Micron Facing Ongoing Pricing Pressures

| About: Micron Technology (MU)

Citing weaker than expected pricing for both DRAM and NAND flash memory prices, Jefferies’ John Lau yesterday cut his rating on Micron Technology (NASDAQ:MU) to Buy from Hold.

Lau wrote in a note:

Our check and commentary from industry players point to a poor outlook for memory market in near term. Both DRAM and NAND markets are likely to experience significant ASP pressure during [the first half] due to excess capacity and a lack of a major catalyst to drive significant demand. Our checks also point to a slowing PC market in recent weeks and this could lead to weak DRAM demand in near term.

Lau says that big capacity additions in Flash has led to a “glut” in the NAND market; he sees capacity increasing 130% in 2007, with demand “likely to lag significantly.” He sees ASPs down 50%-60% in 2007, “worse than we had anticipated.”

Lau figures some of the NAND capacity will shift to DRAM production, due in part to Vista-driven demand.

Lau yesterday cut his price target on Micron to $15 from $21.

On Friday, Micron closed at $13.16.

Previously: SanDisk Swoons On Weak Q1 Outlook; Flash Prices Cratering (January 31, 2007)

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Tagged: , Semiconductor - Memory Chips
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