Seeking Alpha

Micron lower on report Samsung plans to hike DRAM output

  • Morgan Stanley reports Samsung (SSNLF, SSNGY) plans to hike its DRAM output. Micron (MU -3.5%), whose shares have risen over 6x from their fall 2012 lows, is selling off in response. Peer SK Hynix (HXSCL) fell 4.1% in Seoul.
  • Digitimes recently reported Samsung is thinking of building a new DRAM fab in 2015, as industry consolidation and strong mobile and server-related demand keep prices high. The site also reported spot prices for 4Gb DDR3 DRAM chips could rise to $4.80-$5.00 in Q3, after rallying to an 18-month high of $4.35 in late June.
  • TrendForce estimates Samsung had 35.5% of the global branded DRAM market in Q1, SK Hynix 28.2%, and Micron 28%.
  • This morning, SA author David Alton Clark argued Micron investors should tread carefully at current levels, given the DRAM industry's historical cyclicality.
  • Previous: Samsung reportedly planning to hike DRAM contract prices
Comments (20)
  • coolpdx
    , contributor
    Comments (7) | Send Message
     
    So, Sammy thinking about a plant in 2015, which will be operational in 1-2 years and its not even confirmed, MU drops !! Wonderful wall street. Btw, MU long here.
    9 Jul, 10:24 AM Reply Like
  • f5alcon
    , contributor
    Comments (527) | Send Message
     
    it is a rumor probably for market manipulation
    9 Jul, 10:28 AM Reply Like
  • Lappy50
    , contributor
    Comments (6) | Send Message
     
    Right on!!!
    9 Jul, 10:40 AM Reply Like
  • chipmarketing
    , contributor
    Comments (27) | Send Message
     
    Building a DRAM fab is a three year process to qualified product and production.
    9 Jul, 10:53 AM Reply Like
  • i_am_seeker_2
    , contributor
    Comments (408) | Send Message
     
    Ah, it is a Herb Greenberg twitter comment on a Morgan Stanley call that is responsible for Micron's sharp decline this morning. Greenberg is often right for somewhere between 2 hours and 2 days, but frequently wrong for periods longer than that. His twitter-- "M-Stanley saying Samsung raising DRAM capacity to 100k wafers per month, well ahead of expectations. History FINALLY repeating itself?"

     

    No, Herb, history is not repeating itself. But I'm sure we will keep hearing calls like yours to that effect, just as we have heard them for the last 18 months. Are you suggesting, Herb, that Samsung will start a price war in order to increase their market share in memory chips when their mobile consumer product division--far larger than their chip division--would be hurt even further by lower chip prices, which would help Sammy's mobile competitors?

     

    You are suggesting that they are pretty stupid then. I don't think so. Even if they do build new DRAM wafer capacity, it will be brought up and released in an orderly manner precisely in order to maintain profits in DRAM and not even further lower their mobile competitions' costs. The situation in memory chips has completely changed from the past when there were a dozen or more competitors in the sectors, many of whom were backed by national banks. There are only three producers of any size left now, they are all technologically and financially sound (or, in Hynix's case, have a sound backer in SK Telecom), none of them have any reason to begin a market share war and in fact each of them have good reasons to want the current healthy supply-demand situation to continue for the foreseeable future.
    9 Jul, 10:32 AM Reply Like
  • miross
    , contributor
    Comments (9) | Send Message
     
    Interesting.... as my search of MS this am (9:32 PDT -- having client access) doesn't show any such comment....
    9 Jul, 12:32 PM Reply Like
  • moksha22
    , contributor
    Comments (40) | Send Message
     
    In 2015? Thinking about? LOL.

     

    DRAM price up?
    That's great news for me, MU should rally!
    9 Jul, 10:44 AM Reply Like
  • Dmitry Kovalchuk
    , contributor
    Comments (196) | Send Message
     
    Previous: Samsung reportedly planning to hike DRAM contract prices ---> is actually positive news for $MU
    9 Jul, 10:46 AM Reply Like
  • Rector181
    , contributor
    Comments (5) | Send Message
     
    Argee. This "news" is actually very favorable to MU - shows there is a real demand for DRAM. MU will profit greatly - particularly in the next 2-3 years.
    Price Target for 14: $40 per share.
    9 Jul, 12:53 PM Reply Like
  • User 17444992
    , contributor
    Comment (1) | Send Message
     
    Long ang going longer. Herb is like a broken digital clock, just before it gets lost.
    9 Jul, 11:07 AM Reply Like
  • hksche2000
    , contributor
    Comments (787) | Send Message
     
    Well said, I_am_seeker_2, and nothing left to be added, except relish this buying opportunity on MU!
    9 Jul, 11:10 AM Reply Like
  • Tai Yu
    , contributor
    Comments (164) | Send Message
     
    Assuming Samsung's demand projection is correct, DRAM price will surge and MU stands to benefit, at least before the Korean new fab is ready.

