Micron: Shares Up on Higher Chip Prices
A big jump in the secondary market for computer memory chips pushed up shares of Micron Technologies (MU: 2.86*, +0.25, +9.57%) Thursday as investors bet that a floor had been found in falling semiconductor prices.
After months of declines, prices for certain types of memory chips shot up on the electronic marketplace DramExchange recently. That helped boost shares of the Boise, Idaho, company, says Betsy Van Hees, an analyst with Caris & Co.
“I think the move you’re seeing today is about the spot pricing going up,” Van Hees says. “One day doesn’t make a trend, though. The best case would be a flattening-out trend in pricing instead of these constant day in, day out declines. That would be very encouraging.”
Stability in the battered semiconductor market is also being pushed by the government of Taiwan, which is encouraging consolidation in the chip-making industry. The island nation makes about a third of all the chips used in personal computers and other electronics, and its companies have been hit so hard by the recession that the government is considering a financial bailout.
Nanya Technology, which has a licensing agreement with Micron, is considering asking for help, a move that could bolster Micron’s fortunes in the future, says Kevin Vassily, an analyst at Pacific Crest Securities.
“They are forcing the hand of companies in Taiwan to align with stronger players,” Vassily says of the government actions. “Down the road, Micron would be the company that could acquire a company like Nanya, so they’re not only likely to survive, but when the industry gets better, they should be in a position to do fairly well.”
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