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Micron (MU) Gets Indian Government's Nod for $2.7B Chip Project
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Micron Technology (MU - Free Report) has received the Indian government’s cabinet approval to set up a semiconductor testing and packaging facility worth $2.7 billion in the country, Reuters reported on Tuesday citing a senior government source.
The facility is most likely to be built in the state of Gujarat and is anticipated to generate more than 5,000 jobs. The Reuter’s source also revealed that the Indian government agreed to the production-linked incentive worth $1.34 billion for the plant.
Being one of the world’s biggest producers and consumers of electronics and automobiles, the Indian government is trying hard to build a semiconductor ecosystem within the country to cater to the growing demand for chips. In doing so, the government announced an incentive package worth INR 76,000 crore for the technologically sophisticated industry.
Micron’s multi-billion-dollar investment news has come at a time when Indian Prime Minister Narendra Modi is on a five-day visit to the United States to take the relationship between the two countries to new heights. The official announcement of Micron’s investment plan is most likely to be declared during Modi’s stay between Jun 20 and Jun 24 in the United States.
We opine that Micron’s new investment plan is critical for India as well as the United States. The company’s chip testing and packaging plant will not only lay the foundation stone for the Indian government’s domestic semiconductor ecosystem plan but also boost Prime Minister Narendra Modi’s ambitious Make in India initiative.
Meanwhile, it will help the U.S. government’s long-term strategy of reducing dependence on China for the supply of semiconductors as well as restrict Chinese access to critical and more advanced chip technologies.
Micron Caught in the Trade War Crossfire
Micron’s Indian investment plans could be seen as its strategy of diversifying its business operations and improving the supply chain of its memory chips, which had been disrupted due to extensive pandemic-led lockdowns in China.
The company’s move can also be seen as a balanced approach to sustain its business operations, which have been caught in the crossfire of the ongoing tech war between the world’s two largest economies — the United States and China.
In May 2023, the Chinese government imposed restrictions on Micron for selling its products in key domestic industries on national security concerns, stating that the memory chipmaker failed to pass a cybersecurity review initiated in late March 2023. The restrictions can be seen as a retaliatory action against the U.S. government’s export ban on China for certain advanced chips used in data centers for AI, data analytics and computing applications.
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.
In late March, Micron reported weaker-than-expected financial results in 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.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). Shares of the company have rallied 33.9% year to date (YTD).
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Micron (MU) Gets Indian Government's Nod for $2.7B Chip Project
Micron Technology (MU - Free Report) has received the Indian government’s cabinet approval to set up a semiconductor testing and packaging facility worth $2.7 billion in the country, Reuters reported on Tuesday citing a senior government source.
The facility is most likely to be built in the state of Gujarat and is anticipated to generate more than 5,000 jobs. The Reuter’s source also revealed that the Indian government agreed to the production-linked incentive worth $1.34 billion for the plant.
Being one of the world’s biggest producers and consumers of electronics and automobiles, the Indian government is trying hard to build a semiconductor ecosystem within the country to cater to the growing demand for chips. In doing so, the government announced an incentive package worth INR 76,000 crore for the technologically sophisticated industry.
Micron’s multi-billion-dollar investment news has come at a time when Indian Prime Minister Narendra Modi is on a five-day visit to the United States to take the relationship between the two countries to new heights. The official announcement of Micron’s investment plan is most likely to be declared during Modi’s stay between Jun 20 and Jun 24 in the United States.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
We opine that Micron’s new investment plan is critical for India as well as the United States. The company’s chip testing and packaging plant will not only lay the foundation stone for the Indian government’s domestic semiconductor ecosystem plan but also boost Prime Minister Narendra Modi’s ambitious Make in India initiative.
Meanwhile, it will help the U.S. government’s long-term strategy of reducing dependence on China for the supply of semiconductors as well as restrict Chinese access to critical and more advanced chip technologies.
Micron Caught in the Trade War Crossfire
Micron’s Indian investment plans could be seen as its strategy of diversifying its business operations and improving the supply chain of its memory chips, which had been disrupted due to extensive pandemic-led lockdowns in China.
The company’s move can also be seen as a balanced approach to sustain its business operations, which have been caught in the crossfire of the ongoing tech war between the world’s two largest economies — the United States and China.
In May 2023, the Chinese government imposed restrictions on Micron for selling its products in key domestic industries on national security concerns, stating that the memory chipmaker failed to pass a cybersecurity review initiated in late March 2023. The restrictions can be seen as a retaliatory action against the U.S. government’s export ban on China for certain advanced chips used in data centers for AI, data analytics and computing applications.
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.
In late March, Micron reported weaker-than-expected financial results in 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.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). Shares of the company have rallied 33.9% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Meta Platforms (META - Free Report) , Manhattan Associates (MANH - Free Report) and Blackbaud (BLKB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 5 cents southward to $2.82 per share in the past 30 days. For 2023, earnings estimates have increased by a penny to $11.94 per share in the past seven days.
Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 136.3% YTD.
The Zacks Consensus Estimate for Manhattan Associates' second-quarter 2023 earnings has been revised upward by a couple of cents to 72 cents per share for the past 60 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 60 days.
Manhattan Associates' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 33.6%. Shares of MANH have soared 57.5% YTD.
The Zacks Consensus Estimate for Blackbaud’s second-quarter 2023 earnings has been revised 10 cents northward to 93 cents per share in the past 60 days. For 2023, earnings estimates have increased to $3.75 per share from $3.43 60 days ago.
Blackbaud's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10.4%. Shares of BLKB have rallied 20.9 % YTD.