The Ratings Game: Micron’s stock falls after China ban. Here’s why gauging the impact isn’t so simple.

by | May 22, 2023 | Stock Market

This story has been updated to specify revenue estimates for mainland China and correct the name of the conference Micron’s CFO is attending Monday. Micron Technology Inc. shares were falling 4% in premarket trading Monday as Wall Street tried to determine the future impact of a failed China cybersecurity review on the chip company’s business.

While analysts said Micron
derived about 11% of its revenue last fiscal year from mainland China, they also noted that gauging the likely impact to Micron might be more nuanced than a look at overall China revenue would suggest. That’s because China ordered critical information infrastructure operators in the country to stop using the company’s products. See more: China tells its tech manufacturers to stop using Micron chips The definition of critical information infrastructure companies isn’t entire clear, “leaving investors to focus on the potential that consumer / handset / mobile device companies may not fall under this definition and therefore Micron’s sales into this end market may not be impacted,” Wells Fargo analyst Aaron Rakers wrote in a note to clients, while reiterating an overweight rating and $70 target price on the stock. Micron disclosed in a filing with the Securities and Exchange Commission that it was “evaluating what portion of our sales could be impacted by a ‘critical information infrastructure’ ban,” while noting that its chief financial officer would share more at a JPMorgan conference later Monday. Bernstein’s Mark Li doubted that Micron would end up feeling a sting to the tune of 11% of its total revenue. He noted that “the ban is only on ‘domestic critical information infrastructure operators’ and other customers, especially those selling civilian products to other countries, are not legally require …

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