$MU (Micron Technologies) DD LPDDR5X DRAM, P/E Ratio, NAND Flash growth, and the CEO's performance.

Will MU be running in the 90’s? Bullish or bearish; let me know your opinion/analysis in the comments. Part one link So first, we are going to look at the past three days of trading. The stock has had solid momentum over the last 30 days, and especially the past three days. Micron shares have gained 27% this month, the last 30 days have brought the annual gain to 34%. Why did MU pop on Friday: Micron opened at 78.93, had a high of 83.86, a low of 78.93, closed at 83.03 (7.80% change), and 47.22M volume. Covered in the first DD Micron climbed a lot on Friday. This was due to an analyst at Evercore ISI adding the memory chip maker to his list of top stock picks. He anticipates a return to earnings growth next year.. ( ‘“In his note, Muse wrote that while shares of chip makers like Micron have lagged behind the PHLX Semiconductor index, or SOX, since early June, the tide may be shifting. “We believe negative sentiment was due to investor concerns over the sustainability of PC, handsets, and cloud demand, which was also compounded by DRAM spot pricing that began to flatten out in May/June 2021,” Muse wrote.’ Useful Nasdaq article explaining Friday’s hype "Why Is Everyone Talking About Micron Stock?” This is also due to the Citi upgrade (see Monday section). Why did MU pop on Monday: Micron opened at 83.66, had a high of 87.67, a low of 83.66, closed at 83.86 (1.00% change) and 34.35M volume. MU popped again on Monday, with shares rising as much as 5.6%. Monday’s rise was due to a variety of reasons, outlined below. An important thing to note is that despite the market slide on Monday, Micron generally held its own and remained green. The rest of my calls were obliterated, meanwhile the calls I bought pre-market and 5 minutes after open remained in profit. I did not sell these on the peak, I am still holding them. Evercore ISI analyst upgrade from Friday: Again due to the Evercore ISI price upgrade on Friday, MU saw strong momentum on Monday. Citi analyst upgrade from Friday: “Citi analyst Christopher Danely said the pricing correction in the DRAM market was "drawing to a close" as the PC and server markets stabilized and expanded. As such, he expects Micron to benefit from "more positive catalysts" in the coming months and maintains a "buy" rating with a price target of $120 -- more than 40% above its current price.” CNBC article released pre-market: An article was released on Monday from CNBC, 7:00AM EST. This highlighted the two analyst upgrades, their targets, and the upside. Due to CNBC’s wide reach, this highlighted the stock to other investors and drove momentum. One bearish thing to note (not in the article), from CNBC ‘Trading Nation: “On CNBC’s "Trading Nation," Michael Binger of Gradient Investments said semiconductor stocks that have gained sharply in the recent period are likely to pull back.” However my opinion as of Wednesday is that this has happened to much of the semi-sector Monday/Tuesday, but MU has remained largely unaffected thus far. Micron’s LPDDR5X DRAM is going to be used in the MediaTek Dimensity 9000: This is important news, I’m going to cover this later in my DD. This was also announced pre-market. “Micron Technology, Inc. (MU) revealed that its low-power double data rate 5X (LPDDR5X) DRAM for MediaTek Inc.’s new Dimensity 9000 5G flagship chipset for smartphones has been validated. ”Built on its 1α (1-alpha) node, the new chipset will help smartphones unlock applications powered by artificial intelligence and 5G innovation. Micron claims LPDDR5X to be the fastest and most advanced mobile memory available. It says that it has shipped the first batch of samples.” “Meanwhile, Micron disclosed that it was joining hands with leading smartphone manufacturers and chipset vendors to enable ecosystem innovation with LPDDR5X. Micron outperformed the general market on Monday Nasdaq recommended Micron as one of top 4 stock trades for Monday Furthermore MU was the 3nd (2nd according to other scrapers) most discussed stock on Wallstreetbets Monday Why did MU pop again on Tuesday: Micron opened at 85.04, had a high of 87.71, a low of 84.33, closed at 85.41 (1.85% change), and had a volume of 31.64M Micron again showed strong performance yesterday. Again, much of the semi sector was sliding/underperforming, yet Micron remained strong. The primary reason for this was that Mizuho upgraded Micron back to a buy (one month after it was downgraded). Link to Marketwatch article Mizuho analyst Vijay Rakesh again became bullish on Micron. He upgraded it to buy, after downgrading it to neutral on October 20th. He changed his price target to $95 from $75. “When Rakesh downgraded Micron last month, he cited expectations of a soft demand outlook for the first half of 2022 for PCs and notebooks, server and handset markets. “However, our recent checks indicate the ‘ACTUAL’ demand is improving across all three markets,” Rakesh wrote in a research note, with first-quarter PC/NB builds “only” flat to down 5% from the previous quarter, compared with expectations of a 10% to 15% decline and handsets flat versus expectations of down 10%. He also believes server demand could improve.” From Barrons: “New data indicated actual demand