Why Microchip’s announcement might impact Micron’s prospects


Nov. 26 2019, Updated 1:45 p.m. ET

4Q14 results

Micron Technology, Inc.’s (MU) DRAM product revenues increased approximately 5% over the previous quarter. Higher bit sales volume and constant average selling price led to this growth. Networking DRAM pricing were up 19% owing to 4G LTE deployment in China and growth in emerging markets.

Read more about this topic in Market Realist’s, Why LTE adoption in China should drive Micron’s DRAM business.

dram revenue for each fiscal qtr

Possibility of correction

When Microchip Technology Inc. (MCHP) announced an inventory correction in the chip industry on October 10, 2014, semiconductor stocks including Intel Corporation (INTC), Texas Instruments Incorporated (TXN), and others fell.

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Meanwhile, according to Srini Sundararajan of Summit Research, “MU derives its revenue from DRAM DDR3 chips.” These are in short supply and fully accounted for by Apple Inc. (AAPL), Samsung Electronics Ltd. (SSNLF), and Chinese smartphone and tablet vendors, as well as PC, and server vendors. “Similarly,” said Sundararajan, “Micron’s NAND is used as storage. Microchip is more relevant for its microcontrollers and not really relevant for PCs, servers, DRAM memory, NAND memory”.

Both Micron’s and Intel’s latest quarterly results show that currently, the situation is not as dire as purported. Still, future results will tell us more. Micron’s management is optimistic about the DRAM industry prospects in the near future. As the above chart shows, DRAM revenues grew with each fiscal quarter.

To learn more about the Microchip’s news on chip industry, please read Market Realist’s series, Microchip Technology’s news may not affect other leading players.


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