Wednesday, February 28, 2007

Micron's Price Weakness

Barron's: This morning Lehman’s Tim Luke mentioned weakness in Micron's image sensor business.

To me this is quite a natural result of Micron's inability to deliver high-quality 1.75um sensors, while 2.2um sensors are rapidly becoming a place of intense competition for 6-7 other companies. The best solution for Micron would be to sway the market to smaller pixels, but so far 1.75um pixel preformance is not there.

Another Barron's article cites Adam Benjamin, an analyst at Jefferies & Co., who expects disappointing news when OmniVision on Thursday reports its financial results for the fiscal third quarter ended January. Benjamin says the company is being hit by “severe” pricing pressure in VGA image sensors - and a slower than expected shift in the market away from VGA to higher margin megapixel sensors.

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