Micron's DRAM Supply Temporarily Hit by Taiwan Earthquake, But Long-Term Outlook Remains Strong

Zinger Key Points
  • Taiwan earthquake may cut Micron's DRAM supply by mid-single digits, long-term capacity unaffected.
  • Micron's HBM chips, key for AI, set to dominate market with superior efficiency and potential $1B revenue by 2024.

Micron Technology Inc MU announced that the April 3 earthquake in Taiwan will likely reduce its dynamic random access memory (DRAM) supply for the calendar quarter by up to a mid-single-digit percentage. 

With operations in four Taiwanese locations, Micron plays a significant role in the global chip supply chain, sparking concerns about potential disruptions due to the earthquake. 

However, the company clarified that while it hasn’t reached full DRAM production capacity post-earthquake, the event will not affect its long-term DRAM supply capabilities, Reuters reports.

These chips, designed for use in Nvidia Corp’s NVDA H200 graphics processing units for AI applications, have seen tremendous market demand. 

The booming AI industry’s demand for DRAM chips has led to a surge in Micron’s stock as investors recognize the company’s growing role in supplying the technology sector.

In response to the increasing demand, especially from the AI sector, Micron began mass production of its high-bandwidth memory (HBM) chips in February. 

A 7.2-magnitude earthquake struck Taiwan on Wednesday at 8 a.m. local time, with Hualien in eastern Taiwan as its epicenter. This was the most severe earthquake to hit the region in 25 years. 

Taiwan Semiconductor Manufacturing Co TSM quickly evacuated its factories, raising concerns about potential production impacts. 

However, TSMC reassured that its safety protocols were effective, reporting a swift recovery of over 80% in tool functionality at its facilities, including the advanced Fab 18 in Tainan, expecting full operational status by day’s end. Meanwhile, Nvidia communicated that, after consulting with its manufacturing partners, it foresees no disruptions to its supply chain due to the earthquake, as reported by Reuters.

Analysts flagged Micron’s HBM3E due to its outstanding thermal and power efficiency, highlighting its 30% reduced power consumption over SK Hynix and its technological edge over Samsung, which faced delays. 

They predicted Micron would dominate the HBM market, potentially exceeding $1 billion in HBM revenues by the 2024 calendar year, positioning Micron as a significant player in the semiconductor sector.

Micron stock surged over 96% in the last 12 months. Investors can gain exposure to the stock via REX FANG & Innovation Equity Premium Income ETF FEPI and Invesco Semiconductors ETF PSI.

Price Action: MU shares traded higher by 3.16% at $126.06 on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy of Micron

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