Micron stock, semiconductor Stocks Retreat Amid Memory Chip Price Forecast

Shares in Micron Technology (MU), semiconductor equipment makers and chip companies took a hit on Tuesday after a market research firm forecast weakening prices for memory devices in the fourth quarter. Micron stock tumbled as the Nasdaq Composite also fell.

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Contract prices of memory chips built into personal computers will decline by as much as 5% quarter over quarter in the three months ending Dec. 31, forecast market researcher TrendForce.

That prompted Micron stock to fall 5.4% to close at 75.91 on the stock market today. Applied Materials (AMAT) dipped 2.8% to 138.06. Lam Research (LRCX) fell 3.6% to 617.17.

TrendForce said the industry is feeling the effects of PC makers, also known as original equipment manufacturers or OEMs, who have an overabundance of dynamic random access memory chips, or DRAM.

“Regarding the contract market, PC OEMs currently carry relatively high levels of DRAM inventory because they substantially stocked up on PC DRAM beforehand in anticipation of an upcoming shortage,” said TrendForce. “Not only has PC OEMs’ high DRAM inventory put downward pressure on possible price hikes for PC DRAM, but the gradual lifting of Covid-related restrictions in Europe and the U.S. will also likely lower the overall demand for notebook computers, thereby pulling down the overall demand for PC DRAM.”

Micron Stock: Outlook Topped Expectations

Shares in semiconductor stocks Nvidia (NVDA), Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSM) also retreated.

Silicon Motion Technology (SIMO), which makes controllers for memory chips, retreated 5.8% to 75.36.

The Nasdaq fell 0.5% to near 14,788.09. While semiconductor stocks took a hit on Tuesday, many software growth stocks also pulled back.

Boise, Idaho-based Micron earned an adjusted $1.88 a share on sales of $7.42 billion in the quarter ended June 3. For the current quarter, Micron expects to earn an adjusted $2.30 a share on sales of $8.2 billion. Wall Street has predicted earnings of $2.18 a share on sales of $7.88 billion in Micron’s fiscal fourth quarter.

Semiconductor Stocks Prosper In 2021

AMAT stock has gained 60% in 2021. Micron stock has gained 1.5% this year. AMD stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Checkup.

Nvidia stock is on the IBD Leaderboard.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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