Micron Technology, Inc. (NASDAQ:MU) receives a reiteration of Buy rating from Mizuho analyst Vijay Rakesh, who sets a price target of $72.00.
The Cybersecurity Administration of China (CAC) announced on Sunday that Micron Technology, Inc. is a cybersecurity threat, barring Chinese operators of critical infrastructure from buying any product from the company after conducting an investigation on March 31.
The initial top-line impact ranges from a low-single-digit to high-single-digit percentage of Micron Technology, Inc.’s total revenue, according to the company’s recent statement. The ban is a potential headwind for China since it limits leading-edge DDR5 availability, which is essential for advancing its next-generation technology roadmap. South Korea has declared that it is not restricting its domestic OEMs from fulfilling orders, although challenges may exist.
The analyst, however, considers the dip an excellent opportunity to buy Micron Technology, Inc.’s stock.
Micron Technology, Inc. stated that quarterly trends are currently favorable, with improving bit shipments Q/Q through 2023E, better DDR5 pricing, and a decrease in customer inventory.
According to the CAC’s Sunday ruling, Micron Technology, Inc.’s products pose network security risks that affect China’s national security, prohibiting operators of critical infrastructure from purchasing the company’s products. The ban could impact financial to telco customers, as the company presently has approximately 25% revenue exposure to China.
China is facing few options due to comprehensive equipment and technology restrictions that have impeded capacity ramps and technology roadmaps at Yantgze Memory (YMTC) and ChangXin Memory (CXMT). In contrast, the analyst believes that Micron Technology, Inc. dominates leading-edge DRAM (DDR5) and NAND.
The ban could be a short-term tailwind for Samsung Electronics Co, Ltd (OTC:SSNLF) and SK Hynix. Meanwhile, broader channel inventories remain high.
Although the CAC’s ban on Micron Technology, Inc. creates near-term volatility around the total impact of restrictions, Rakesh believes that restrictions could be a double-edged sword and could impair China’s plans for expanding its technology and AI footprint. The analyst also sees opportunities for demand with the Genoa, Hopper, and Generative AI Server/Data Center platforms expected to ramp up in 2H23.
Price Action: Micron Technology, Inc.’s shares traded higher by 0.82% at $66.77 on the last check Tuesday.