By Adam Clark
Micron Technology was falling early Tuesday after stock moves in South Korea spooked investors in the memory-chip sector. But Micron is signing up major customers to deals which should offer some long-term protection.
Micron shares were down 6.0% at $925.61 in premarket trading.
That comes after a 6.9% fall for its South Korean peer Samsung Electronics, which reported a 19-fold rise in operating profit for the June quarter. Fellow memory-chip company SK Hynix fell 6.1%, as it prepares to list American depositary receipts on the Nasdaq on Friday, raising $28 billion.
The reaction to Samsung's preliminary earnings report looks to be related to profit-taking after a run up in the stock over the past 12 months.
"Equities are rotating out of technology after Monday's rebound, as an Asian chip selloff...revived AI-valuation worries," wrote analysts at Saxo Bank in a research note.
However, beyond a one-day move there are further signs Micron is locking in higher prices for its memory chips well into the future. The company on Monday announced a "strategic customer agreement" with Ford Motor. It's one of 16 long-term supply deals Micron has locked in, guaranteeing approximately $100 billion in revenue. That eases fears that the current sky-high prices and margins are unsustainable.
Barron's has previously argued Micron stock could double from its current levels as booming memory demand driven by artificial-intelligence hardware moves it beyond its normal boom-and-bust cycle.
Write to Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.