Micron Technology (NASDAQ:MU) jumped Monday following news that Samsung Electronics plans to cut memory chip production near term. Many Wall Street analysts said the move could accelerate a recovery within the memory chip industry.
"We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured," Samsung Electronics said in a regulatory filing on Friday, according to multiple media outlets.
The move is being seen as a positive for Micron, according to KeyBanc Capital Markets, which suggests that it "will allow a quicker return to supply-demand balance and potential rebound and also remove concerns on irrational supply behavior."
Citi's Christopher Danely explained "Samsung's decision is huge positive for the industry, and should help to spur a recovery starting in 2H."
Samsung's production cut comes after Micron. SK Hynix and Kioxia Holdings have reduced their spending and cut their chip production.
Micron CEO Sanjay Mehrotra late last month, in a statement announcing Micron's second-quarter results and outlook, said he was "confident" in the company's long-term demand outlook and "we expect gradual improvements to the industry’s supply-demand balance ."
Micron acquired upward momentum late last week, as investors continued to assess the impact of China's cybersecurity review on the company.
MU shares began Monday up $4.80, or 8.2%, to $63.36.
