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Micron Technology Chinese stocks fell on Monday after a press release announced that the Chinese authorities were pledging to deepen the antitrust investigation into the alleged anti-competitive activities of the trio of chip makers controlling more than 95% the production of DRAM memory chips.
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The Financial Times reported Monday that the Chinese government had discovered "numerous evidence" of antitrust violations by the oligopoly. Chinese antitrust probes included South Korean companies Samsung Electronics and SK Hynix, as well as US-based Micron Technology. Officials in Beijing said the investigation had made "significant progress".
The inclusion of Micron in the investigation is seen as a counter-offensive by China in its trade war with the United States, the report said.
The Chinese government has invested heavily in national chip manufacturing capabilities, including memory chips. The US government has accused China of stealing US technology to achieve its goals.
The United States accuse a Chinese chip maker of a secret robbery
Earlier this month, the US Department of Justice accused the Fujian Jinhua Integrated Circuit, a state-owned corporation, of stealing trade secrets from Micron. China founded Fujian Jinhua in February 2016 for the sole purpose of designing, developing and manufacturing DRAMs.
Dynamic random access memory (DRAM) chips are essential components of personal computers, smartphones, workstations, and servers. They work closely with the main processor for data processing tasks.
Shares of Micron Technology fell 6.6% to 36.83 today. Samsung and SK Hynix are negotiating in South Korea.
Micron Technology Stock gets a reduction in target price
Romit Shah, an analyst at Nomura Instinet, reiterated Monday his purchase price on the title Micron, but has reduced its price target to 50%.
"We estimate that the estimates are too high for the quarter and fiscal year 2019 due to weak DRAM fundamentals," he said in a report. Much of the weakness seems already taken into account in the stock, said Shah.
The pricing of DRAMs is down by 10% in December. It will probably drop by 15% in the first quarter, he said.
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