Following a report Monday by Morgan Stanley regarding potential price declines for NAND flash chips, a report that seems to have contributed to a rout in semi stocks yesterday, and Micron Technology (MU) in particular, this afternoon comes another cautious note, this time from Keybanc’s Weston Twigg.
Twigg, who has a Sector Weight rating on Micron shares, relates data from research firm InSpectrum that, similar to Morgan Stanley, shows “material NAND pricing declines” taking place “through the first half of 2018."
Twigg cautions that the projections for NAND are preliminary at this point. He thinks Micron is actually “relatively well positioned as a memory play, given that two thirds of its revenue is DRAM related."
That said, he does think that “NAND pricing risk will likely act as a near-term headwind” for the company.
Looking across the rest of the landscape, Twigg thinks Western Digital (WDC), the real subject of the Morgan Stanley note, faces greater risk than Micron.
And Seagate Technology (STX), Western’s competitor in spinning discs, is “susceptible to faster displacement of its hard disk drive revenue by solid-state drives ( where it has a small position), as NAND pricing falls."
Micron shares today closed down another $1.35, or 3%, at $42.39, and are up 6 cents at $42.45 in late trading.