was improving across PCs, servers and handsets that “could support an improved pricing,” prompting Rakesh to raise the stock to Buy and boost his price targets. The new target for Micron is $95, up from $75” “Rakesh estimates that first-quarter PC and netbook builds will only decrease between 0% and 5% quarter over quarter, up from previous estimates that they would fall between 10% and 15%. PC demand alone could be up as much as 5% year over year, a shift Rakesh said was surprising given Wall Street consensus that demand would be down between 2% and 3%.” ”Requests for memory chips in China also could improve compared to previous estimates, as well as orders from server hosts like Amazon ( AMZN ) and Google (GOOGL). An additional boost could come from upcoming investments in the metaverse and virtual reality.” ”Micron may be a new darling among analysts. Last week, Evercore ISI analyst C.J. Muse added Micron to his list of top stock picks, anticipating a return to earnings growth next year.” Micron was once again one of the top discussed stocks on Wallstreetbets on Tuesday, being in the fourth position. Wednesday outlook: MU is currently declining pre-market. Opening at 85.59, with a high (so far) of $86, and a (current) low of 84.62, where it is at right now as I write this segment (13:22PM GMT/08:22 EST/07:23 CST). There is no negative news, so I expect this is due to the current slide of the semi-segment and general market slightly affecting MU (whereas the past two days it has almost-always remained green despite the current market). However it is only down 0.90%, we will see what happens at open. I will update this segment then. I will also include any news that comes out today. Update: MU is still remaining strong. As of 10:25AM EST, it has so far peaked at 86.72, after opening at 84.65, the current low being 84.65 also. Volume so far is 6.81(M). Current price (10:27AM EST) is 86.15 representing a 0.85% change. Wednesdays news/articles: 12:36AM EST: “Micron Rallies Against The Grain” (Investing.com) Approx 8:40AM EST :”Micron Technology Stock Is at the Middle of an Upswing, Not the End” An analysis of the MediaTek Dimensity 9000 news (Micron LPDDR5X DRAM to Feature in MediaTek Dimensity 9000): “Micron is the first semiconductor company to sample and validate this fastest, most advanced mobile memory in the industry and has shipped the first batch of samples of LPDDR5X built on its first-to-market 1α (1-alpha) node.” ‘“This 1α node achievement confirms Micron’s excellence in DRAM and is a direct result of Micron’s relentless commitment to cutting-edge design and technology,” said Scott DeBoer, executive vice president of technology and products at Micron. “With a 40% improvement in memory density over our previous 1z DRAM node, this advancement will create a solid foundation for future product and memory innovation.”’ ‘“Our new 1α DRAM technology will enable the industry’s lowest-power mobile DRAM as well as bring the benefits of our DRAM portfolio to data center, client, consumer, industrial and automotive customers,” said Sumit Sadana, executive vice president and chief business officer at Micron. “With our industry leadership in both DRAM and NAND technology, Micron is in an excellent position to leverage the growth in memory and storage, which are expected to be the fastest growing segments in the semiconductor industry over the next decade.”’ It is noteworthy that Samsung was the first to announce LPDDR5X DRAM, however Micron was the first to validate it’s LDPDDR5X module DRAM in partnership with MediaTek. Micron has already shipped the first batch of this DRAM module. This is not surprising as Micron has been making GDDR5X and GDDR6X VRAM for Nvidia GPU’s for many years. Micron has also revealed that samples of this new memory module for smartphones supports data rates of up to 8.533 Gbps, making it 30% faster than LPDDR5 modules (it is worth noting these are the highest achievable figures for the standard, and not real world figures). How is LPDDR5X RAM on the MediaTek Dimensity 9000 better than LPDDR5? Relevant chart of the Micron LPDDR5X used by MediaTek This RAM is the newest standard in RAM technology for mobile devices. It aims to improve the data transfer on RAM chips used in mobile devices such as the DImensity 9000 (or other counterparts such as Samsung Exynos and Qualcomm Snapdragon). It is claimed that these Micron DRAM modules (produced with 1-alpha technology) consume the lowest power among mobile DRAMs. When sampled Micron’s LPDDR5X solution achieved data transfer speeds of up to 7500Mbps, however this is behind the transfer rates supported by the new standard (8533Mbps). As Micron emphasized on the 8533 figure, my personal prediction is that it will soon bring out products achieving higher transfer speeds (or that it is maybe saving them for other manufacturers than MediaTek). LPDDR5 (highest rate) achieves 6400Mbps. “Based on these results, MediaTek concluded that LPDDR5X modules lead to 17% faster transfer speeds and 15% lower latency compared to the previous generation.” “MediaTek remarked the new RAM technology will allow increasingly higher levels of data processing, which are needed for the complex and heterogeneous processing units that are built into modern-day chipsets. These higher