We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Micron (MU) Caught in the Cross Fire of US-China Tech War
Read MoreHide Full Article
Micron Technology’s (MU - Free Report) shares fell 4.4% last Friday after the Cyberspace Administration of China announced that it would conduct a cybersecurity review of products sold by the U.S. memory chip manufacturer in the country.
China's cyberspace regulator stated that the move is aimed at ensuring the integrity of its information infrastructure supply chain, preventing network security risks and safeguarding national security. However, the regulatory body did not provide many details about the extension of its review operation as well as which Micron products will come under the purview.
The development can be seen as a retaliatory action by the Chinese government against the U.S. government’s increasing restrictions on Chinese access to critical and more advanced semiconductor technology.
In October 2022, the United States imposed an export ban on certain advanced chips that are used in data centers for artificial intelligence, data analytics and computing applications. Over the past few months, the Netherlands and Japan also joined the United States to restrict China from making advanced chips.
The tit-for-tat actions could jeopardize Micron’s prospects, which are already facing the brunt of the weak demand for its memory chips. Chip sales in China make up approximately 11% of Micron’s total revenues.
Last week, Micron reported weaker-than-expected financial results for the second quarter of fiscal 2023. The company reported a non-GAAP loss of $1.91 per share, which was significantly higher than the Zacks Consensus Estimate of a loss of 67 cents. The bottom line compared unfavorably with the prior-year quarter’s earnings of $2.14 per share.
The quarterly revenues of Micron plunged 53% year over year to $3.69 billion, which missed the consensus mark of $3.76 billion. The rapidly weakening consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty were the main reasons behind the dismal quarterly performance.
The memory chip maker has offices in Shanghai and Shenzhen and a chip packaging facility in the city of Xian. In early 2022, Micron announced that it would shut down DRAM design operations at its Shanghai facility by the end of the year. The move was seen as a strategic shift from the manufacturing of chips back to the United States amid mounting trade tensions between the United States and China.
MU is not the only semiconductor company that has been impacted by the tech war between the world’s two largest economies. On Aug 31, 2022, NVIDIA Corporation (NVDA - Free Report) disclosed that the U.S. government informed it on Aug 26 about imposing a new licensing requirement, effective immediately, for its A100, A100X and forthcoming H100 integrated circuit sales in China and Russia. The government also banned NVIDIA from exporting DGX or any other systems that incorporate A100 or H100 integrated circuits.
The new licensing requirements will also be implied for any future chip designs developed by NVIDIA that have a threshold greater than or equivalent to A100. Additionally, any systems developed in the future incorporating the aforementioned types and thresholds will also fall under export restrictions.
Zacks Rank & Stocks to Consider
Currently, Micron carries a Zacks Rank #3 (Hold), while NVIDIA has a Zacks Rank #2 (Buy). Shares of MU and NVDA have rallied 20.7% and 90.1%, respectively, year to date (YTD).
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents 30 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past seven days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 29.9% YTD.
The Zacks Consensus Estimate for Aspen Technology's third-quarter fiscal 2023 earnings has remained unchanged at $1.66 per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $7.10 per share in the past 60 days.
Aspen Technology’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 5.2%. Shares of AZPN have rallied 11.4% YTD.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Micron (MU) Caught in the Cross Fire of US-China Tech War
Micron Technology’s (MU - Free Report) shares fell 4.4% last Friday after the Cyberspace Administration of China announced that it would conduct a cybersecurity review of products sold by the U.S. memory chip manufacturer in the country.
China's cyberspace regulator stated that the move is aimed at ensuring the integrity of its information infrastructure supply chain, preventing network security risks and safeguarding national security. However, the regulatory body did not provide many details about the extension of its review operation as well as which Micron products will come under the purview.
The development can be seen as a retaliatory action by the Chinese government against the U.S. government’s increasing restrictions on Chinese access to critical and more advanced semiconductor technology.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
In October 2022, the United States imposed an export ban on certain advanced chips that are used in data centers for artificial intelligence, data analytics and computing applications. Over the past few months, the Netherlands and Japan also joined the United States to restrict China from making advanced chips.
The tit-for-tat actions could jeopardize Micron’s prospects, which are already facing the brunt of the weak demand for its memory chips. Chip sales in China make up approximately 11% of Micron’s total revenues.
Last week, Micron reported weaker-than-expected financial results for the second quarter of fiscal 2023. The company reported a non-GAAP loss of $1.91 per share, which was significantly higher than the Zacks Consensus Estimate of a loss of 67 cents. The bottom line compared unfavorably with the prior-year quarter’s earnings of $2.14 per share.
The quarterly revenues of Micron plunged 53% year over year to $3.69 billion, which missed the consensus mark of $3.76 billion. The rapidly weakening consumer demand and substantial customer inventory adjustments across end markets amid macroeconomic uncertainty were the main reasons behind the dismal quarterly performance.
The memory chip maker has offices in Shanghai and Shenzhen and a chip packaging facility in the city of Xian. In early 2022, Micron announced that it would shut down DRAM design operations at its Shanghai facility by the end of the year. The move was seen as a strategic shift from the manufacturing of chips back to the United States amid mounting trade tensions between the United States and China.
MU is not the only semiconductor company that has been impacted by the tech war between the world’s two largest economies. On Aug 31, 2022, NVIDIA Corporation (NVDA - Free Report) disclosed that the U.S. government informed it on Aug 26 about imposing a new licensing requirement, effective immediately, for its A100, A100X and forthcoming H100 integrated circuit sales in China and Russia. The government also banned NVIDIA from exporting DGX or any other systems that incorporate A100 or H100 integrated circuits.
The new licensing requirements will also be implied for any future chip designs developed by NVIDIA that have a threshold greater than or equivalent to A100. Additionally, any systems developed in the future incorporating the aforementioned types and thresholds will also fall under export restrictions.
Zacks Rank & Stocks to Consider
Currently, Micron carries a Zacks Rank #3 (Hold), while NVIDIA has a Zacks Rank #2 (Buy). Shares of MU and NVDA have rallied 20.7% and 90.1%, respectively, year to date (YTD).
Some better-ranked stocks in the broader technology sector are Wix.com (WIX - Free Report) and Aspen Technology (AZPN - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents 30 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past seven days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 29.9% YTD.
The Zacks Consensus Estimate for Aspen Technology's third-quarter fiscal 2023 earnings has remained unchanged at $1.66 per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 2 cents to $7.10 per share in the past 60 days.
Aspen Technology’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 5.2%. Shares of AZPN have rallied 11.4% YTD.