Micron's strong performance raises expectations for a long-term boom in the semiconductor industry

(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = As Micron of the United States reported 'surprising earnings', expectations are rising that the boom in the semiconductor industry due to memory supply shortage will continue for a long time, contrary to the concerns of some in the market.

In the early morning of the 1st, Korean time, Micron announced that its sales in the fourth quarter of the fiscal year (June to August) reached $54.23 billion (approximately 73.5 trillion won), nearly five times the same period last year, breaking an all-time high.

This was a surprising performance that exceeded the consensus (market average forecast, $51.07 billion).

Quarterly adjusted earnings per share (EPS) was $33.42, exceeding Wall Street expectations of $31.61.

Micron CEO Sanjay Mehrotra announced in a conference call held after the earnings announcement that the company has secured more than a third of its sales through long-term supply contracts by 2030 and plans to significantly expand its capital expenditures (CapEx).

In particular, it is predicted that memory and storage supply and demand in fiscal years 2027 and 2028 will be much tighter than in 2026, and HBM demand will grow faster than general DRAM until 2028.

Securities experts agreed that the results were 'above neutral'.

Seo Sang-young, managing director of Mirae Asset Securities, said, "In the conference call, we emphasized in a very strong tone that this performance is not a simple memory price rebound, but a structural cycle in which supply shortage will continue from 2027 to 2028."

In addition, Micron said that it is important to note that it is currently unclear when supply will catch up with demand.

Han Ji-young, a researcher at Kiwoom Securities, also said, "At a time when it has become important to improve the stock market's profit strength to withstand high interest rates, the fact that Micron's performance showed results above neutral is a factor of relief. This is because both sales and earnings per share (EPS) exceeded the consensus, and the gross profit ratio (87.0%) was also higher than expected (86%), proving high profitability."

He emphasized, “Although the gross profit margin guidance for the first quarter of fiscal 2027 was 86.25%, slightly lower than expectations (86.4%), it is important to note that this is a one-time impact reflecting incentives, etc. and that an upward direction has been suggested after the second quarter.”

However, Yang Hyeong-mo, a researcher at DS Investment & Securities, pointed out, "If you look at the performance numbers, there were almost no flaws. In other words, demand is still strong. However, Micron's stock price did not rise strongly in after-hours trading."

Researcher Yang said, “Memory stock prices receive the highest compensation in areas where prices are rising quickly, and when the rate of price growth slows and facility investment begins to accelerate, the market begins to look at the next supply,” and added, “This is the reason why stock prices did not soar immediately despite good performance.”

Kim Seon-woo, a researcher at Meritz Securities, said, “Performance and guidance have repeatedly exceeded expectations, and memory companies’ stock prices are passing a period where they are becoming insensitive to surprises.”

However, the DRAM industry is still not even halfway through the upcycle, and “we expect that additional upward revisions to next year’s performance estimates will lead to a strong stock price rise,” said researcher Kim.

Existing consumers of smartphones and PCs are resisting the surge in sales prices, but as supply shortages worsen, they have no choice but to accept higher prices.

Researcher Kim said, “That point is expected to be between the end of this year and early next year, and memory companies’ profit estimates for 2027 will all be revised upward again.” He added, “Business-to-business (B2B) demand for artificial intelligence (AI) advancement is based on ‘investment,’ and competitive spending to reach general artificial intelligence (AGI), which thinks like humans, on a first-come, first-served basis is inevitable.”

In fact, thanks to the shortage of semiconductor supply, Korean exports are continuously hitting record highs.

On this day, the Ministry of Trade, Industry and Energy announced that exports in September amounted to $120.94 billion, an 83.5% increase over the same period last year, recording the highest monthly exports. Semiconductors, the company's flagship product, drove overall exports with sales of more than $60 billion.

However, as of 10:41 am, KOSPI is down 0.19% from the previous day to 6,825.07, and Samsung Electronics [005930] and SK Hynix [000660] are down 0.28% and 0.17%, respectively.

In the stock market, foreigners and institutions are net selling KRW 656.5 billion and KRW 136.9 billion, while individuals and other corporations are net buying KRW 327 billion and KRW 465.4 billion.