Micron Has a Rosy Future, But Faces Bumpy Product Transition

By | August 18, 2015

Micron Technology provided its view of the memory market, technology trends and company strategy at an analyst conference where executives stressed the company’s R&D investments and product roadmaps designed to exploit changing customer requirements and new memory applications. The company has a thorough understanding of the memory business, a compelling vision and strong product roadmap, however its near-term results remain shackled to a secularly declining PC market and cut-throat flash pricing.

While the company painted a rosy picture of future prospects, investors are more concerned with the here and now where ASPs (average selling price) are falling and the largest market for DRAM, PCs, is “challenging”. Micron’s lackluster Q3 financial results, what one Forbes contributor described as “dismal”, triggered a 30% decline in the company’s stock in the intervening weeks.

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In the full post I analyze Micron’s strategy, the business drivers behind it and specific product directions, including:

  • DRAM customers demanding high performance memory: Micron’s answer is to ramp its next-generation 20nm fabrication process andmigrate to faster, more efficient DDR4 products.
  • NAND buyers in both the mobile and data center markets can’t get enough capacity: Here, Micron has partnered with Intel on a 3D NAND process that DeBoer says it can scale for the next decade and enable 10TB and up SSDs.
  • New types of memory products: The recently announced 3D XPoint memory, another joint development with Intel, promised the speed and durability of DRAM with the density and nonvolatility of NAND. At IDF,Intel demonstrated a 3D XPoint PCIe SSD that provides 5-times the I/O throughput of its high-end NAND SSD. Micron has also developed the hybrid memory cube, a multichip package combining a stack of traditional DRAM chips with a unique logic layer that can provide 15-times the I/O bandwidth of a standard DDR3 module while using 70% less power.

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The column details the three growing markets Micron is targeting through an expanding product portfolio: mobile devices, automotive and data centers. For example, Micron’s data center strategy includes elements of all three umbrella strategies DeBoer outlined: higher-density DDR4 DRAM and NAND, flash storage products like SSDs, and PCIe cards, plus emerging high-speed memory (HMC, 3D XPoint) for new applications.

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The problem for Micron and its investors is that it must first navigate the transition from relying on a secularly declining market, PCs, where margins are nonexistent, to a much more diverse set of products with exciting, but unproven (and unknowable) potential. Micron has a compelling product and technology roadmap, helped in no small part by its strategic partner, Intel and isn’t content to react to events dictated by competitors like Samsung or large buyers like Apple. Although Micron has a sound strategy, that doesn’t mean it’s a great investment until it demonstrates some success with its new product initiatives.

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