16-nm planar NAND
In fiscal 3Q15, Micron’s (MU) trade NAND revenue increased approximately 3% on a sequential basis. This sequential growth was driven by a 6% increase in average selling price (or ASP), which was partially offset by a marginal decline in sales volumes. Trade NAND doesn’t include NAND products sold to Intel (INTC) under the long-term contract agreement. Both the companies have sold NAND products since 2005.
To improve upon its storage business, Micron announced the availability of its 16-nm (nanometer) TLC planar NAND in the previous quarter. TLC (triple level cell) has low write cycle levels that make it particularly suitable for consumer flash devices like USB sticks and camera cards.
The above chart shows the cost of transition from one nm technology to the other. In the semiconductor space, fabless suppliers like Nvidia (NVDA), Qualcomm (QCOM), and Broadcom (BRCM) had the highest R&D (research and development) spending as a percent of sales in 2014 at 31.3%, 28.5%, and 28.2%, respectively. Micron’s allocation towards its R&D has been only 8.5% of its sales.
16-nm planar NAND offers the lowest cost per GB
16-nm planar NAND is considered to be the world’s smallest planar NAND lithography. The physical dimension of NAND is its lithography. Thus, by employing this technology, Micron can manufacture planar NAND drives with the lowest cost-per-GB prevalent in this space. 16-nm TLC NAND flash memory will strengthen Micron’s portfolio from a cost perspective in the retail and consumer segments. Management stated that many channel customers have bought its TLC NAND for SSDs, consumer drives, and memory cards.
Micron’s 16-nm TLC product uses the traditional 2D planar NAND. Intel/Micron 3D NAND products are making their entry into the market in the second half of 2015, as we will discuss in the later part of the series. However, Micron chose to continue to sell 16-nm primarily because it is a more profitable product until the 3D NAND process matures.
If you are bullish about Micron Technology, you can invest in the QQQ PowerShares ETF (QQQ). QQQ invests about 0.59% in Micron.