Friday, April 1, 2011

Micron Technology (MU) Looks Strong on DRAM Prices

Saying it appears the fallout from the earthquake in Japan in the chip industry will continue to put upward pressure on DRMA chip prices, which should benefit Micron, Sterne Agee chip analyst Vijay Rakesh said he's maintaining a "Buy" rating on the company.

DRAM spot prices are already up 5 percent to 7 percent in the quarter and could go higher, says Rakesh.

Some manufacturers such as Rexchip and Powerchip could find their supply of wafers shrinking dramatically, as “Japanese OEMs are cutting out some of these arrangements,” which under normal conditions had been supplied up front by the companies, with payment coming after DRAM production.

With smartphone and tablet sales continuing to soar, that is another factor which could have a strong impact on the supply of wafers.

Micron closed Thursday at $11.47, falling $0.11, or 0.95 percent.

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