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Micron (MU) Faces Restrictions for Selling Products in China
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Micron Technology (MU - Free Report) has been imposed with a trade restriction by the Cyberspace Administration of China on selling its products in key domestic industries on national security concerns. In a statement, China’s cybersecurity regulator revealed that the U.S.-based memory chipmaker has failed to pass a cybersecurity review, which it had initiated in late March 2023.
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.
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.
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 fall under export restrictions.
Zacks Rank & Stocks to Consider
Currently, Micron and NVIDIA each carry a Zacks Rank #3 (Hold). Shares of MU and NVDA have rallied 36.4% and 114%, respectively, year to date (YTD).
The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised 43 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 15.2% upward to $12.04 per share in the past 30 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 104.2% 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 30 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 30 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 45.9% YTD.
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Micron (MU) Faces Restrictions for Selling Products in China
Micron Technology (MU - Free Report) has been imposed with a trade restriction by the Cyberspace Administration of China on selling its products in key domestic industries on national security concerns. In a statement, China’s cybersecurity regulator revealed that the U.S.-based memory chipmaker has failed to pass a cybersecurity review, which it had initiated in late March 2023.
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.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
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.
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 fall under export restrictions.
Zacks Rank & Stocks to Consider
Currently, Micron and NVIDIA each carry a Zacks Rank #3 (Hold). Shares of MU and NVDA have rallied 36.4% and 114%, respectively, year to date (YTD).
Some better-ranked stocks from the broader technology sector are Meta Platforms (META - Free Report) and Manhattan Associates (MANH - Free Report) , each sporting a sport 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 43 cents northward to $2.87 per share in the past 30 days. For 2023, earnings estimates have been revised 15.2% upward to $12.04 per share in the past 30 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 104.2% 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 30 days. For 2023, earnings estimates have moved upward by 17 cents to $2.87 per share in the past 30 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 45.9% YTD.