Memory Chip Makers Rally on Lower CapEx News

Good news for the memory sector: The players seem to be acting rationally for a change.

One clear message from the Applied Material’s (AMAT) earnings call yesterday is that there has been a dramatic reduction in capital investment in the DRAM and NAND memory chip sectors. The company sees overall chip industry cap ex down 25%-35% this year, with DRAM spending down 50% and NAND flash spending down 15%-plus. A sign of trouble? Well, yeah, everyone has known for months now that both memory sectors are in trouble. But the slowdown in spending should help restore the supply/demand balance and stabilize prices.

That’s lead to some rare optimism on the memory chip stocks today:

• Micron (MU) today is up 29 cents, or 3.5%, to $8.62.
• Qimonda (QI) is up 7 cents, or 1.6%, to $4.59.
• SanDisk (SNDK) is up $1.43, or 4.7%, to $32.02.

Comments

[DanielJacome]

Looking further down the food chain, any thoughts on the semi eqpt names?

Sentiment in select names seems to suggest we may be bottoming.

Pays to note that the chip eqpt group discounts info @ least 6 mths ahead.

VSEA still looks like the best name in the group, for some reason its the name our buy side friends keep warming up to - indeed, since hitting rock bottom at 30, its run up close to 10 pts!!