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Memory leader still a great play on semiconductor shortages
Thursday 08 Apr 2021 Author: Steven Frazer

Gain to date: 16.1%
Original entry point: Buy at $80.72, 21 January 2021

The microchip industry has been on a tear for months but the backcloth promises to get even better for semiconductors powerhouse Micron Technology

Micron is among the world leaders when it comes to memory, both dynamic random-access memory which helps digital devices work faster, and flash memory, used for storage.

In a world moving ever more swiftly to the cloud, better, bigger, faster and cheaper memory will be a vital enabler, so the Biden administration’s commitment to spend $50 billion to address supply constraints, and maintain global leadership in the face of Far East competition, comes as a real boost.

The announcement was well-timed, with Micron also reporting second quarter (to 28 February 2021) earnings that beat estimates thanks to particularly strong demand in mobile, industrials, and automotive sectors.

The company forecast a strong Q3 as DRAM demand continues to outpace supply. Interestingly, the company does not plan to throw its money willy-nilly into capacity expansion, sticking to its ‘conservative’ capex plenty of demand down the line and firm pricing.

Up more than 16% in only a little more than two months, we continue to believe there is further 2021 upside to be had.

SHARES SAYS: A great play on the current semiconductors shortage, with longer-term attractions too. 

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