Shares of Micron Technology experienced a significant upturn, climbing as much as 4.6% during the day and closing with a 3.7% gain. This positive movement comes amidst a generally favorable day for the semiconductor sector, particularly for companies focused on artificial intelligence (AI), but Micron’s boost can also be directly attributed to challenging news from a key competitor, Samsung.
Samsung has projected a staggering 56% decline in its second-quarter operating profit compared to last year, falling short of market expectations. Notably, the firm did not provide updates on its anticipated high-bandwidth memory (HBM) product, particularly its new 12-layer HBM3. This ambiguity is significant since HBM is critical for AI applications, with major DRAM companies like Micron, Samsung, and SK Hynix benefitting from fixed contracts at high margins. In contrast, prices for traditional DRAM are prone to fluctuations based on supply and demand metrics.
While SK Hynix has taken an early lead in the HBM market, Micron has been quickly gaining ground, enhancing its technology and expanding its share. Samsung’s recent hurdles, including delays in its HBM3 product qualification by Nvidia, may provide Micron with the opportunity to seize additional market share, especially as Micron’s HBM sales saw a nearly 50% increase sequentially last quarter.
It’s noteworthy that Micron operates within an oligopoly with only three HBM suppliers, positioning it favorably as challenges for one rival can significantly benefit the others. The company has plans to ramp up HBM4 production, with management expecting to begin volume production by early 2026. As it stands, Samsung is pushing to qualify its HBM4 with Nvidia later this year; however, ongoing technological setbacks could generate further opportunities for Micron to expand its presence in the HBM market.
Micron’s stock may appear pricier, but with the potential benefits from Samsung’s struggles, it could be justified as the company looks to enhance its position in a crucial segment of the semiconductor industry. The outlook for Micron remains optimistic as it capitalizes on industry dynamics, providing a hopeful perspective on its future growth despite competitive challenges.