Micron Stock Falls Again as Memory-Chip Slump Persists. What Can Turn It Around

Dow Jones
昨天

Micron Technology is stuck in a spiral amid concerns about Chinese competition and the artificial-intelligence trade in general. But shareholder returns could help it rebound, according to analysts.

Micron shares were down 4.4% at $874 in premarket trading. A slide that began at the start of the week on news that China's CXMT was developing a new memory chip has been compounded by fears about the wider AI trade.

South Korean memory companies Samsung Electronics and SK Hynix were even harder hit, dropping 9.5% and 11%, respectively, in local trading on Thursday.

But the worries are overblown, according to UBS analyst Nicolas Gaudois. He notes that CXMT's so-called 4F square design (4F2) is likely still just a sample product this year and it would take substantial development to maximize efficiency and performance.

"Memory stocks are now down 19% from the more recent peak in September, almost back to the July trough. We think this should push memory companies to get going on shareholder returns," Gaudois wrote in a research note Thursday.

The calls for cash returns are growing louder. J.P. Morgan analysts said Wednesday a survey of more than 100 investors in Asia found "almost every investor pointed to the need for immediate corporate action from the large-cap Asian memory players for aggressive shareholder returns to avoid further multiple de-rating".

Micron is currently restricted from carrying out big share buybacks or special dividends due to conditions of the Chips Act funding it received from the U.S. government back in 2024. But that limit should be lifted from Dec. 9 and the company recently approved an increase in its total share-repurchase authorization to more than $35 billion.

UBS analyst Timothy Arcuri has argued Micron could start by buying back about $20 billion worth of shares a quarter, rising to around $50 billion quarterly toward the end of its fiscal year 2027, which would be September next year.

The long-term concern is that rising Chinese supply will undercut the skyhigh prices Micron and its peers can currently charge for memory. But even if CXMT can bring advanced chips to the market, it's unclear whether U.S. manufacturers would get government approval to buy CXMT-produced memory and, in any case, the Chinese company gives priority to domestic companies.

"We don't know CXMT's yield for 4F2 and how much capacity it has. We suspect equipment will remain a constraint...Therefore, we remain cautious on how much impact this new tech of CXMT will have on the global memory market," wrote Jefferies analyst Edison Lee in a research note.

So Micron shareholders can breathe a sigh of relief on the Chinese competition issue at least. But it remains to be seen if the prospect of big buybacks can outweigh the current AI gloom.

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