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Technology Stocks : WDC/Sandisk Corporation

WDC 163.61

+2.2%

Nov 6 3:59 PM EST

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From: JCnieuwenj	4/26/2016 10:43:30 AM
	of 60323

Micron jumps after SK Hynix forecasts strong Q2 shipment growth, plans lower capex seekingalpha.com Thanks to weak PC DRAM demand and continued DRAM/NAND flash price pressure, Korea's SK Hynix ( OTC:HXSCF +6% in Seoul) saw revenue drop 17% Y/Y in Q1 to KRW3.7T ($3.22B), and net income drop to KRW444B from KRW1.3T ($1.1B) a year ago. However, the company also guided for DRAM shipments to rise by a mid-teens % Q/Q (mobile and server demand will lead the way), and NAND shipments to rise more than 30% thanks to new mobile products (iPhone 7?). Micron ( MU +7.3%) is getting a lift from Hynix's Q2 outlook. Also possibly helping: Hynix mentioned on its earnings call ( transcript) 2016 capex is now expected to be below a 2015 level of KRW6.6T ($5.8B). Micron guided in late March for FQ3 (May quarter) revenue of $2.8B-$3.1B, nearly flat Q/Q at the midpoint relative to FQ2's $2.93B. Regarding DRAM, Hynix said it's expecting "more positive demand momentum around the second half as inventory levels for major customers is not too high today and demand from new smartphone launch toward the end of the quarter is expected to stimulate mobile DRAM demand with adoption of higher-density DRAM to continue, and launch of new server chipsets is expected to drive system buildup demand for servers" In addition, supplier capex is expected to drop in 2H16. The company plans to grow DRAM bit shipments at a low-to-mid 20% clip in 2016. The NAND supply/demand balance "remained more stable than in expected," and the trend is expected to continue in Q2. However, Hynix cautions 3D NAND ramps in 2H16 could affect the balance. Hynix's 2016 NAND bit shipment growth is expected to be in the mid-to-high 30s.

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