Micron Technology (NASDAQ:MU) shares fell Friday, June 3 as investment firm Piper Sandler downgraded the memory chipmaker, citing its “oversized exposure” to consumer electronics.
With Micron in the spotlight, other bellwether semiconductor companies also were negatively impacted. Intel (INTC) was off by 2.6% while Nvidia (NVDA) was down by 4.5%, Qualcomm (QCOM) shares fell by 3.5% and Advanced Micro Devices (AMD) dropped 3%.
According to the Tech Note in Seeking Alpha:
- Micron is also not as exposed to the automotive market, which Kumar said events like rising rates, a slowing macro and the possibility of excess inventory may be a concern.
- Kumar pointed out that Micron’s exposure of greater than 50% to consumer markets is higher than many other semiconductor companies, and with some weakness in the mobile and PC markets, it’s likely there could be “additional pressure on the company.”
Perhaps it’s in the definitions of the Piper Sandler database used to downgrade Micron. But my analysis shows significantly different metrics, which is shown below in this article.
Shown in Chart 1, Micron’s share of the total Automotive Memory market of $3,700 million was 55.0% in 2021, up slightly from 53.9% in 2020, according to The Information Network’s report entitled “Hot ICs: A Market Analysis of Artificial Intelligence (“AI”), 5G, Automotive, and Memory Chips.”
Chart 2 shows that Micron’s share of the total Automotive Semiconductor Market of $51,600 million was 3.9%, up slightly from 3.4% in 2020.
Chart 3 shows Micron’s share of the global Consumer Semiconductor market of $46,800 million was 2.5% in 2021, down slightly from 2.8% in 2020.
Note that my analysis of the “Consumer” segment is based on Industry Consortia “Semiconductor Industry Association” definitions.
Chart 4 shows Micron’s share of the global Smartphone Semiconductor market of $88,100 million was 8.2% in 2021, down from 10.3% in 2020.
The Piper Sandler analysis states that Micron’s exposure was greater than 50% of consumer markets. My analysis shows that it is just 2.5% of the $46 billion consumer semiconductor (Chart 3) and 8% of the $88 billion smartphone semiconductor markets (Chart 4). These shares are significantly below the 50% share reported by Piper Sandler.
In the Automotive semiconductor market, Piper Sandler reports that Micron is also not as exposed to the automotive market. In my analysis, Micron has a 55% share of the $3.7 billion market (Chart 1), which in my opinion, is significantly more than “not as exposed.” Indeed, if we consider the overall Automotive Semiconductor market, Micron does have just a 3.9% share of the $52 billion market.
Investors must consider that Micron’s automotive share of total revenues is 7% compared to semiconductor manufacturers that specialize in the automotive market, such as NXP Semiconductors (NXPI) with a 47% exposure, or Infineon with a 46% exposure.
I rate Micron a buy. My analysis also correlates with Seeking Alpha’s Ratings and Factor Grades shown in Chart 5.