Shares of chip makers plunged in early Thursday trading following comments made by KLA-Tencor (KLAC) at the Citi Global Technology Conference in New York and concerns raised by analysts regarding the outlook for memory markets heading into the final quarter of the year, media reported.
KLA-Tencor, a provider of process control and yield management systems, plummeted as much as 9%, its biggest one-day loss in more than two years.
Baird senior analyst Tristan Gerra also reduced his price target on Micron Technology (MU), arguing that DRAM pricing is expected to hit a peak in the third quarter while the oversupply of NAND flash has deteriorated recently.
Morgan Stanley (MS) analyst Shawn Kim also added to the pessimistic view on semiconductor stocks, saying that the memory market would have to address inventory and pricing concerns. “Memory markets have worsened in recent weeks. For DRAM [memory chip], demand is weakening, inventory and pricing pressures are building, and vendors are struggling to move bits,” Kim said. “In NAND [flash memory], there is just too much supply. Earnings risks are emerging from 3Q and our cautious view on memory is playing out,” he added.