Micron’s December 9 Deadline,What Investors Need to Know

SPEAKER_1 (0:00)

Let's talk about this, let's talk about the AI sector as a whole. It's been back and forth, trending, high, low. SanDisk, we talked about that. SanDisk is almost $1,000 down from its all time high.

So it's been a little turbulence. It's been turbulent. So let's talk about Micron specifically, and then the AI trade as a whole.

Rashad Bilal (0:24)

Yeah, I'm gonna unpack this a little bit. Y'all can chime in if you'd like. I'd appreciate it if you did actually. So last week, I left everybody off with that December 9th date, and we're gonna come back to it. When I woke up this morning, I knew that I'd get a bunch of text messages and calls about what's up with Micron, why is it down $21 pre-market? And then, you know, financial times.

They reported that CXMT, the Chinese semiconductor company, the CEO said that they're gonna be releasing their, I want to call it a DRAM chip, but it's kind of like DRAM-adjacent. And by that, I mean, yes, it is technically DRAM, but what its purpose is for are very different. And so when we think DRAM, specifically our audience for sure, you think Micron, you think SK Hynix, you think Samsung, you're thinking high bandwidth memory. And so we saw all those semiconductor companies, specifically in the memory sector, pull back on that news. Why? Well, they're saying, hey, we're going to change the way that memory chips are going to be organized, right? We're going to make a smaller wafer that can hold more memory. But what is the memory for, right? The memory that CXMT is making is for smartphones, for PCs and consumer electronics. And why is that important? Well, the second piece of what I'm about to say makes it important, right?

CXMT has been banned and blacklisted by the United States government and military. Now, a few months ago, we talked about them because they were in the news saying that they had a new outlook on memory. Apple had just heard that memory prices were going to go up. They said Micron has raised them. They said, can we test? And this was the whole issue with Trump and Tim Cook at the time going back and forth. And eventually, you know, Apple said, okay, we'll go with what everybody else is doing. Meanwhile, CXMT was still making things.

Problem is this, right? When we hear news like that, you say, okay, well, and I put this in the university earlier, if you think about CXMT in terms of what they're building, who are they going to sell it to, right? Are they selling it to data centers? Because that's where we're seeing the highest growth when it comes to high bandwidth memory. Well, they can't sell it to the United States, which is the largest concentration of data centers being built. I think like 71% of data centers in the world are being built in the United States. So you lose that as a target audience. Who do you have if you're that company? Well, you have domestic China, right? And so you got to look at the developments of China and where they're going in terms of memory, specifically high bandwidth. This is not that, right? Like they can build out and build out the infrastructure to get to high bandwidth memory and using it at the same width. But that's going to take time, four to five years at minimum. And so the news is kind of like, OK, they said they're doing something. It really isn't relevant to what Micron's doing for SK Hynix or Samsung's doing right now. But here goes that crack, right? We talked about the high concentration earlier. Here comes a crack and here comes the news. I think the biggest story is the December 9th story. And why we talked about it is because, and I'm telling you right now, December 9th, 2026 is the second anniversary of the CHIPS Act, which Micron agreed to during, in 2020, where they got 6.1 billion to build out infrastructure for their business. Now, from that time, I got to give you the stock price at the time. Micron was trading at $82 at this time.

Micron is now, well, I mean, I mean, it touched $1,200 at its all-time high. I know we're trading a little over $1,000 right now. And so at that time, a part of the agreement for the 6.1 billion was that they could not buy back shares, right? So you hear a lot of times when companies have large operating profits, they'll say, okay, we're gonna do a stock buyback. Apple's done it, NVIDIA's done it. What does that mean? I'm gonna buy back shares, meaning that the existing shares that are out in the world, they now go up in value. And so you start to see companies shoot up right when they have buyback shares. So on December 9th, that is going to expire, meaning Micron can now buy back their shares. They couldn't do it for two years.