Western Digital stock climbs 9% as Samsung cuts memory-chip output
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Western Digital (NASDAQ:WDC) shares surged 9% Monday as the storage and memory-technology company benefitted from Samsung (OTCPK:SSNLF) saying it would cut its memory chip production levels this year.
Samsung (OTCPK:SSNLF) didn't disclose how much of its DRAM production it would reduce, but Morgan Stanley analyst Shawn Kim estimated that Samsung's (OTCPK:SSNLF) cuts could come to 20% of the company's chip production levels. Kim said Samsung's (OTCPK:SSNLF) announcement was likely "positive" for the memory market, and that "Investors are much more excited that industry contacts around this, given obvious green shoots implied from production cuts.
Raymond James analyst Srini Pajjuri reiterated his outperform rating on Western Digital's (WDC) stock, and said he expects Samsung's production cuts to speed up the recovery in memory-chip prices. Paijuri added that he is "optimistic that the severity of the current downturn [in memory chip prices] will lead to structurally better supply discipline in the industry going forward."
The Samsung (OTCPK:SSNLF) announcement alone was enough to raise enthusiasm for Western Digital (WDC), as more than 4.3M shares of the company's stock had traded hands by early Monday. Western Digital (WDC) averages 4.2M shares exchanged on a daily basis.
Along with Western Digitial (WDC) Micron Technology (MU) shares rose by more than 7% in reaction to Samsung's (OTCPK:SSNLF) production cut plans.