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Semiconductor shares rise as 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 and the demand for mobile phones slows down.

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

Fish stocks in the chipmakers have been pummelled in the last six months as the demand for Apple’s iPhones have decreased and the prices for DRAM and NAND memory chips sank by an oversupply, adding to concerns that a two-year-long semiconductor everything was coming to a halt.

Micron’s comments came as it reported quarterly profit above analysts estimates on Wednesday, cost cutting helped offset declining demand and prices.

A chip recovery will likely be fueled by fresh investment from data center customers and more contents of the memory in the phones, according to analysts at JPMorgan.

Micron shares rose 8.7 percent on Thursday morning. Shares in Advanced Micro Devices Inc and Nvidia Corp rose 2 percent, while Qualcomm Inc. and Intel Corp. climbed 1 percent.

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 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.

Top Insights Group analyst Kinngai Chan upgraded Micron’s stock to a “buy” rating and predicted that the chipmaker, the cost savings would exceed price decreases in the second half of the year 2019.

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 rose 2.5 percent and Applied Materials Inc. jumped about 3 percent.

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

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