Memory Chips: Ride the Volatility?

Published on 11/13/18 | Saurav Sen | 4,743 Words

The BuyGist:

  • Mr. Market has been spooked by bad memories of price cyclicality in the memory sector.
  • The Buylyst argues that the 2016 cycle is unlikely to repeat. 
  • However, there is another factor that wasn't front-and-center in 2016: China - on trade wars, and on new Greenfield fabs. 
  • On Greenfield fabs: Micron and its incumbent competitors can (and are) outcompeting the Chinese on technological prowess. 
  • On Trade War: It's unpredictable. But probability is on Micron's side. The current market valuation of Micron assumes a very high probability of an ugly trade war. That's not rational. 

Why this article?

It was high time The Buylyst put down on paper its rationale for sticking with Micron. There are two reasons for that: 

  1. Micron’s stock has taken a beating despite posting record earnings.
  2. Many Buylyst subscribers have asked for an update on the Micron Thesis.

While Micron is The Buylyst’s conduit to the Memory Semiconductor market, this worldview applies to the other Memory companies as well. 

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