Micron (MU) shifts focus toward AI-driven growth amid China retreat.
Micron Technology shares have stayed resilient despite reports that the company plans to exit China’s server chip business. Micron’s reported decision to stop supplying server chips to Chinese data centers follows regulatory pressure from Beijing. The company will continue sales to automotive and smartphone customers in China while shifting its data-center focus to other global markets.
While the move highlights ongoing geopolitical tensions, investors appear confident that surging demand from U.S. hyperscalers and artificial intelligence (AI) infrastructure will more than offset the lost sales in China.
Key Points
- Micron plans to stop supplying server chips to Chinese data centers after regulatory pressure from Beijing.
- The company’s growing AI-related memory business continues to drive strong results and higher margins.
- Analysts and technicals point to potential upside, with possible targets near $245 and support around $158 and $130.
Why Is Micron Exiting China’s Server Chip Market?
Micron’s decision follows China’s 2023 ban on its products for use in critical infrastructure, citing unspecified “security risks.” Since then, Micron’s data center business in China has struggled to recover. The company will now stop providing server chips to Chinese data centers, effectively exiting that segment of the market.
However, Micron will continue serving Chinese clients in the automotive and smartphone sectors and maintain partnerships with customers like Lenovo, whose data center operations are largely based outside mainland China.
In fiscal year 2024, Micron generated about $3.4 billion—roughly 12% of total revenue—from mainland China, down sharply from 25% in 2022.
How Will Micron Offset the Loss of China’s Data Center Business?
Despite leaving a key market, Micron remains in a strong position globally. Its AI-focused memory products—particularly high bandwidth memory (HBM) used in AI servers—are seeing explosive growth.
In its most recent quarter, Micron reported a 214% jump in Cloud Memory revenue, driven by AI demand and elevated DRAM prices, which boosted its gross margin to 45.7%, up nearly seven percentage points.
While China’s restrictions have benefited rivals such as Samsung and SK Hynix, global AI infrastructure spending has created enormous demand elsewhere. Micron is expanding sales to data center operators in the U.S., Europe, and Latin America, where AI buildouts are accelerating.
Is Micron Stock Still a Buy After the Pullback?
MU shares recently pulled back around 2%, trading near $198, after hitting a record above $200 earlier this month. Technical analysis shows the stock broke out from a pennant pattern, a move often signaling continued upward momentum.
Based on historical pattern analysis, Micron’s price could climb toward $245 if the rally continues. Key support levels to watch include $158 and $130, areas that could attract buyers during pullbacks.
Analysts remain bullish: UBS raised its target to $245, and Citi to $240, citing Micron’s positioning to benefit from AI-related memory shortages and potential collaborations with leading AI companies.
What It Means for Investors
Micron’s exit from China’s server chip business underscores how geopolitical risks can reshape global tech supply chains. Yet the company’s pivot toward AI memory solutions, coupled with a rebound in DRAM pricing, has given it powerful new growth engines.
For investors, this transition reduces exposure to regulatory uncertainty while strengthening Micron’s foothold in the fast-growing AI hardware ecosystem. With revenue growth accelerating and profitability expanding, MU remains a compelling long-term play for those seeking exposure to the AI-driven semiconductor cycle. Watch technical support at $158 and $130 if volatility increases, and monitor HBM and Cloud Memory trends for clues about near-term revenue strength.
Conclusion
Micron’s China retreat may appear like a setback, but it’s strategically sound. The company is focusing on higher-margin AI-related products while maintaining relationships with global partners. As demand for data and computing power continues to surge, Micron’s diversified approach could translate into sustained growth and shareholder value.
FAQs
Why is Micron exiting China’s server chip business?
Micron is withdrawing from China’s data center segment after a government ban limited its products in critical infrastructure, making the business no longer viable.
Will Micron still operate in China?
Yes. Micron will continue to sell chips to Chinese automotive and mobile phone customers and maintain a packaging facility in Xi’an.
How much revenue does Micron get from China?
As of fiscal 2024, about 12% of Micron’s total revenue—around $3.4 billion—came from mainland China, down from 25% in 2022.
How is AI impacting Micron’s business?
AI infrastructure is fueling massive demand for high-performance memory chips like HBM and DRAM, leading to record revenue and margin growth for Micron.
Is Micron stock a buy right now?
Many analysts remain bullish. With AI-related demand surging and technical signals pointing higher, MU appears well-positioned for continued upside, though investors should monitor support levels near $158 and $130.
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