     

    If Samsung proves to be wrong, this company is worst hit with over capacity. The news short to medium term is neutral if not positive.

     

    If the low of yesterday's candle at $32.12 at today's close is breached, MU may still need to find a lower support level. I trust a strategy to reap the upside potential while limiting the total dollar exposure is to buy a call option
    9 Jul, 11:33 AM Reply Like
  • terre tulsiak
    , contributor
    Comments (15) | Send Message
     
    No wonder you guys get ulcers. Try eating more beneficial bacteria.
    9 Jul, 11:48 AM Reply Like
  • Mace Meier
    , contributor
    Comments (76) | Send Message
     
    Is there a link to the Morgan Stanley report?
    9 Jul, 01:54 PM Reply Like
  • alan kohn
    , contributor
    Comments (10) | Send Message
     
    Capacity additions must happen if memory is to be the hugh growth market that is expected by micron investors. Prices must come down to compete with traditional memory solutions. Expect more capacity and lower pice per bit if dram and flash are to grow rapidly.
    9 Jul, 06:49 PM Reply Like
  • Big Fish
    , contributor
    Comments (11) | Send Message
     
    Huge growth market is the result of increase demand that would hike selling price. Vendors would like to increase sales by producing more. The added capacity would ultimately lead to increased supply. Should demand increase fail to sustain going forward or even reduce will to over supply will mean lower price.

     

    Bearing in mind any substantial increase in capacity takes time, short term to medium term we should be seeing a price hike.
    10 Jul, 10:13 AM Reply Like
  • terre tulsiak
    , contributor
    Comments (15) | Send Message
     
    What happened to making components....DOMESTIC... What would happen if we took over an old Pratt Whitney Plant or other place, rounded up a bunch of workers that were motivated to succeed- say, they were unemployed or made less than minimum wage, gave them some scrubs and gloves- which everyone seems to be wearing anyway, and told them we were testing a new process. There is a factory which makes stuff we need. They buy the material to make the stuff from another place right down the ROAD or the RIVER.The place that is selling us the material- call it METALS, gets it from the GARBAGE of people and other businesses all around that area. But everyone keeps it separate so it's easy to take what they need and even have machines and other processes to separate the individual precious metals and elements. Take it to the refinement process, then ultimately the scrubbed assembly-line workers and train them to put together the latest 'iteration' of the tablet/phone/computer.(In Fact! we could even keep the food waste separate altogether! mix it with the grass that we keep fertilizing so it grows more so we have to keep cutting it and make a whole new product- called compost- which we could use to add to the soil to put the beneficial bacteria, nutrients, minerals and other elements back in- which might not make the fertilizer and leaf blower people that happy but I digress, anyway) The point is the metal that we have in this country. Let's pretend we only have one earth. so we have to be as careful as we can with the parts. If we use something we have to put something back- it's only fair. Especially when we are being so wasteful, using fuel and resources to get materials from another country. The only possible reason that would offset the added expense is that the inputs are less, meaning labour or material. So someone or something is being exploited or damaged. I realized from buying fruit. If other countries don't have the same regulations regarding pesticides, fertilizers,water use and pollution, and human rights conditions, why would we risk eating something they said was safe, but also, who are we supporting in doing so?
    20 Jul, 01:59 PM Reply Like
  • tromur
    , contributor
    Comments (34) | Send Message
     
    What??? Are you on the right website???
    21 Jul, 06:28 PM Reply Like
  • terre tulsiak
    , contributor
    Comments (15) | Send Message
     
    Clearly I am not. I also know that 'know' is not shortened to 'no' unless I want to sound ignorant. I just wonder what you gamers are going to do when the lights go out and you don't have any real world skills.
    22 Jul, 05:07 PM Reply Like
  • Dmitry Kovalchuk
    , contributor
    Comments (196) | Send Message
     
    Analytical thinking skills are always in demand, no matter what industry or task.
    23 Jul, 05:05 AM Reply Like
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