Micron was double-downgraded to underperform from buy at Bank of America as the coronavirus fallout weighs on memory-chip orders.

Micron Technology (MU) - Get Report shares were double-downgraded at Bank of America, to underperform from buy, as the firm's checks show that memory-chip orders are slowing.

Woo said he's now "worried about earnings misses or guidance cuts for March and the second quarter."

The firm does not see any meaningful progress in China’s tech-supply chain as the fallout from the coronavirus spreads through the global economy.

“We previously assumed that disruption in China's tech-supply chain will be normalized from the mid- to late second quarter, and we still assume normalized smartphone assembly for the second half," Bank of America analyst Simon Woo wrote.

"However, our latest checks reveal that new memory-chip orders (for the second quarter and even the second half) have started to decline, led by smartphone/PC original equipment manufacturers.”

This action implies that weaker purchases at retail are starting to worry OEMs, particularly manufacturers of high-end equipment, according to Woo.

Another finding from Bank of America’s checks is that OEMs will keep a maximum of the equivalent of just two to three months of memory-chip and Korea component inventories instead of three to four months worth. Normally they keep inventories of one to two months.

“Thus, new chip/component order growth from OEMs, which relies heavily on China’s manufacturing and seems more worrisome to the demand side (apart from supply), should start to decline from March or at least April if the [coronavirus]-led disruption continues into March-April,” Woo said.

Micron shares at last check were off 4.6%. They closed the regular session Monday down 3.5% at $55.01. Woo has a $50 price objective on the shares.