Factors affecting Micron stock
Since January 2015, Micron Technology (MU) stock has fallen by 43.81%. It has fallen by 30.08% in the last month alone, mainly due to weak PC (personal computer) sales, slow 2015 growth for DRAM (dynamic random access memory) and NAND, as well as a rising dollar. Micron earns substantial revenues from overseas.
In spite of these factors, Micron Technology is nevertheless a fundamentally strong company.
Presence in non-PC DRAM markets
Micron Technology is increasingly focused on the non-PC DRAM market segment. It’s also trying to capture market share in the 3D-NAND market to ensure long-term growth and sustainability. Due to low demand for PCs globally, Micron is allocating less production to the PC segment.
Since 2012, Micron has increased manufacturing capacity by 90% and has acquired competitors in an effort to develop strategic partnerships.
High growth expected in mobile devices and servers
In the chart above, you can see that 30% of Micron’s DRAM business revenues is generated by the PC segment, while the Mobile Applications, Servers, and Networking, Automotive and Industrial segments contribute 25%, 20%, and 25% of revenues, respectively. According to Micron Technology’s CEO, Mark Durcan, the mobile and server segments are expected to grow in the range of 30% to 50% annually.
This growth is expected to be mainly driven by rising mobile shipments and increasing content in smartphones. Following Micron’s acquisition of Elpida in 2014, the mobile segment came to represent 25% of the firm’s DRAM business. Before that, the segment accounted for 10% of revenues.
According to industry analysts, the server business is an attractive segment. It’s also less sensitive to price fluctuations in the market. The DRAM server segment consists of subsegments that include “enterprise class” and “data centre servers.” These are expected to grow at a healthy rate.
Micron Technology makes up 0.42% of the PowerShares QQQ Trust, Series 1 (QQQ) and 0.54% of the Technology Select Sector SPDR Fund( XLK). Competitors of Micron Technology include Altera (ALTR) and Analog Devices (ADI), which have generated year-to-date returns of 36.22% and 13.12%, respectively.