Chipmakers’ shares rise after Micron predicts memory recovery

Shares of semiconductor companies worldwide rose on Thursday, after U.S. chipmaker Micron Technology Inc predicted a recovery in a memory market saddled with oversupply as device demand sags.

Micron said on Wednesday (21.March 2019) it saw recovery in the memory chip market, after reporting quarterly profit that beat analysts’ estimates as cost controls helped offset falling demand and prices.

Micron’s shares rose 4.3 percent in early trading. Shares in other U.S chipmakers, Advanced Micro Devices Inc, Qualcomm Inc and Qorvo Inc, each climbed about 1 percent. Intel Corp and Nvidia Corp inched marginally higher.

SK Hynix, the world’s second-biggest memory chip maker, saw its shares surge nearly 7 percent by 0330 GMT, while Samsung Electronics Co Ltd’s stock gained 4.3 percent.

Both Samsung and SK Hynix said in January that they expected sales of memory products to revive in the second half of the year.

“With our assumption of reacceleration of investments by data centre customers, content uplift in phones and CPU shortages to abate, we expect supply/demand fundamentals to normalize in the back half of the year,” JPMorgan analysts said in a client report.

Shares of European chipmaker Infineon Technologies AG rose 1 percent, while STMicroelectronics NV added 1.6 percent.

Analysts have been wary about prospects for the memory chip market due to lower demand for smartphones and slumping investment from data centre companies.

“We see 2019 as an industry cycle bottom and what makes this interesting is that Micron will emerge from it without negative earnings,” Rosenblatt Securities analyst Hans Mosesmann said, adding Micron could focus on returning at least half of its free cash flow to shareholders.

Tech research firm TrendForce in a report on Wednesday said it expects a only a slight decline in NAND flash chip sales in the second quarter as demand recovers from smartphones, computers and servers.

“Although it won’t cause an immediate reversal of the oversupply situation, it will have a positive effect on the market environment,” analyst Ben Yeh at DRAMeXchange, a Trendforce division, said in the report.

U.S. chip equipment makers, which supply tools for chip making and designing, also edged higher on Thursday. Lam Research Corp, Applied Materials Inc and ASML Holding NV each climbed nearly 1 percent.

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