Micron Technology, Inc. (NASDAQ:MU) might have been dealt its biggest blow yet after reports emerged suggesting Apple Inc. (NASDAQ:AAPL) had selected Samsung to supply it with DRAM chips for its next iPhone. Should this come to fruition then Micron could lose billions of dollars on a potential supply deal. The stock reacted negatively to the rumors plummeting in the market prior to an official confirmation.
The reports first emerged in Korea Times and may signal the start of a thaw relationship between Apple Inc. (NASDAQ:AAPL) and Samsung having been on the opposite sides in terms of competition in the smartphone space. Samsung, the maker of Galaxy smartphones, is a big manufacturer of DRAM chips and a direct competitor to Micron Technology, Inc. (NASDAQ:MU). The stock has not been performing well in the market and is down by 16% on a year to date.
The Korean Times also reported that Samsung is in the process of supplying LG Electronics with 100% mobile DRAM chips to be used for the company’s LG G4 smartphones. Samsung is also set to handle at least half of the DRAM chips supply needed by Apple according to the source probably for iPhone 6S
Micron Technology, Inc. (NASDAQ:MU) relies on its DRAM business that has been growing in the wake of advance and growth of mobile technology and services. Despite the ongoing rumors, the chip maker remains bullish on its NAND and DRAM business that continue to thrive on strong demand. The company has already indicated plans to invest $4 billion in expanding its Singapore fabrication plant that should accelerate the production of advanced 3D NAND flash memory.
Micron could on the other hand benefit from the fact that the supply of DRAM chips in the market is relatively low meaning there is always sure to be business regardless of Apple opting to go with Samsung. Micron Technology, Inc. (NASDAQ:MU) could also enjoy DRAM shortage in the form of higher prices for whatever deal it signs in the second half of the year.