Why Are Western Digital, Micron Shares Trading Higher Today?

Lockdown measures to combat a Covid-19 resurgence in the Chinese city of Xian have affected chip-making facilities owned by Samsung Electronics Co Ltd SSNLF, SCMP reports.

• Samsung said it will "temporarily adjust operations" at its plants in the city and "take all necessary measures."
• Samsung's two memory wafer fabrication plants in the city comprise 15% of the global NAND flash production capacity.
• Other chip producers and users that could be affected by the news include Western Digital Corp WDC, Micron Technology Inc MU, and Seagate Technology Holdings PLC STX.
• While the scale and duration of any production loss are unknown, given disciplined NAND Flash vendor-held inventory levels, Wells Fargo analyst Aaron Rakers would view NAND production impacts as a positive for Western Digital and Micron. 
• According to Trendfocus, Samsung's two Xi'an NAND Flash fabs totaled 245,000 wspm capacity during Q3, equaling 42% of Samsung's total NAND Flash manufacturing capacity and 15% of the full NAND Flash industry capacity.
• Benchmark analyst Mark Miller said he believes Samsung's report is driving up Western Digital's shares, noting that Samsung has two NAND plants in the city. 
• Shares of Western Digital competitors Seagate and Micron have been up to over 40% since mid-October. The improving memory chip prices, expectations for continued strength in cloud demand, and Micron's expectations for a solid second half of 2022drove the momentum.
• Miller reiterated a Buy and $92 price target on Western Digital.
• Price Action: WDC shares traded higher by 6.03% at $66.62 on the last check Wednesday. MU shares traded higher by 3.58% at $96.26