Shares of Micron Technology, Inc. (NASDAQ: MU) experienced a decline on Wednesday as the company prepared to announce its first-quarter earnings. This drop follows reports indicating that China is advancing its capabilities in artificial intelligence (AI) chip manufacturing.
According to Reuters, Chinese scientists have developed a prototype machine designed to produce advanced semiconductor chips essential for AI applications. This innovation could signify a step toward semiconductor self-sufficiency for China. The prototype is capable of generating extreme ultraviolet light, a technology mainly controlled by Western suppliers. The machine was reportedly developed by engineers formerly associated with ASML, who reverse-engineered existing extreme ultraviolet lithography systems. Although the machine has not yet produced functional chips, its development raises concerns about China’s acceleration in achieving sophisticated chipmaking technologies.
Investor caution has been heightened across the AI sector following news that Blue Owl Capital will not finance a $10 billion project for Oracle’s upcoming data center. Micron is scheduled to announce its earnings after market close, with analysts projecting earnings per share of $3.95 and revenue of $12.83 billion. In the previous quarter, Micron reported earnings of $3.03 per share, surpassing expectations, and revenues of $11.31 billion.
Micron’s CEO, Sanjay Mehrotra, highlighted the company’s strong performance and competitive position in the AI landscape. The company has exceeded earnings estimates for seven consecutive quarters and has seen its stock rise over 40% in the past three months.
Several analysts have adjusted their price targets for Micron ahead of the earnings report, with notable upgrades from Needham, Wedbush, Stifel, and Citigroup, all maintaining positive ratings.
Why this story matters: The advancements in Chinese semiconductor technology could impact global chip supply chains and competition.
Key takeaway: Micron continues to show strong financial performance and resilience in the face of emerging competition from China.
Opposing viewpoint: The growth of China’s semiconductor capabilities may threaten the U.S. dominance in AI chip production.