processing capabilities will be vital for the high-data requirements of the 5G era.” The difference between Micron’s and Samsung’s LPDDR5X solutions can only be compared once the Snapdragon 888 benchmarks are released, or newer chips featuring the most recent RAM technology. Availability of Micron’s new DRAM: “Micron’s Taiwan fabs have begun volume production of 1α node DRAM, starting with DDR4 memory for compute customers and Crucial consumer PC DRAM products. Micron has also begun sampling LPDDR4 to mobile customers for qualification. The company will introduce additional new products based on this technology throughout calendar 2021.” P/E Ratio: MU’s current P/E ratio (as of Wednesday 24th November pre-market) is 16.3x. The median P/E ratio for the US is 18x. I’m sourcing from the below linked article for this section. “Recent times have been advantageous for Micron Technology as its earnings have been rising faster than most other companies. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising.” “Micron Technology's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.” Last year delivered a 117% gain to the company’s bottom line. The EPS has fallen 57% in total from three years ago. Therefore the recent earnings growth may have been undesirable for the company. “Turning to the outlook, the next three years should generate growth of 35% per annum as estimated by the analysts watching the company. That's shaping up to be materially higher than the 11% each year growth forecast for the broader market.” Micron’s P/E is now in line with other companies. You can use P/E to gauge current investor sentiment and future expectations. It’s superior earnings outlook is not contributing to P/E as much as expected. When strong earnings outlook is seen with faster-than-market growth, potential risks are what may be placing pressure on the P/E ratio. The risk of price drop looks to be subdued, but investors likely thing future earnings could see some volatility. NAND Flash revenue growth for Q3 2021: Recent relevant article released today, I will be sourcing from this for this section. Hyperscaler and enterprise clients are continuing procurement in line with Q2, this is in order to deploy products based on new processor platforms. Major smartphone brands are expected to expand their procurement activities during Q3, as they are preparing to release new flagship models. “As such, clients in both server and smartphone industries made significant contributions to the revenue growth of the NAND Flash industry for 3Q21.” However, suppliers note that orders from PC OEM’s are showing signs of decline. “‘On the whole, the industry’s quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of USD 18.8 billion in 3Q21.”* “Demand from the data center segment remained strong, and clients continued to adopt Micron’s 176L products. However, Micron’s shipment share in the smartphone market lagged behind that of other NAND Flash suppliers. Furthermore, its PC OEM clients were starting to be affected by the uneven supply of semiconductor chips. In light of these factors, Micron’s NAND Flash bit shipment increased by a modest 4% QoQ. On the other hand, the NAND Flash market remained in a severe shortage in 3Q21, thereby driving up Micron’s ASP by about 5% QoQ. Hence, Micron’s NAND Flash revenue for 3Q21 reached USD 1.97 billion, an 8.8% QoQ increase.” Sales ranking of Branded NAND Flash makers, Q3 2021 (in million USD) NAND Flash revenue growth for Q4 2021: The impact of the component supply shortage has increased across numerous segments of the NAND flash market, as the capacity issues in the foundry market remains unresolved. Currently, NAND Flash components are in higher available supply compared to other kinds of key components. “For OEMs and ODMs, the differences between the NAND Flash inventory level and the inventory levels of other components have been growing over the past several months. Therefore, they have to scale back orders and reduce stock for NAND Flash. As inventory adjustments are happening, NAND Flash contract prices will start to drop and thus bring about an end to the several quarters of strong revenue growth enjoyed by suppliers.” I would note that this is actually possibly negative news for MU, but will only affect Q4 and perhaps after that. NAND is only a segment of Micron’s business though. Micron’s CEO, an analysis of his performance “Memory chip demand has been exploding since Sanjay Mehrotra was recruited as Micron CEO in 2017.” Mehrotra previously founded SanDisk. He became available after Western Digital acquired SanDisk in 2016. After Mehrotra joined Micron as CEO, strong performance was seen in 2017 and 2018.. Micron’s sales rose from $12 billion in 2016 to $20 billion in 2017 (fueled by data centres and smartphones). In 2017/2018, Mehrota astutely aimed production at solid state drives and graphics. One reason for this was to target the cloud boom, and their upgrade cycle to meet demands for AI applications (making memory important, and thereby putting Micron in a good position). He also aimed to balance between supply and demand that year, rather than the bear market that was indicated by current stock price. In 2017/2018, while expanding investment, Micron built up a cash reserve. It has $8 billion in cash (as of May 2018), and short term investments as of the most recent quarter at that time. Long term debt fell to $7.8 billion nd could be paid out of cash on hand. It’s price to earnings ratio was 10 (as of May 2018), which would mean a 25% bump in stock price. In March 2020 Micron surprised ‘analysts by earning $405 million, 36 cents per share, on revenue of $4.8 billion for the quarter ending in February.’ Certainly strong performance despite being at the start of the pandemic. ”The results sent MU stock up over 5% on March 26, although shares are down over 3% in mid-morning trading March 27.” “Shares rose sharply thanks to a conservative outlook from CEO Sanjay Mehrotra, who has seen many booms and busts in his 30 years as a memory company executive.” “Last week, Micron Chief Executive Sanjay Mehrotra said in a letter that the company took early precautions in January to limit the spread of the SARS-CoV-2 coronavirus in its facilities in China and the rest of Asia and expanded those protections as the virus spread world-wide.” “We have also carefully managed raw materials and our supply chain to maintain our manufacturing capabilities and production,” Mehrotra said. “Our global team has shown tremendous strength and solidarity, operating with excellence despite lockdowns and quarantines that challenged staffing, shipments and work schedules.” Because memory chips are commodity products, MU stock is prone to sharp rises and falls. Until recently (as of March 2020) it was said to be riding a “supercycle,” with chip-based memory replacing spinning disks in devices, PCs and the cloud.’ Analysis as of today 24th of November 2021: Memory has been going through a ‘super-cycle’ for years now, this is due to SSD’s/flash memory replacing standard HDD’s in consumer devices and more recently in data centres. SSD’s/flash memory are faster and more reliable. As the price has been coming down for SSD’s/flash memory, the switch to these has accelerated. Analysts may warn that this ‘super-cycle’ is peaking, however it is just cooling down. And as outlined in my previous DD, in 2023, 2024 and the future. We can actually expect memory demand to exponentially increase. Chart showing price projections of various DRAM product categories for Q3 The current supercycle is expected to run until 2023 (“The super cycle in global memory chips, where price strengthening is coupled with demand overwhelming supply, is expected to last until 2023”), and could go well beyond that with new demand from the Machine Internet. As well as cloud-computing. Mehrotra sees it continuing. As outlined in my previous DD, he has set a capital budget of $150 billion for the next decade.. Please see my last DD or the link for more info on this budget. Lastest TA from Tradingview: "MU - Break, Back test, Rally and the current Challenge" "85$ is the challenge now" MU Option Chain My opinions on MU options are in the previous DD TL;DR: Fridays performance was strong due to Evercore ISI Analyst upgrades, as well as a Citi upgrade. Mondays performance was due to the Evercore ISI and Citi analyst upgrades, as well as other factors including; CNBC article, LPDDR5X DRAM announcement, and other articles released/general hype. It was one of the top discussed stocks on WSB. Tuesdays performance was due to Mizuho analyst upgrade. It was also one of the top discussed stocks on WSB. Micron’s LPDDR5X solution achieved data transfer speeds of up to 7500Mbps, however this is behind the transfer rates supported by the new standard (8533Mbps). As Micron emphasized on the 8533 figure, my personal prediction is that it will soon bring out products achieving higher transfer speed. “Micron’s Taiwan fabs have begun volume production of 1α node DRAM, starting with DDR4 memory for compute customers and Crucial consumer PC DRAM products. Micron has also begun sampling LPDDR4 to mobile customers for qualification. The company will introduce additional new products based on this technology throughout calendar 2021.” “‘On the whole, the industry’s quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of USD 18.8 billion in 3Q21.”* Q4: The impact of the component supply shortage has increased across numerous segments of the NAND flash market, as the capacity issues in the foundry market remains unresolved. Currently, NAND Flash components are in higher available supply compared to other kinds of key components. The current supercycle is expected to run until 2023 (“The super cycle in global memory chips, where price strengthening is coupled with demand overwhelming supply, is expected to last until 2023”), and could go well beyond that with new demand from the Machine Internet. As well as cloud-computing. Mehrotra sees it continuing. As outlined in my previous DD, he has set a capital budget of $150 billion for the next decade.. Please see my last DD or the link for more info on this budget. TL;DR of the TL;DR: Analyst upgrades, hype and new RAM technology have contributed to the price rise this week. NAND flash shipments are rising Q3. There is a supply shortage across the market. The memory supercycle is expected to continue until 2023 and perhaps beyond. The CEO of Micron is delivering high performance, expects this to continue and has set a capital budget of $150 billion for the next decade.

