SAN FRANCISCO -- Shares of chipmakers Micron and SanDisk surged on Thursday after a solid-state drive maker warned of component shortages, increasing expectations that production cutbacks have stopped a slump in prices for flash memory chips.
Shares of Boise, Idaho-based Micron jumped 5.97 percent to $6.55 while Milpitas-based SanDisk surged 8.0 percent to $43.85.
Late on Wednesday, San Jose-based OCZ Technology Group Inc said it expected revenue for the second quarter to fall below its previous forecast because of a shortage of the NAND chips it uses to build storage devices.
Wall Street saw the revised outlook as fresh evidence that lower output by NAND manufacturers is reducing supply and stabilizing low prices.
"Supply and demand is coming into balance with the cuts and the industry rationalizing its capacity," said Kevin Cassidy, an analyst at Stifel Nicolaus.
Japan's Toshiba Corp announced in July that it would slash production of NAND memory chips by 30 percent, a move expected to bolster prices across the industry.
Production reductions by Toshiba and others in the memory industry have yet to be fully felt, Citi analyst Glen Yeung said in a research note to clients.
Low prices and steadily rising investment costs to implement new technologies have been driving consolidation in the highly competitive and cyclical memory chip business.
In the industry's latest tie-up, Micron announced in July it would buy failed Japanese chipmaker Elpida Memory Inc for about $750 million in cash and pay creditors a total of $1.75 billion in annual installments through 2019.
That plan, submitted to Japanese court in August, would push Micron into second place behind market leader Samsung Electronics in the global market for DRAM chips.