Micron Technology, Inc. (NASDAQ:MU) is less than four decades old, but in the semiconductor industry, that’s ages.

Back in the dark ages, Micron Technology’s single product was a 64-kilobyte memory card that could only contain about half a newspaper’s worth of information. Over the years, the company has expanded the capacity of its memory chips hundreds of thousands of times over and has broadened out into chips that can power a host of products.

Now, Micron is one of the largest producers of memory chips in the world.

And a few months ago, I spoke about how the semiconductor chip shortage negatively affected the company’s third-quarter earnings.

Semiconductors are integral devices in PCs, cars, cameras, smartphones, gaming hardware, medical equipment… anything technological. With all that demand, COVID-19 plant shutdowns and on-going supply chain issues, the chip market has suffered.

The SPDR S&P Semiconductor ETF (XSD), which tracks a basket of chip stocks, is down 31% year-to-date (YTD). It is also underperforming the S&P 500, which is down 21% during the same time frame.

So, in today’s Market 360, let’s take a look at Micron’s two recent announcements: its fourth-quarter earnings and its plan to build the largest U.S. chip plant ever. And we’ll discuss what it all means for the future of the chip industry…

Micron’s Fourth Quarter Earnings

Micron released its fourth-quarter earnings on September 29.

And, unfortunately folks, they continued to decline.

For the fiscal quarter, Micron reported earnings of $1.45 per share, beating analysts estimates of $1.30 per share but down 44% from earnings of $2.59 per share last quarter. Revenue came in at $6.64 billion, down from $8.64 billion last quarter and $8.27 billion for the same period last year.

Taking a look at my Portfolio Grader, Micron right now has a C-rating. This means that, although the stock is not a “Sell” after its earnings announcement, it is still a “Hold.”

The company expects fiscal first-quarter 2023 revenue of about $4.25 billion, plus or minus $250 million versus average analyst estimates of $5.62 billion. It also expects adjusted earnings of about $0.4 per share, plus or minus $0.10 per share, versus average estimates of $0.64 per share.

So, it seems like earnings will continue to fall as the semiconductor chip shortage continues.

However, Sanjay Mehrotra, president and CEO of Micron, said, “We expect to emerge from this downcycle well positioned to capitalize on the long-term demand for memory and storage.”

And how does the company plan to capitalize on demand?

Micron to Open Largest U.S. Semiconductor Factory

On Tuesday, Micron announced that it plans to build a chip manufacturing plant in upstate New York. Predicted to take at least two decades and up to $100 billion, this will be the largest semiconductor factory ever built in the U.S.

The plant will be located in Clay, New York, just north of Syracuse. The company chose this location because of its proximity to “leading higher education institutions, access to talent traditionally underrepresented in technology jobs and a significant military population” which aligns with Micron’s “commitment to veteran hiring.” The company also said the site offers access to “water and clean, reliable power.”

Micron can build this plant after the passage of the CHIPS and Science Act of 2022 this past August. The Act provides $52 billion in grants and subsidies for companies to build and expand computer chip factories in the country.

Micron said preparations for the site are set to begin next year, with construction to begin in 2024 and chip production in 2025.

As the U.S. has become reliant on foreign semiconductors chips, especially since the Covid-19 pandemic and with more people working from home, the hope is that Micron’s new factory will remove us from the current overseas supply chain issue.

Shares of the company rose 4.3% on Tuesday.

With its manufacturing growth ahead, it will be interesting to see how this news affects Micron’s earnings growth in the future.

As you know, I like companies with strong fundamentals and earnings growth. My system is exclusively designed to scour the stock market for individual, high-quality shares.

In other words, I zero in on the companies that stand to profit the most from the next big cycle.

And I predict an “Impact Event” is coming that could give you some of the greatest investment opportunities of your lifetime.

It’s an event so huge, that Bank of America says it will hit with a $150 trillion aftershock… and could send tremors rippling across markets for the next three decades straight.

And the key to preparing for this “Impact Event” going forward is to simply identify as many of these cash-rich, quality companies as you can… while prices are still low enough that you could make a substantial return.

To get ready for the “Impact Event,” click here.

Sincerely,

 

 

Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Micron Technology, Inc. (MU)