UPDATE 1-Micron shares jump on firm memory chip prices
* DRAM spot prices up in DRAMexchange
* Analysts say gains could be short-lived
* Shares up 8 pct; Elpida, Hynix close higher
(Adds details, analysts' comments in paragraphs 7-11)
By Himank Sharma and Megha Mandavia
BANGALORE, Aug 29 (Reuters) - Shares of chipmaker Micron Technologies (MU.O) rose as much as 8 percent on Monday, tracking gains made by its Asian peers on a rise in spot prices of DRAM memory chips, but analysts warned that the gains could be short-lived.
DRAM or Dynamic Random Access Memory is used as primary memory in PCs, but slowing PC sales growth in the last few months has hurt prices.
"DRAM pricing has been strong over the past three days. And it is the first time you have seen any increases in DRAM average selling price in 3-4 months," Avian Securities analyst Win Cramer said.
DRAM accounted for about 60 percent of Micron's annual sales of $8.48 billion in 2010, but falling prices and weak demand has hurt growth this year. [ID:nN1E75L25G]
Micron is the only U.S.-based manufacturer of DRAM modules, and competes with Japan-based Elpida Memory 6665.T and South Korea's Hynix Semiconductor (000660.KS).
Spot prices for DDR3 2 Gigabit type DRAM chips rose to as much as $1.04 on the DRAMexchange on Monday and averaged $1.02 during the session, building on the 3.6 percent rise on Friday.
"There is a sense that DRAM pricing is in the process of bottoming out and that it may not get very good for the rest of the year, but we may have seen the worst of the trends behind us," Robert W Baird analyst Tristan Gerra told Reuters.
Sales of PCs have grown at a slower pace than expected in recent quarters as some consumers worried about a tough economy and held off on large purchases while others chose Apple's (AAPL.O) iPad and other tablets over laptops.
However, Avian's Cramer warned that Monday's gains could be short-lived given the uncertainty surrounding DRAM pricing.
"DRAM has increased as speculators have been active in the market. We think DRAM pricing will turn back around at some point this week."
JMP Securities analyst Alex Gauna concurred, saying the DRAM price move did not mean much.
"It is too early to say one way or the other. We need to watch the market later in September."
Micron shares, which have more than halved since touching a high of $11.95 in February, rose to $6.10 on Nasdaq. They were trading up 7 percent at $6.06 on Monday afternoon.
Elpida shares closed up 3.18 percent on Monday, building on their 18 percent gain on Friday. Hynix shares closed up 8.36 percent on Monday.
(Reporting by Himank Sharma and Megha Mandavia in Bangalore; Editing by Saumyadeb Chakrabarty, Roshni Menon)
((Himank.Sharma@thomsonreuters.com; Within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: Himank.Sharma@thomsonreuters.com@reuters.net)) Keywords: MICRON/SHARES
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