US Semiconductors_ More CES DRAM Datapoints – PC End Market Slow, Handsets a Little Better Although DRAM Inventory in PC Market Almost Normal

Summary of the Conference Call on US Semiconductors Industry Overview - The conference call focused on the US semiconductor industry, particularly the DRAM market, and its performance in the PC and cell phone sectors [1][7]. Key Points Demand Trends - Demand in the PC supply chain is reported to be sluggish, which is a mild negative for companies like AMD (28% of sales), Intel (55% of sales), and Micron (15% of sales) [2][8]. - In contrast, demand in the cell phone supply chain appears stable, which is a mild positive for Qualcomm (QCOM), where 74% of sales are derived from this segment [3][10]. DRAM Inventory Levels - DRAM inventory in the PC supply chain has declined and is nearing optimal levels, having decreased from a peak of 15 weeks to approximately 10 weeks, with normal levels estimated at around 8 weeks [3][9]. - However, DRAM inventory in the cell phone supply chain remains elevated compared to PCs, indicating a potential for normalization by spring [4][11]. Pricing Expectations - The expectation is that DRAM inventory will normalize by spring 2025, with DRAM pricing anticipated to stop declining starting in the second quarter of 2025 [4][12]. Investment Recommendation - The recommendation to maintain a Buy rating on Micron Technology Inc. is reiterated, with a price target set at $150, which reflects an 11X F26E EPS, slightly above its historical average but below AI peers [5][14][17]. Risks Identified - Supply/Demand Dynamics: The memory industry is sensitive to the alignment of supply with demand. Excess supply could lead to inventory reductions and lower pricing, negatively impacting Micron's estimates [18][21]. - Pricing Pressure: Any price reductions by Micron or competitors could lead to lower contract and spot pricing, adversely affecting estimates [19][21]. - Capacity Management: Increased manufacturing capacity without corresponding demand could result in excess supply, leading to lower pricing [20][21]. - Competition: Micron faces competition from major players like Samsung, SK Hynix, Toshiba, and Western Digital, which could impact market share and estimates [21]. Additional Insights - The call highlighted the importance of monitoring inventory levels and pricing trends in the semiconductor market, particularly as the industry approaches a potential recovery phase in 2025 [1][12].