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Chipmakers’ shares rise after Micron predicts memory recovery

(Reuters) – Shares of semiconductor companies around the world rose on Thursday, after the U.S. chipmaker Micron Technology Inc predicted a recovery in the memory market saddled with oversupply as a device of the question sinks in.

FILE PHOTO: a Memory of the chip parts of the U.S. memory chip maker MicronTechnology are shown on their stand at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach

Micron said on Wednesday it saw recovery in the memory chip market, after reporting a quarterly profit that beat analysts ‘ estimates, as cost control helped offset falling demand and prices.

Micron shares rose 4.3 percent in early trading. Shares in other U. S chipmakers, Advanced Micro Devices Inc., Qualcomm Inc Qorvo Inc., each climbed about 1 percent. Intel Corp and Nvidia Corp inched marginally higher.

SK Hynix, the world’s second largest memory chip maker, saw its shares rise by almost 7 percent by 0330 GMT, while Samsung Electronics Co Ltd stock gained 4.3 percent.

Both Samsung and SK Hynix said in January that they expected that the sales of the memory products to revive in the second half of the year.

“With our assumption of reacceleration of investment by the data center customers, content increase of the phones and the CPU deficits, we expect the supply/demand fundamentals to normalize in the back half of the year,” JPMorgan analysts in a client report.

Shares of European chipmaker Infineon Technologies AG rose 1 percent, while STMicroelectronics NV added 1.6 percent.

Analysts are cautious about the outlook for the memory chip market as a result of a lower demand for smartphones and falling investment from data center companies.

“We see 2019 as a industry cycle of soil and what makes this interesting is that Microns come out without the adverse result,” rosenblatt Securities analyst Hans Mosesmann said, adding Micron could focus on the return of at least half of the free cash flow for the shareholders.

Technical research firm TrendForce, in a report Wednesday said that it is a only a slight drop in the NAND flash chip sales in the second quarter as demand recovers from smartphones, computers, and servers.

“Although it will not lead to an immediate reversal of the situation, it will have a positive effect on the market,” analyst are You at DRAMeXchange, a Trendforce division, said in the report.

U.S. chip equipment manufacturers, the supply of tools for chip making and design, also the edges higher on Thursday. Lam Research Corp., Applied Materials Inc. and ASML Holding NV each climbed almost 1 percent.

Reporting by Sonam Rai in Bengaluru and Heekyong Yang in Seoul; Editing by Christopher Cushing and Sai Sachin Ravikumar

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