Odd One Out

Image source: Aleksandrs Samuilovs, graficriver_icons_logo, Oleskova Olha - Shutterstock

What's going on?

Micron warned investors on Tuesday that this quarter’s profit would be weaker than expected – even if the industry’s other players are following a different pattern.

What does this mean?

You’d think Micron would be having an easy enough ride: carmakers and industrial companies are in serious need of its semiconductors, and demand from data centers is on the rise too. But computer manufacturers – one of Micron’s biggest customers – have been struggling to get hold of the parts it needs to actually manufacture said computers, and have subsequently been cutting back on chip purchases. The company is confident orders will pick up again when those shortages clear up, but investors are going to have to grit their teeth in the meantime: Micron’s admitted that its profit for this quarter is set to disappoint.

Why should I care?

For markets: Investors aren’t impressed.
Micron’s stock is down for the year, which actually makes it a bit of an outlier in the industry: the value of an index tracking 30 of the biggest chipmaking firms has risen by nearly 19% over the same period (tweet this). Throw this profit warning into the mix, and the company isn’t exactly winning any friends: investors sent its stock down 4% on the back of the announcement.

The bigger picture: ASML is looking to profit from the shortages.
ASML Holdings has no such complaints: the semiconductor equipment maker said on Wednesday that it’s expecting orders to keep flooding in over the next decade. And it might well be right, with Taiwanese chipmaking giant TSMC already having promised to spend $100 billion on ramping up production between now and 2024 alone. That’s a lot of cash up for grabs, and investors seem to agree that ASML will be the one to grabs it: they’ve sent the equipment maker’s shares up more than 55% this year.

Originally posted as part of the Finimize daily email.

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