Micron (NASDAQ:MU): China Ban Under the Microscope

China’s ban on the buying of Micron Technology’s (NASDAQ:MU) chips by its key infrastructure operators has come under tough scrutiny in the U.S. On May 27, Commerce Secretary Gina Raimondo said that the U.S. “won’t tolerate” the ban and called China’s move as “plain and simple, economic coercion.” Since the news of the ban on May 22, MU stock has gained 11.6%, in part bolstered by the general euphoria for semiconductor stocks.

Raimondo held talks with Chinese counterparts during the week and put forth the U.S. stand. The Biden administration is discussing the potential fallouts and the required actions to be taken in response to the ban. But so far, no clarification has been received. Chinese authorities have prohibited the use of Micron’s chips, citing the threat to national security. However, the U.S. views it as retaliation in the ongoing U.S- China trade war.  

Since last year, the U.S., Europe, and Japan have organized efforts to cease the export of advanced chips to China to slow its progress and its unlawful use of sophisticated chips in the development of damaging technologies. Meanwhile, China is strengthening ties with South Korea which also hosts solid chip-manufacturing capabilities.

Is Micron a Buy, Sell, or Hold?

Micron is indeed one of the finest chip manufacturers in the U.S. and plays a crucial role in the world’s chip industry. Despite China’s ban on its products, Wall Street remains bullish on the stock. On May 26, BMO Capital analyst Ambrish Srivastava reiterated a Buy rating on Micron and raised the price target on the stock to $80 (8.2% upside potential) from $67.

Overall, the stock has a Moderate Buy consensus rating based on 18 Buys, four Holds, and two Sell ratings. Also, the average Micron Technology price target of $70.83 implies 4.2% downside potential from current levels. Meanwhile, the stock has already gained 47.1% so far in 2023.

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