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Shares of Micron Technology ended their three-day losing streak Monday. That drop brought the memory-chip maker’s market value below $1 trillion as the debate rages about how high memory-chip prices can go.
Micron shares closed up 1.9% at $865.46. That halted a slide that has taken down the stock 30% in the past month. The memory-chip maker closed below the $1 trillion market cap threshold on Thursday for the first time since June 5, according to Dow Jones Market Data.
While it’s still below that mark, Monday’s upswing marked an encouraging first step for a potential turnaround. Micron first closed above $1 trillion in market value on May 26. Its shares have gained nearly 700% in the past 12 months as the growth of artificial-intelligence technology has intensified demand for memory components.
However, an executive of key South Korean rival SK Hynix has warned that current prices are unsustainable in the longer term. Chey Tae-won, chairman of SK Group, which controls SK Hynix, said memory prices were “abnormal” in a press briefing last week, according to local media.
“Prices have to normalize…Otherwise, the market shrinks and competitors flood in,” he said, according to The Korea Herald.
However, the warning only underlines the strength of the memory market in the short term.
Chey also said he expected overall memory demand to rise nearly 60% next year and that demand would continue to outstrip supply through 2027.
That’s the view of Wall Street as well. For example, KeyBanc forecasts dynamic random-access memory (DRAM) prices will rise 15%-20% in the third quarter of this year from the previous quarter, and a further 15% in the fourth quarter. NAND flash memory prices are set to rise 30%-40% in the third quarter and a further 15% in the fourth quarter.
“We do not expect [memory] industry conditions to loosen until at least 2028, as clean room expansions do not begin contributing capacity until likely 2H27, and will still likely under-pace demand growth,” wrote KeyBanc analyst John Vinh in a research note.
Vinh has an Overweight rating and $1,750 target price on Micron stock.
Write to Adam Clark at [email protected] and Anita Hamilton at [email protected]
