Micron to Keep Raising Chip Prices, Analyst Says
8/2/00 4:19:00 PM
Source: Bloomberg News
Boise, Idaho, Aug. 2 (Bloomberg) -- Micron Technology Inc., the biggest U.S. maker of computer-memory chips, boosted contract prices on its mainstay product and could increase the cost another 20 percent by the end of next month, an analyst said.
Micron, the No. 6 performer in the Standard & Poor's 500 Index this year, raised contract prices on the benchmark 64- megabit chips to $8.25 each from about $7.50, Thomas Weisel Partners analyst Eric Ross said. The price could top $10 by the end of September, he said.
The Boise, Idaho-based company sells hundreds of millions of dynamic random access memories, the main memory chips in computers, so small price fluctuations have a big impact on the bottom line. DRAM shortages are starting to surface now, and analysts expect them to worsen over the next few months. Ross thinks the situation could last another year.
''I don't think it's going to slow down until November, when it usually does, but then we'll still be in an under-supply situation through the end of next (calendar) year,'' Ross said.
Micron spokesman Grant Jones said it's hard to know where prices will be in September, though he did confirm that the company increased them to ''about $8'' last week.
Sales of server computers that power companies' Internet sites and PCs have risen, and PC makers are adding more memory to each box to handle complex graphics and games. That's especially good news for Micron, as PC makers bulk up for the back-to-school and holiday seasons.
''Demand is very strong, very robust, and we expect that will continue,'' Jones said.
Spot DRAM prices remained steady today at $8.50. They have gained 81 percent since hitting a low in February.
Computer makers use contracts to buy in bulk and lock in prices for a set time period, while the spot price of a single chip changes daily. Micron could boost the contract prices by 50 cents every two weeks to reach the $10 level, said Ross, who rates the stock a ''strong buy.''
Late last month, Ross raised his profit estimates to 90 cents a share in the current quarter from his previous 78-cent forecast. He expects sales of $2.26 billion, rather than the $2.06 billion he predicted earlier.
Micron shares rose 1 1/16 to 80 1/4 today. They have more than doubled this year |
