The good news just keeps on coming for Micron Technology (MU).

Following price target increases earlier this week, the stock today got a positive view from chip analyst Mehdi Hosseini with Susquehanna, who writes that his “checks” of the NAND flash industry show Micron may be the only company to exploit current manufacturing challenges holding back industry supply.

“Bit growth” of all NAND produced by the industry is not going to be as much as Hosseini had been thinking, he writes, rising by 42% from last year through 2020, compounded annually, versus what he had thought would be 50%.

Thats because all Micron’s competitors — Toshiba (6502JP), along with partner Western Digital (WDC), Hynix (000660KS), and Samsung Electronics (005930KS) -- are stumbling in their attempts to manufacture the newer “3-D” NAND chips -- but not Micron.

"This is actually viewed as +ve for MU,” writes Hosseini, "as it appears to be so far the only one on target with 3D NAND bit growth targets, enabling market share gains."


"All in all,” he adds, "lower supply growth bodes well for margin profiles that are now expected to remain at historical highs for several quarters, if not years!"

Details of Hosseini’s findings:

Recent checks in Asia suggest Toshiba is on track to increase FY17 NAND bit (supply) by ~35%, lower than the previous expectations of 40% driven by the challenges associated with the 64L 3D NAND ramp [...] Recent checks in Asia suggest that Hynix is off to a slow start with its 72L 3D NAND, which is a two (36L)-stack structure [...] As we noted on Sept. 11 (link), challenges associated with 64L 3D NAND architecture forced Samsung to change the manufacturing recipe, leading to a two-quarter delay in the crossover of 64L and 48L 3D NAND. In fact, Samsung's Xian fab is still at 48L and is not expected to migrate until 1H18. This has led to Samsung's NAND bit capacity growth in 2017 to be limited to 30% (at most) vs. the guide of 30-40%.

Micron stock today closed at $40.40, down 18 cents. The stock has climbed 84% this year.