to evacuate factories, potentially disrupting production and impacting chip supply in the long run.

The current rise in Micron's stock price likely isn't a direct result of an earthquake-induced shortage. It's more a cautious pause in pricing negotiations. Investors should closely monitor developments, as the true impact on chip supply and Micron's operations remains unclear.

Personally, I have been bullish about $Micron Technology(MU)$ since the price was at 69 and still am for several reasons. Many analysts continue to have "Buy" ratings on MU, even after the earthquake news. This indicates their belief in the company's long-term prospects. Micron is well-positioned to benefit from the ongoing growth in Artificial Intelligence (AI). AI requires significant memory and storage solutions, which are exactly what Micron provides. Although the earthquake caused a pause, memory chip pricing is generally expected to be favorable for Micron. Once the dust settles from the current situation, negotiations might resume with a potential for price increases due to factors like strong demand for memory and storage solutions. While the situation is still developing, initial reports suggest Micron's production facilities escaped major damage. If true, this could lessen the negative impact on supply.

Read my previous post: This Forgotten Semiconductor Stock Might Be Set for Years to Come

MU 3M Chart

Micron's chart is exhibiting a textbook cup and handle pattern with the recent breakout. This is a strong bullish signal for investors. Stay tuned for similar technical analysis insights!

MU CALL 20240621 110.0

MU Share

Looking to cash out of my MU options if the price pops above $130, but I plan to hold onto my underlying shares of MU.

In conclusion, while the Taiwan earthquake has presented challenges for the semiconductor industry, including Micron, the company's swift response, cautious approach, and perceived resilience have contributed to a positive sentiment among investors, driving Micron's stock to rise amidst the adversity.

How do you assess the impact of natural disasters on semiconductor companies' operations and supply chains, and what factors do you consider when evaluating their resilience in such situations?

Disclaimer: This post reflects my personal opinions and should not be considered as financial advice. Always conduct thorough research before making any investment decisions.

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