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Micron (MU) to Invest $603M in China Over the Next Few Years
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Micron Technology (MU - Free Report) promised on Friday to invest 4.3 billion yuan ($603 million) over the next few years in its chip packaging plant, Reuters reported citing the company’s statement posted on the Chinese social media platform, WeChat.
As part of its $603 million investment plan in the country, Micron will add assembly lines at its existing chip packaging facility in the Chinese city of Xian. Per the report, the investment will also include the acquisition of packaging equipment from a Xian-based subsidiary of Taiwan's Powertech Technology.
In the statement released on WeChat, Micron stated that its new investment plan would create an additional 500 jobs in the country. This will bring the company’s total workforce to more than 4,500 in China.
Micron’s latest announcement can 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.
The company’s investment plan came weeks after the Cyberspace Administration of China imposed a trade restriction on selling its products in key domestic industries on national security concerns. In a statement released on May 21, China’s cybersecurity regulator revealed that the U.S.-based memory chipmaker failed to pass a cybersecurity review, which it initiated in late March 2023.
The trade restrictions on Micron chips 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 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.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). Shares of the company have rallied 20.9% year to date (YTD).
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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.
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Micron (MU) to Invest $603M in China Over the Next Few Years
Micron Technology (MU - Free Report) promised on Friday to invest 4.3 billion yuan ($603 million) over the next few years in its chip packaging plant, Reuters reported citing the company’s statement posted on the Chinese social media platform, WeChat.
As part of its $603 million investment plan in the country, Micron will add assembly lines at its existing chip packaging facility in the Chinese city of Xian. Per the report, the investment will also include the acquisition of packaging equipment from a Xian-based subsidiary of Taiwan's Powertech Technology.
In the statement released on WeChat, Micron stated that its new investment plan would create an additional 500 jobs in the country. This will bring the company’s total workforce to more than 4,500 in China.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
The Ongoing Trade War Ails Micron
Micron’s latest announcement can 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.
The company’s investment plan came weeks after the Cyberspace Administration of China imposed a trade restriction on selling its products in key domestic industries on national security concerns. In a statement released on May 21, China’s cybersecurity regulator revealed that the U.S.-based memory chipmaker failed to pass a cybersecurity review, which it initiated in late March 2023.
The trade restrictions on Micron chips 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 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.
Zacks Rank & Stocks to Consider
Micron currently carries a Zacks Rank #3 (Hold). Shares of the company have rallied 20.9% 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 been 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 125.5% 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 2 cents northward to 93 cents per share in the past 30 days. For 2023, earnings estimates have increased to $3.75 per share from $3.68 30 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 25.7 % YTD.