Summit Talks Up Micron, Says Samsung DRAM Expansion Is A Moot Point

Samsung Electronics' plan to boost in-house production of memory chips sent shares of Micron Technology MU reeling Thursday, but one analyst said smart money should be buying.

"Samsung is merely confirming a DRAM shortage," Summit's Srini Sundararajan said in a note. "Those who are rushing for the exits on Micron are not receiving good advise."

DRAM chips are key components of mobile devices and Micron has benefited from a market shortage. Its shares are up more than 40 percent year to date.

"Listen to what Samsung is saying, but more importantly, pay attention to what they are doing," Sundararajan said. "By signalling it is increasing capacity, Samsung might not even need to carry this out because it expects prices will fall" as a result of the announcement.

Sundararajan said the Samsung capacity plan confirms his "Buy" thesis on Micron, and called its share weakness Thursday a buying opportunity.

Micron closed Thursday down more than six percent at $30.50.