Why Micron Technology Shares Dropped 5% Today

By Erin Kennedy and Evan Niu, CFA – Dec 18, 2013 at 10:00PM

NASDAQ: MU

Micron Technology

Market Cap

$135B

Today's Change

(0.33%) $0.40

Current Price

$121.77

Price as of April 16, 2024, 4:00 p.m. ET

Word on the Street is SK Hynix is building a new factory. Are Micron investors panicking -- or just taking profits off the table?

After incredible gains this year, Micron Technology (MU 0.33%) gave some back today. Shares traded down by as much as 9% before closing out the day with losses of 5% after Bloomberg reported that rival SK Hynix is planning a new factory for DRAM memory chips. SK Hynix is reportedly looking to invest nearly $4 billion into this new factory, but mass production wouldn't ramp until early 2015. SK Hynix said no plans have been finalized.

More supply coming back into the DRAM market could possibly negatively impact prices. Micron has benefited handsomely from SK Hynix's Wuxi fire in September, with shares up nearly 70% since then. The stock may have gotten a little ahead of itself, in which case the pullback is warranted. Longer term, Micron still has opportunities in its higher-margin NAND business as it focuses more on the data center.

In this segment of Tech Teardown, Erin Kennedy discusses Micron's competitive position with Evan Niu, CFA, our tech and telecom bureau chief.

Erin Kennedy and Evan Niu, CFA have no position in any stocks mentioned, and neither does The Motley Fool. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.