Micron Technology (NASDAQ:MU) stock is rising despite falling revenue as it announces a $3.6 billion plant in Japan, backed by $1.5 billion in government aid.
The new plant will include Extreme UltraViolet (EUV) technology so circuit lines can be placed within a few microns of one another.
Micron stock rose nearly 2% on May 17 and another 1.5% overnight. It is expected to open today at almost $66 per share. That’s a market capitalization of over $71 billion on expected fiscal 2023 sales of $23 billion.
Help From Uncle Sam in Japan
Micron has become a favorite target of the Biden administration, which wants to make the industry independent of China. Ambassador to Japan, Rahm Emmanuel, is being given credit for getting the Japan deal done. The deal will be a highlight of the G-7 summit being attended by President Biden.
This is also an economic blow against China, which is threatening to expel Micron from its market, the source of $3.3 billion in Micron sales. China has launched what it calls a “cybersecurity review” after U.S. sanctions aimed at limiting its access to advanced chip technology.
Micron is now buying land for its new plant near Syracuse, New York, with speculators doubling their money on land bought two years ago. Parcels outside the plant footprint are selling for about $5,000 per acre. Rezoning is underway. The company is also building a new chip packaging plant in India.
The public and private investment comes against the backdrop of a collapse in memory chip prices. Micron’s revenues could be down by 25% for fiscal 2023, which ends in August. Micron lost $2.31 billion during its February quarter, $2.12 per share, with revenue of $3.69 billion, about half that in the previous year. Micron next reports earnings on June 29.
MU Stock: What Happens Next?
Micron and its investors are thinking long-term. Shares of MU stock are up nearly 30% in 2023 despite the chip slump, which cut the stock price in half in 2022.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
