Edgewater Research predicts weak storage demand in 2025, and Micron Technology (MU.US) and Western Digital (WDC.US) fell
1min read Edgewater Research downgraded NAND and DRAM price forecasts. Shares of Micron Technology (MU.US) and Western Digital (WDC.US) fell about 4% and 5%, respectively, on Tuesday after the news.
The analyst at Edgewater Research believes that OEM and CSP NAND demand forecasts continue to compress, while data center NAND demand is expected to remain weak in 2025, with only modest year-over-year growth.
The analyst said that suppliers are urging customers to sign long-term agreements for 2025 and in some cases have raised demand forecasts in the 2025 long-term agreements. Suppliers have also noted that they are willing to support any or all demand in 2025. In addition, concerns about shortages of high-bandwidth memory (HBM) and enterprise SSDs (eSSD) seem to have largely dissipated.
The analyst added that price forecasts have been cut again across all segments, including PCs, mobile devices and servers, as well as NAND and DRAM. The rebalancing target for PC and mobile device OEMs remains to be completed by the second quarter of 2025, with orders aligning with actual demand growth in the second quarter or second half of 2025.
The analyst said that feedback from the supply chain indicates a disconnect between the limited supply growth and supply tightness forecast for 2025 and the industry reality (at least through the first half of 2025, there may be a supply glut and pricing pressure). The pricing and demand forecasts for 2025 are becoming more cautious. The analyst expects that feedback in the coming months will be very volatile, depending on enterprise demand; the success and/or transition to standard DRAM by Samsung Electronics' HBM; and speculation about lower NAND utilization.
The analyst has a mixed short-term view and a positive long-term view on Micron Technology. The analysts added that industry feedback continues to become more cautious, tempering their optimism for Micron Technology in the first half of 2025. The analyst said that Micron Technology still has some of its own catalysts to drive its performance relative to the broader market, including a rise in the share price of HBM and eSSD.
The analyst noted that feedback on Micron Technology's relative position in these markets has continued to improve, with average selling prices and margins expected to grow over the next two to three quarters. In the long term, the analyst still believes that Micron Technology is in a more favorable position in terms of technology transition, product portfolio (eSSD, HBM) and cost structure/balance sheet.