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Micron surges on positive comments from competitor

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Patricio Realpe | LatinContent | Getty Images

Micron Technology jumped Tuesday, closing up 9 percent as rival chipmaker SK Hynix indicated positive sales in the DRAM market.

In its latest earnings release, South Korea's SK Hynix said it anticipates DRAM (dynamic random-access memory) shipment growth of roughly 15 percent in the second quarter. DRAM chips are used in smartphones, tablets, personal computers and gaming consoles.

"We are anticipating more positive demand momentum around the second half," President Joon-Ho Kim said in a conference call with investors.

Analysts saw the comments as a potential sign that demand for memory-chip prices will start to pick up, as the struggling PC market put pressure on the industry.

"I like the risk/reward here," wrote Evercore ISI's C.J. Muse in an email. Muse said Micron seems to be near a trough. He said other equipment suppliers confirmed DRAM capital expenditure cuts overnight and Hynex cut its capex budget, while Samsung moved some DRAM capacity to NAND, setting up a possible inflection in Mircon stock.

Vijay Rakesh of Mizuho Bank also believes things are improving for Micron. In a note to investors, he said "capex trends at Hynix and Samsung point to much more discipline, and a focus on profitability over market share."

Both Hynix and Micron are suppliers to Apple Inc.

Shares of Micron are off by 18 percent year-to-date, and 60 percent over the past 12 months.