Investing.com – Micron’s better-than-expected results and news that the chipmaker had resumed shipments to Chinese telecommunications-equipment maker Huawei stoked expectations that memory demand is returning, sending chip stocks soaring higher Wednesday.
Micron (NASDAQ:MU) reported better-than-expected fiscal third quarter results and highlighted signs of recovery in global DRAM semiconductor memory demand. Shares were up more than 13%, tops among stocks in the Nasdaq 100 Index. The big gain has pushed the stock up more than 13% for June and nearly 17% for the second quarter.
“We have seen early signs of bit-demand recovery in most (dynamic random access memory) end markets,” Sanjay Mehrotra, Micron’s president and chief executive, told analysts on a conference call. “Based on our assessment of customer inventory improvement, we anticipate robust bit-demand growth for the industry in the second half of the calendar year compared to the weak demand in the first half.”
The rosier outlook boosted optimism for semis on Wall Street that the worst may be over chip companies following two years of falling memory prices amid a glut in inventories.
Advanced Micro Devices (NA/SDAQ:AMD), Qualcomm (NASDAQ:QCOM) and Nvidia (NASDAQ:NVDA) were about 4% higher. The Philadelphia Semiconductor Index climbed about 3.4%.
In a sign the U.S. ban on Huawei will be not be as restrictive as initially feared, Micron said it had determined it could lawfully restart shipments to the Chinese company.
That helped lift sentiment on other U.S. chip companies that count Huawei as a customer, with Qualcomm and Intel (NASDAQ:INTC) reported to have also resumed shipments.
But some have been quick to temper the optimism, pointing to Micron’s longer inventory lead times and narrowing margin growth, which are at an 11-quarter low.
Micron ended the quarter with about 150 days of inventory on the books, compared with a peak of 100 days in the last downturn.