Apple's Memory Cost Outlook Offers Support for Micron Shares
Yahoo Finance ·
Micron Technology shares dropped approximately 6% on Nov. 2, coinciding with a 16% plunge for Japanese flash memory manufacturer Kioxia Holdings in Tokyo. Kioxia reported on Oct. 30 that its December quarter revenue is projected to grow by just about 1% sequentially, cooling down from a 40% surge between the June and September quarters. However, following the market close on Nov. 2, iPhone maker Apple delivered an alternative outlook during its earnings call, stating it anticipates memory component costs to continue increasing into the coming year. Analysts suggest that Apple's commentary holds greater significance for Micron, largely because the majority of Micron's commercial offerings differ from Kioxia's specific product lineup.
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Apple stated during its earnings conference call that memory chip purchase unit prices are projected to continue rising even after December. This serves as a positive reversal factor for Micron's stock price, which had declined due to concerns over Kioxia's slowing revenue growth. Investors evaluate that Apple's stance on memory price hikes will directly benefit Micron's earnings improvement and margin expansion.
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- Semiconductors — Apple's announcement that it will continue paying higher prices for memory chips even after December is expected to drive up the average selling prices (ASPs) and improve profitability for memory manufacturers like Micron.
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Apple's remarks on continuing memory price hikes are directly linked to an increase in Micron's average selling price (ASP), acting as a driving force to significantly improve future revenue and operating profit margins. The stock price drop caused by Kioxia's slowed earnings guidance will end up as short-term noise, and major customer Apple's price-acceptance stance will defend Micron's fundamentals.
Future stock price scenarios depend on whether large IT companies like Apple maintain their memory demand and on Micron's shipment (Bit Growth) data. Key monitoring indicators are the trends in memory procurement unit prices of major clients and quarterly earnings guidance.
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