Micron stock surges as Samsung’s memory-chip production cuts provide a boost

Shares of Micron Technology Inc.
MU,
+8.60%
shot up 5.6% in premarket trading Monday, as production cuts announced by rival Samsung Electronics Co. Ltd.
005930,
+1.08%
provided a boost. The South Korea-based computer memory chip maker said Friday that it would cut production by “meaningful” levels to optimize its manufacturing operations, as the Associated Press reported. Stifel Nicolaus analyst Brian Chin believes “meaningful” cuts could represent a cut of 10% or more in utilization, with his checks with suppliers corroborating that the cuts began late in the first quarter. Samsung’s announcement comes after Micron had announced cuts as it reported a large fiscal second-quarter loss in late-March. “We view these actions as incrementally positive for memory market sentiment near term and see Micron’s shares reacting well, with rally potential of [10% to 20%] through the [first-quarter] earnings season,” Chin wrote in a note to clients. Micron’s stock has rallied 17.2% year to date through Thursday, while the PHLX Semiconductor Index
SOX,
+1.34%
has climbed 21.3% and the S&P 500
SPX,
-0.19%
has advanced 6.9%.