back
scot-tagscot-icon

Scouted Idea

We scour the net for great ideas, so you don't have to

Original Post

portfolio-reddit logo

Is this your Reddit account?

Claim this username to collect earnings from this post, and the portfolio!

portfolio reddit logoportfolio utradea logo

$MU (Micron Technologies) DD LPDDR5X DRAM, P/E Ratio, NAND Flash growth, and the CEO's performance.

Nov 24, 2021

bullish

general Analysis

[15 min Read]

Will MU be running in the 90's? Bullish or bearish; let me know your opinion/analysis in the comments.

Part one link

So first, we are going to look at the past three days of trading. The stock has had solid momentum over the last 30 days, and especially the past three days. Micron shares have gained 27% this month, the last 30 days have brought the annual gain to 34%.

Why did MU pop on Friday:

Micron opened at 78.93, had a high of 83.86, a low of 78.93, closed at 83.03 (7.80% change), and 47.22M volume.

Covered in the first DD Micron climbed a lot on Friday. This was due to an analyst at Evercore ISI adding the memory chip maker to his list of top stock picks. He anticipates a return to earnings growth next year..

( ‘“In his note, Muse wrote that while shares of chip makers like Micron have lagged behind the PHLX Semiconductor index, or SOX, since early June, the tide may be shifting.

“We believe negative sentiment was due to investor concerns over the sustainability of PC, handsets, and cloud demand, which was also compounded by DRAM spot pricing that began to flatten out in May/June 2021,” Muse wrote.'

Useful Nasdaq article explaining Friday's hype "Why Is Everyone Talking About Micron Stock?”

This is also due to the Citi upgrade (see Monday section).

Why did MU pop on Monday:

Micron opened at 83.66, had a high of 87.67, a low of 83.66, closed at 83.86 (1.00% change) and 34.35M volume.

MU popped again on Monday, with shares rising as much as 5.6%. Monday's rise was due to a variety of reasons, outlined below.

An important thing to note is that despite the market slide on Monday, Micron generally held its own and remained green. The rest of my calls were obliterated, meanwhile the calls I bought pre-market and 5 minutes after open remained in profit. I did not sell these on the peak, I am still holding them.

Evercore ISI analyst upgrade from Friday: Again due to the Evercore ISI price upgrade on Friday, MU saw strong momentum on Monday.

Citi analyst upgrade from Friday: “Citi analyst Christopher Danely said the pricing correction in the DRAM market was "drawing to a close" as the PC and server markets stabilized and expanded. As such, he expects Micron to benefit from "more positive catalysts" in the coming months and maintains a "buy" rating with a price target of $120 -- more than 40% above its current price.”

CNBC article released pre-market: An article was released on Monday from CNBC, 7:00AM EST. This highlighted the two analyst upgrades, their targets, and the upside. Due to CNBC's wide reach, this highlighted the stock to other investors and drove momentum.

One bearish thing to note (not in the article), from CNBC ‘Trading Nation: “On CNBC's "Trading Nation," Michael Binger of Gradient Investments said semiconductor stocks that have gained sharply in the recent period are likely to pull back.” However my opinion as of Wednesday is that this has happened to much of the semi-sector Monday/Tuesday, but MU has remained largely unaffected thus far.

Micron's LPDDR5X DRAM is going to be used in the MediaTek Dimensity 9000:

This is important news, I'm going to cover this later in my DD. This was also announced pre-market. “Micron Technology, Inc. (MU) revealed that its low-power double data rate 5X (LPDDR5X) DRAM for MediaTek Inc.'s new Dimensity 9000 5G flagship chipset for smartphones has been validated.

”Built on its 1α (1-alpha) node, the new chipset will help smartphones unlock applications powered by artificial intelligence and 5G innovation. Micron claims LPDDR5X to be the fastest and most advanced mobile memory available. It says that it has shipped the first batch of samples.”

“Meanwhile, Micron disclosed that it was joining hands with leading smartphone manufacturers and chipset vendors to enable ecosystem innovation with LPDDR5X. Micron outperformed the general market on Monday

Nasdaq recommended Micron as one of top 4 stock trades for Monday

Furthermore MU was the 3nd (2nd according to other scrapers) most discussed stock on Wallstreetbets Monday

Why did MU pop again on Tuesday:

Micron opened at 85.04, had a high of 87.71, a low of 84.33, closed at 85.41 (1.85% change), and had a volume of 31.64M

Micron again showed strong performance yesterday. Again, much of the semi sector was sliding/underperforming, yet Micron remained strong.

The primary reason for this was that Mizuho upgraded Micron back to a buy (one month after it was downgraded).

Link to Marketwatch article

Mizuho analyst Vijay Rakesh again became bullish on Micron. He upgraded it to buy, after downgrading it to neutral on October 20th. He changed his price target to $95 from $75.

“When Rakesh downgraded Micron last month, he cited expectations of a soft demand outlook for the first half of 2022 for PCs and notebooks, server and handset markets.

“However, our recent checks indicate the ‘ACTUAL' demand is improving across all three markets,” Rakesh wrote in a research note, with first-quarter PC/NB builds “only” flat to down 5% from the previous quarter, compared with expectations of a 10% to 15% decline and handsets flat versus expectations of down 10%. He also believes server demand could improve.”

