Money for nothing

Yesterday, Micron gave us insights into their most recent quarter that showed the memory market is still on fire. With virtually no increase in the cost of products sold, Micron managed to grow the business solidly. In short, customers are paying more for the same. We are certainly not blaming Micron for making a buck. The memory market is not for the faint at heart, you need to make a buck when you can to pay for the next generation fabs.

 

Digging a bit deeper reveals a more nuanced picture. Micron is increasing the number of bits shipped both in DRAM and in NAND but keeping the gains in improved manufacturing efficiency for itself. The focus from a capacity perspective has been on NAND that has increased 78% in capacity over the last year while pricing has been relatively stable. Micon has in reality been able to pocket the entire efficiency gain from NAND over the last year. For DRAM it has been even better. The focus on NAND capacity is at the sacrifice of DRAM capacity. The increasing undersupply in the DRAM market means that Micron not only could keep the manufacturing gains but also increase pricing per bit. As a result – DRAM is now 66% of Microns business.

Overall Micron is managing this cycle brilliantly and is reinvesting in the business. It has also managed to get control of the manufacturing joint venture with Nanya and now has full ownership of Inotera. This is going to be important for future capacity.

 

 

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