Morningstar | The Tide Turns on the Memory Gold Rush as Micron's Guidance Forecasts Dark Clouds in 2019
Micron Technology is a significant supplier and manufacturer of memory and storage used in a plethora of electronic devices ranging from personal computers to smartphones. The firm is number three in market share for total memory/storage shipments, after Samsung and SK Hynix. For fiscal 2018, DRAM accounted for roughly 70% of total revenue, with NAND making up the remainder. As Micron operates in the highly competitive and cyclical memory space, we believe its long-term profitability will be limited.Dynamic random-access memory provides high-speed data storage and retrieval while a device is in operation. NAND flash products are electrically rewritable, nonvolatile memory that retains content when power is turned off. This characteristic makes NAND ideal for mass-storage uses, specifically for solid-state drives, which have begun to displace traditional hard disk drives. We view NAND as a more promising avenue for future growth, with SSDs poised to be used in the majority of PCs and data centers, as well as advanced NAND used in smartphones.There tends to be little to no product differentiation in memory storage, with average selling prices normally tracking downward over time. This ultimately leads to major price competition between industry leader Samsung and second-tier firms such as Micron and Hynix. The latter competitors generally establish joint ventures, such as IM Flash Technologies, in an attempt to come up with superior memory solutions. Through this partnership with Intel, Micron has developed next-generation 3D NAND as well as the 3D XPoint technology. However, the two firms have announced that they will go their separate ways after current technology developments are completed.Micron Technology provides memory and storage solutions. The company's portfolio of memory and storage technologies include Dynamic Random Access Memory, Not And, 3D XPoint? memory, and Not Or. The company's segments are: Compute and Networking Business, which includes memory products sold into client, cloud server, enterprise, graphics, and networking markets; Mobile Business, which includes memory products sold into smartphone and other mobile-device markets; Storage Business, which includes Solid-State Drives and component-level solutions sold into enterprise and cloud, client, and consumer storage markets; and Embedded Business, which includes memory and storage products.
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