From Barrons: “New data indicated actual demand was improving across PCs, servers and handsets that “could support an improved pricing,” prompting Rakesh to raise the stock to Buy and boost his price targets. The new target for Micron is $95, up from $75”

“Rakesh estimates that first-quarter PC and netbook builds will only decrease between 0% and 5% quarter over quarter, up from previous estimates that they would fall between 10% and 15%. PC demand alone could be up as much as 5% year over year, a shift Rakesh said was surprising given Wall Street consensus that demand would be down between 2% and 3%.”

”Requests for memory chips in China also could improve compared to previous estimates, as well as orders from server hosts like Amazon ( AMZN ) and Google (GOOGL). An additional boost could come from upcoming investments in the metaverse and virtual reality.”

”Micron may be a new darling among analysts. Last week, Evercore ISI analyst C.J. Muse added Micron to his list of top stock picks, anticipating a return to earnings growth next year.”

Micron was once again one of the top discussed stocks on Wallstreetbets on Tuesday, being in the fourth position.

Wednesday outlook:

MU is currently declining pre-market. Opening at 85.59, with a high (so far) of $86, and a (current) low of 84.62, where it is at right now as I write this segment (13:22PM GMT/08:22 EST/07:23 CST). There is no negative news, so I expect this is due to the current slide of the semi-segment and general market slightly affecting MU (whereas the past two days it has almost-always remained green despite the current market). However it is only down 0.90%, we will see what happens at open. I will update this segment then. I will also include any news that comes out today.

Update: MU is still remaining strong. As of 10:25AM EST, it has so far peaked at 86.72, after opening at 84.65, the current low being 84.65 also. Volume so far is 6.81(M). Current price (10:27AM EST) is 86.15 representing a 0.85% change.

Wednesdays news/articles: 12:36AM EST: “Micron Rallies Against The Grain” (Investing.com)

Approx 8:40AM EST :”Micron Technology Stock Is at the Middle of an Upswing, Not the End”

An analysis of the MediaTek Dimensity 9000 news (Micron LPDDR5X DRAM to Feature in MediaTek Dimensity 9000):

Micron is the first semiconductor company to sample and validate this fastest, most advanced mobile memory in the industry and has shipped the first batch of samples of LPDDR5X built on its first-to-market 1α (1-alpha) node.

‘“This 1α node achievement confirms Micron's excellence in DRAM and is a direct result of Micron's relentless commitment to cutting-edge design and technology,” said Scott DeBoer, executive vice president of technology and products at Micron. “With a 40% improvement in memory density over our previous 1z DRAM node, this advancement will create a solid foundation for future product and memory innovation.”'

‘“Our new 1α DRAM technology will enable the industry's lowest-power mobile DRAM as well as bring the benefits of our DRAM portfolio to data center, client, consumer, industrial and automotive customers,” said Sumit Sadana, executive vice president and chief business officer at Micron. “With our industry leadership in both DRAM and NAND technology, Micron is in an excellent position to leverage the growth in memory and storage, which are expected to be the fastest growing segments in the semiconductor industry over the next decade.”'

It is noteworthy that Samsung was the first to announce LPDDR5X DRAM, however Micron was the first to validate it's LDPDDR5X module DRAM in partnership with MediaTek. Micron has already shipped the first batch of this DRAM module. This is not surprising as Micron has been making GDDR5X and GDDR6X VRAM for Nvidia GPU's for many years.

Micron has also revealed that samples of this new memory module for smartphones supports data rates of up to 8.533 Gbps, making it 30% faster than LPDDR5 modules (it is worth noting these are the highest achievable figures for the standard, and not real world figures).

How is LPDDR5X RAM on the MediaTek Dimensity 9000 better than LPDDR5?

Relevant chart of the Micron LPDDR5X used by MediaTek

This RAM is the newest standard in RAM technology for mobile devices. It aims to improve the data transfer on RAM chips used in mobile devices such as the DImensity 9000 (or other counterparts such as Samsung Exynos and Qualcomm Snapdragon). It is claimed that these Micron DRAM modules (produced with 1-alpha technology) consume the lowest power among mobile DRAMs.

When sampled Micron's LPDDR5X solution achieved data transfer speeds of up to 7500Mbps, however this is behind the transfer rates supported by the new standard (8533Mbps). As Micron emphasized on the 8533 figure, my personal prediction is that it will soon bring out products achieving higher transfer speeds (or that it is maybe saving them for other manufacturers than MediaTek). LPDDR5 (highest rate) achieves 6400Mbps.

“Based on these results, MediaTek concluded that LPDDR5X modules lead to 17% faster transfer speeds and 15% lower latency compared to the previous generation.”

“MediaTek remarked the new RAM technology will allow increasingly higher levels of data processing, which are needed for the complex and heterogeneous processing units that are built into modern-day chipsets. These higher processing capabilities will be vital for the high-data requirements of the 5G era.”

