Why Micron Stock Dropped Today

Micron (NASDAQ: MU) banal slid 3.9% done 11:05 a.m. ET arsenic investors caught a lawsuit of the Mondays -- and resumed worrying astir the durability of precocious prices for representation chips utilized successful the artificial quality industry.

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The SK Hynix "IPO"

South Korea's SK Hynix (NASDAQ: SKHY), present trading connected Nasdaq arsenic an American Depositary Receipt, is the apt catalyst for today's diminution successful Micron's price. SK shares soared 14% connected their Nasdaq debut earlier turning process this greeting and selling disconnected by much than 6%. Micron banal is pursuing SK banal lower, and it's not excessively hard to recognize why.

When SK debuted, its CEO stated confidently that the planetary marketplace for machine representation volition look its "worst-ever proviso shortage" adjacent year, and proviso volition stay debased (and prices high) done 2030 and beyond.

This sounds like bully quality for Micron, which is enjoying windfall profits from these precocious prices close now. Problem is, SK competes with Micron, it's the ascendant subordinate successful high-bandwidth representation (50% to 60% marketplace share) and a bigger subordinate successful plain vanilla DRAM representation arsenic well, with 29% marketplace stock -- much than Micron has.

What this means for Micron banal

This presumption allows SK Hynix to acceptable prices successful the HBM and DRAM markets -- which is good for Micron for now, arsenic prices are high. But SK is moving to treble its DRAM accumulation by 2030, which volition summation proviso and presumably little prices. Worse, SK Hynix's Nasdaq debut conscionable netted it $26.5 cardinal successful caller banal sales, giving it ample funds to proceed with (or adjacent accelerate) its enlargement plans.

This volition beryllium atrocious quality for Micron, costing it some profits and marketplace share. This is the crushed Micron banal is going down today.

Should you bargain banal successful Micron Technology close now?

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