Micron Technology (NASDAQ:MU) is a leading memory manufacturer of memory solutions for computing and consumer electronics markets. Micron is the only North America based major memory manufacturer that competes against South Korean bigwigs like Samsung and Hynix, and it recently received a big boost as a California court ruled in its favor regarding an anti-trust case brought on by Rambus (NASDAQ:RMBS). See our update Micron Cleared in Antitrust Suit, Shares Overshoot $5.75 Value.
Micron Announces New Memory Modules
Last week, Micron announced a new portfolio of load reduced dual-inline memory modules (LRDIMMs) featuring a 64GB offering to meet the ever-growing density requirements of servers. Micron continues its memory market leadership with modules that provide 50 percent higher memory capacity and a performance increase of 33 percent for server applications. Resulting improvements are expected to bring benefits to enhance cloud computing, high-performance computing, web servers, transactional databases, and data analytics, while reducing power needs by nearly 10%. LRDIMMs look to maximize infrastructure and optimizes return on investment coupled with appropriate server virtualization strategies.
Emphasis on Specialty Memory Segments
To reduce the volatility in revenue due to DRAM supply/demand cycles, Micron is shifting its product mix to increase its share of specialty memory segments like mobile, SSD and server that are less volatile and have higher gross margins. In FY 2011, PC DRAM sales accounted for only 18% of Micron’s revenue, compared to 33% in FY10, and 31% for the industry. Gross margins on PC DRAM are slim due to intense competition and slowing demand for PCs.
Memory sales to the mobile segment increased to 25% from 10% in FY 2010. Sales to other higher gross margin segments like networking, servers and storage were up to 22% from 13% in FY10. Moreover, in Q3 2011, NAND revenue increased to 40% of overall revenue, leaving behind DRAM at 36%. We expect NAND’s revenue share to remain higher than DRAM due to sustained demand from end-consumer markets.