The difference between Micron's and Samsung's LPDDR5X solutions can only be compared once the Snapdragon 888 benchmarks are released, or newer chips featuring the most recent RAM technology.

Availability of Micron's new DRAM: “Micron's Taiwan fabs have begun volume production of 1α node DRAM, starting with DDR4 memory for compute customers and Crucial consumer PC DRAM products. Micron has also begun sampling LPDDR4 to mobile customers for qualification. The company will introduce additional new products based on this technology throughout calendar 2021.”

P/E Ratio:

MU's current P/E ratio (as of Wednesday 24th November pre-market) is 16.3x. The median P/E ratio for the US is 18x. I'm sourcing from the below linked article for this section.

“Recent times have been advantageous for Micron Technology as its earnings have been rising faster than most other companies. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising.”

“Micron Technology's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.”

Last year delivered a 117% gain to the company's bottom line. The EPS has fallen 57% in total from three years ago. Therefore the recent earnings growth may have been undesirable for the company.

“Turning to the outlook, the next three years should generate growth of 35% per annum as estimated by the analysts watching the company. That's shaping up to be materially higher than the 11% each year growth forecast for the broader market.”

Micron's P/E is now in line with other companies. You can use P/E to gauge current investor sentiment and future expectations. It's superior earnings outlook is not contributing to P/E as much as expected. When strong earnings outlook is seen with faster-than-market growth, potential risks are what may be placing pressure on the P/E ratio.

The risk of price drop looks to be subdued, but investors likely thing future earnings could see some volatility.

NAND Flash revenue growth for Q3 2021:

Recent relevant article released today, I will be sourcing from this for this section.

Hyperscaler and enterprise clients are continuing procurement in line with Q2, this is in order to deploy products based on new processor platforms.

Major smartphone brands are expected to expand their procurement activities during Q3, as they are preparing to release new flagship models.

“As such, clients in both server and smartphone industries made significant contributions to the revenue growth of the NAND Flash industry for 3Q21.”

However, suppliers note that orders from PC OEM's are showing signs of decline.

“‘On the whole, the industry's quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of USD 18.8 billion in 3Q21.”*

“Demand from the data center segment remained strong, and clients continued to adopt Micron's 176L products. However, Micron's shipment share in the smartphone market lagged behind that of other NAND Flash suppliers. Furthermore, its PC OEM clients were starting to be affected by the uneven supply of semiconductor chips. In light of these factors, Micron's NAND Flash bit shipment increased by a modest 4% QoQ. On the other hand, the NAND Flash market remained in a severe shortage in 3Q21, thereby driving up Micron's ASP by about 5% QoQ. Hence, Micron's NAND Flash revenue for 3Q21 reached USD 1.97 billion, an 8.8% QoQ increase.”

Sales ranking of Branded NAND Flash makers, Q3 2021 (in million USD)

NAND Flash revenue growth for Q4 2021:

The impact of the component supply shortage has increased across numerous segments of the NAND flash market, as the capacity issues in the foundry market remains unresolved. Currently, NAND Flash components are in higher available supply compared to other kinds of key components.

“For OEMs and ODMs, the differences between the NAND Flash inventory level and the inventory levels of other components have been growing over the past several months. Therefore, they have to scale back orders and reduce stock for NAND Flash. As inventory adjustments are happening, NAND Flash contract prices will start to drop and thus bring about an end to the several quarters of strong revenue growth enjoyed by suppliers.”

I would note that this is actually possibly negative news for MU, but will only affect Q4 and perhaps after that. NAND is only a segment of Micron's business though.

Micron's CEO, an analysis of his performance

“Memory chip demand has been exploding since Sanjay Mehrotra was recruited as Micron CEO in 2017.”

Mehrotra previously founded SanDisk. He became available after Western Digital acquired SanDisk in 2016.

After Mehrotra joined Micron as CEO, strong performance was seen in 2017 and 2018.. Micron's sales rose from $12 billion in 2016 to $20 billion in 2017 (fueled by data centres and smartphones). In 2017/2018, Mehrota astutely aimed production at solid state drives and graphics. One reason for this was to target the cloud boom, and their upgrade cycle to meet demands for AI applications (making memory important, and thereby putting Micron in a good position). He also aimed to balance between supply and demand that year, rather than the bear market that was indicated by current stock price. In 2017/2018, while expanding investment, Micron built up a cash reserve. It has $8 billion in cash (as of May 2018), and short term investments as of the most recent quarter at that time. Long term debt fell to $7.8 billion nd could be paid out of cash on hand. It's price to earnings ratio was 10 (as of May 2018), which would mean a 25% bump in stock price.

In March 2020 Micron surprised ‘analysts by earning $405 million, 36 cents per share, on revenue of $4.8 billion for the quarter ending in February.' Certainly strong performance despite being at the start of the pandemic.

”The results sent MU stock up over 5% on March 26, although shares are down over 3% in mid-morning trading March 27.”

