The Zhitong Finance App learned that as one of the leaders in the chip industry, Micron Technology (MU.US) has a market capitalization of more than 50 billion US dollars. Taking advantage of the 5G trend, its main business is growing strongly. DRAM memory chips and NAND long-term memory chips are expected to occupy a place in 5G smartphones made in China.
However, data also sometimes “lies,” and health incidents have created a “golden pit” for US stocks. Since the US stock “bottomed out and rebounded” at the end of March, Micron Technology's stock price has risen by more than 40%. Intuitively speaking, investing in this stock is a good choice, but further analysis shows that its performance actually “outperformed the market.” Referring to the industry barometer Philadelphia Semiconductor Index, Micron Technology's stock price fell 18% during the same period.
Needham's analyst Rajvindra Gill, however, does not expect this fatigue to continue. Over the next few years, the company's development will benefit from the development of 5G networks in China. One factor worth considering is the 5G base station deployment plan. China is expected to open 600,000 5G base stations from 2020 to 2021, and this number continues to break through. He expects that from 2022 to 2023, China will maintain the rate of opening 1.35 million 5G base stations every year. This means that the market demand for semiconductor memory will increase significantly, and Micron Technology is the main supplier of DRAM memory chips.
The company is facing far more opportunities than that. Gill also believes that 5G smartphones in China are developing rapidly, and as a major supplier of DRAM memory chips and NAND long-term memory chips, Micron Technology is expected to share a share of this wave of development. He said that the development of 5G mobile phones will be the biggest growth driving force for Micron's chip business, and its popularity will drive a significant increase in demand for DRAM memory chips and NAND long-term memory chips. Among them, demand for NAND long-term memory chips in mid-range and low-end phones is growing the fastest.
As China plans to vigorously develop 5G this year, Gill expects chip demand to show strong growth in 2021 and continue until 2024. As consumer demand for 5G phones exceeds that of other phone types, this trend will continue to accelerate.
Gill mentioned that according to the latest data, 40% of the phones sold in China in April were 5G phones. He expects the sales volume of 5G phones in China to reach 2,250 million units by 2020, and this figure will reach 450 million units by 2021.
Therefore, the analyst reiterated Micron Technology's “buy” rating, with a target price of $70, which is about 36% higher than the current stock price.
In addition, among analysts tracking the stock, 18 analysts gave Micron Technology a “buy” rating, 7 gave a “hold” rating, and 1 gave a “sell” rating. The consensus rating was “moderate buy”. The average target price is 66 US dollars, which is about 28% of the stock's current upward space.