Micron in NAND industry
In the first part of the series, we saw that the memory industry is transitioning away from DRAM (dynamic random access memory) toward non-volatile flash technology such as NAND (negative AND) and 3D NAND. Even Micron Technology (MU) is lowering its dependence on DRAM, from which it earns ~60% of its revenue, to focus on non-volatile memory (NAND and 3DXpoint), from which it earns 32% of its revenue.
Let’s look at the company’s view of the NAND industry and the strategies it has adopted to boost growth in this space.
NAND industry trend
On the supply front, growth in the NAND industry has slowed from more than 100% during 2005–2010 to ~50% during 2010–2015. It’s now expected to hover around 30%–40% from 2016 and beyond.
Despite the slow growth, there’s room for new capacity to meet the demand. However, this new capacity will depend on the return derived from the capital invested. On the demand front, NAND growth will be driven by SSD (solid state drives) and mobile.
Move to 3D technology gains speed
Another major trend is the shift toward 3D technology. There’s a wide proliferation of 3D technology, and memory suppliers are moving aggressively to capture market share.
Micron is responding to this trend by ramping up production of 3D NAND at its Singapore fabrication plant (or fab). The company will do a large number of bid-outs on 3D technology by the end of 2016 or at the start of 2017. It will face tough competition from other memory makers who are also ramping up production of 3D technology.
Samsung (SSNLF) started volume production of 3D V-NAND (vertical NAND) flash memory chips at its China facility in 2014. Toshiba (TOSBF) and SanDisk (SNDK) are jointly building a fab in Japan (EWJ) to manufacture 3D NAND. The fab is expected to start production in the second half of 2016. Even Intel has announced plans to convert its China fab to manufacture non-volatile memory.
A new entrant in the NAND space is Tsinghua Unigroup, which has announced plans to build a NAND plant in China. We’ll look at that in a later part of the series.