“Shares rose sharply thanks to a conservative outlook from CEO Sanjay Mehrotra, who has seen many booms and busts in his 30 years as a memory company executive.”

“Last week, Micron Chief Executive Sanjay Mehrotra said in a letter that the company took early precautions in January to limit the spread of the SARS-CoV-2 coronavirus in its facilities in China and the rest of Asia and expanded those protections as the virus spread world-wide.”

“We have also carefully managed raw materials and our supply chain to maintain our manufacturing capabilities and production,” Mehrotra said. “Our global team has shown tremendous strength and solidarity, operating with excellence despite lockdowns and quarantines that challenged staffing, shipments and work schedules.”

Because memory chips are commodity products, MU stock is prone to sharp rises and falls. Until recently (as of March 2020) it was said to be riding a “supercycle,” with chip-based memory replacing spinning disks in devices, PCs and the cloud.'

Analysis as of today 24th of November 2021: Memory has been going through a ‘super-cycle' for years now, this is due to SSD's/flash memory replacing standard HDD's in consumer devices and more recently in data centres. SSD's/flash memory are faster and more reliable. As the price has been coming down for SSD's/flash memory, the switch to these has accelerated.

Analysts may warn that this ‘super-cycle' is peaking, however it is just cooling down. And as outlined in my previous DD, in 2023, 2024 and the future. We can actually expect memory demand to exponentially increase.

Chart showing price projections of various DRAM product categories for Q3

The current supercycle is expected to run until 2023 (“The super cycle in global memory chips, where price strengthening is coupled with demand overwhelming supply, is expected to last until 2023”), and could go well beyond that with new demand from the Machine Internet. As well as cloud-computing.

Mehrotra sees it continuing. As outlined in my previous DD, he has set a capital budget of $150 billion for the next decade.. Please see my last DD or the link for more info on this budget.

Lastest TA from Tradingview:

"MU - Break, Back test, Rally and the current Challenge"

"85$ is the challenge now"

MU Option Chain

My opinions on MU options are in the previous DD

TL;DR:

  • Fridays performance was strong due to Evercore ISI Analyst upgrades, as well as a Citi upgrade.

  • Mondays performance was due to the Evercore ISI and Citi analyst upgrades, as well as other factors including; CNBC article, LPDDR5X DRAM announcement, and other articles released/general hype. It was one of the top discussed stocks on WSB.

  • Tuesdays performance was due to Mizuho analyst upgrade. It was also one of the top discussed stocks on WSB.

  • Micron's LPDDR5X solution achieved data transfer speeds of up to 7500Mbps, however this is behind the transfer rates supported by the new standard (8533Mbps). As Micron emphasized on the 8533 figure, my personal prediction is that it will soon bring out products achieving higher transfer speed.

  • “Micron's Taiwan fabs have begun volume production of 1α node DRAM, starting with DDR4 memory for compute customers and Crucial consumer PC DRAM products. Micron has also begun sampling LPDDR4 to mobile customers for qualification. The company will introduce additional new products based on this technology throughout calendar 2021.”

  • “‘On the whole, the industry's quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of USD 18.8 billion in 3Q21.”*

  • Q4: The impact of the component supply shortage has increased across numerous segments of the NAND flash market, as the capacity issues in the foundry market remains unresolved. Currently, NAND Flash components are in higher available supply compared to other kinds of key components.

  • The current supercycle is expected to run until 2023 (“The super cycle in global memory chips, where price strengthening is coupled with demand overwhelming supply, is expected to last until 2023”), and could go well beyond that with new demand from the Machine Internet. As well as cloud-computing.

  • Mehrotra sees it continuing. As outlined in my previous DD, he has set a capital budget of $150 billion for the next decade.. Please see my last DD or the link for more info on this budget.

TL;DR of the TL;DR: Analyst upgrades, hype and new RAM technology have contributed to the price rise this week. NAND flash shipments are rising Q3. There is a supply shortage across the market. The memory supercycle is expected to continue until 2023 and perhaps beyond. The CEO of Micron is delivering high performance, expects this to continue and has set a capital budget of $150 billion for the next decade.

page loading card

MU

Micron Technology, Inc.

55.86

-2.00
-3.46%

Return

-35.23%
Change % Since Posting
-30.39
Change Since Posting
86.25
Price When Posted

Metrics

120.00
Target Price
9/ 10
Confidence
2-6 Months
Timeframe
catalyst icon
Earnings Release
catalyst icon
News
catalyst icon
SEC
Filing
catalyst icon
Sentiment
catalyst icon
Other Catalyst

Access the latest tools and discussion channels with an account

reddit-sentiment

Reddit Sentiment
Analysis

portfolio-balancer

Portfolio Balancer
with brokerages

sec-dashboard

SEC Dashboard
with NLP

aiodd-ad
next