The chip market has been one strange bird in the last two years. A massive chip shortage turned every memory module into gold. Then, as the economy began to sour, demand destruction kicked in and started to normalize prices. However, a bottom may be coming, and that’s giving Micron Technology (NASDAQ:MU) a little extra benefit.
Reports from Daiwa—via analyst SK Kim—suggest that the memory market may be close to its bottom. If that turns out to be the case, then supply levels can be adjusted accordingly, and the shocks that hit the market may be coming to an end as well. Moreover, Kim notes, it’s a safe bet that the demand destruction seen so far will turn around at least somewhat. New processor launches coming up, as well as a reopening of China, should improve the demand for chips of all sorts.
Micron occupies a unique place in the market. It’s one of the big three firms in DRAM, and one of just six of the biggest NAND flash makers around. Thus, whatever happens in world markets—especially as far as chipmaking goes—Micron will likely be impacted by it. With word emerging that the Chinese government plans to pull out of semiconductor subsidies, that’s likely to put more opportunity in front of Micron. This dovetails nicely with SK Kim’s reports that show the memory cycle starting to improve with 2023’s second half.
Wall Street visibly back SK Kim’s assessment here. Analyst consensus calls Micron a Moderate Buy, and with an average price target of $63.68, the stock has 18.27% upside potential.
