Goldman's James Schneider, who has cut shares to Neutral, thinks NAND flash supply could grow faster in the next few quarters than previously expected, and that margins "are likely to peak in 2H13" thanks to price pressure and slowing cost reductions.
SanDisk (SNDK -2.3%) shares nearly doubled from last summer's lows thanks in large part to healthy pricing, rising margins, and expectations NAND supply growth will remain limited. These factors have also given a big lift to Micron (MU +0.6%) shares.
Yesterday, Morgan Stanley asserted there is "no more upside" in the memory chip space, while predicting DRAM growth/ASPs/margins will peak in Q3.
MS observes Samsung (SSNLF.PK), Hynix, SanDisk partner Toshiba (TOSBF.PK), and Micron's Elpida and Inotera units are all set to expand capacity in response to strong smartphone, tablet, and SSD-related orders.
MS: "Most investors we met are convinced that this time it is different ... However, industries do not stay in a vacuum or steady state when faced with huge excess returns building and significant shortage heading into 2H13."