Micron stock (NASDAQ: MU) tumbled on Friday, following Reuters reports that the US chipmaker has decided to abandon China’s server chip market after failing to rebound from Beijing’s 2023 ban on its products.
The stock dropped approximately 4% in premarket trading before moderating to around 2.5% lower during regular hours, as investor concerns mounted over the revenue impact from this strategic withdrawal.
The Idaho-based memory chip giant, which generated $3.4 billion or roughly 12% of its total revenue from mainland China in its previous fiscal year, plans to cease supplying server chips to data centers across China.
Why Micron stock is falling today
The stock decline reflects investor concerns about the permanent loss of a substantial revenue stream and the broader implications of intensifying US-China technology tensions.
China’s 2023 ban effectively shut Micron out of the country’s massive data center expansion boom, driven by artificial intelligence investment.
Despite the company’s attempts to recover and maintain compliance with all applicable regulations, the business never regained meaningful traction in China’s server chip market.
The timing of this announcement is particularly sensitive, as it comes during a period when Chinese customs authorities have reportedly intensified crackdowns on imports of US-made chips, with Beijing actively promoting its “AI plus” strategy emphasizing self-reliance across the entire AI technology stack.
Server chips remain critical components for AI development due to their essential role in data centers that power advanced AI applications, making this market segment especially valuable.
South Korean competitors Samsung Electronics and SK Hynix have been benefiting from Micron’s absence, capturing market share in Chinese data centers alongside domestic Chinese chipmakers like YMTC and CXMT, which are expanding with government support.
This competitive disadvantage has made Micron’s China position increasingly untenable, ultimately forcing the strategic exit decision.
What analysts say
Despite the China exit news, Wall Street analysts remain largely bullish on Micron’s long-term prospects, with the consensus rating standing at “Strong Buy” based on 27 Buy ratings and only three Hold recommendations.
The average analyst price target sits at approximately $200-$207, representing potential upside even after the stock’s remarkable 134% surge year-to-date.
Multiple top-tier firms raised their price targets on Micron this week, with both Citigroup and Mizuho lifting their targets to $200-$240 from previous levels, representing an 18.5% upside from recent closing prices.
UBS boosted its target to $245 from $225, while Morgan Stanley’s Joseph Moore upgraded the stock from equal weight to overweight with a $220 target, noting that “multiple quarters of double-digit price increases can lead to substantially higher earnings power”.
Analysts emphasize that Micron’s fundamentals remain robust outside China, driven by explosive demand for AI-related memory products and tightening DRAM supply conditions extending through 2026.
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