Micron Shares Rise More Than 30 Percent This Week

Micron Technology shares rose sharply this week as demand for memory chips increased amid a global shortage. The stock gained almost 14 percent to $734 in trading on Friday afternoon. It has advanced about 35 percent for the week and more than 80 percent over the past month.

The performance puts Micron on track for its best week since December 2008. At that time the shares traded below $5 in the period following the financial crisis. The company's market capitalization currently stands above $820 billion. Demand for memory chips and central processing units is playing a growing role in the expansion of artificial intelligence systems.

While graphics processing units initially received the most attention in AI infrastructure projects, memory, storage and CPUs have gained focus in recent months. Total capital expenditure by large technology companies on these systems could surpass $1 trillion by the end of next year.

Prices and profit margins for memory chip producers have increased because of the shortage. Large technology companies that purchase the chips have noted rising costs for their services and products. DRAM and NAND flash are the two main types of memory in demand for AI processing, with DRAM offering higher speed and NAND providing greater reliability.

Several other semiconductor companies posted strong gains this week. Shares of AMD rose 24 percent and the company's market capitalization crossed $700 billion. Intel shares also increased 24 percent on the week and have more than doubled in the past month.

Three companies produce more than 90 percent of the world's DRAM supply. Like Micron, the South Korean producers have seen their stock prices rise sharply. Samsung reached a market valuation above $1 trillion this week. SK Hynix has received multiple investment offers from technology companies seeking to expand dedicated memory production capacity.

Retail trading activity in Micron shares has increased in recent months. Net buying of the stock reached its highest level in two years in mid-April. This occurred even as overall retail stock purchases have moderated slightly from levels seen in prior years.

A research report issued this week stated that Micron holds a strong position in both DRAM and NAND technologies. It noted improving cost efficiencies from advances in manufacturing processes for both product lines. The memory chip shortage has prompted efforts to increase production.

One reported proposal involved equipment financing tied to ultraviolet lithography machines for new manufacturing lines.