Micron banks on 3D XPoint
In the previous part of this series, we saw that Micron (MU) expects the increase in memory content in mobile and servers to drive revenue growth in the long term. While this may seem like good news, one major roadblock for the company is gaining a cost advantage over its Korean (EWY) rival Samsung (SSNLF), which is driving down the cost of memory by introducing advanced nodes.
In the earlier articles, we saw that Micron is looking to gain a cost advantage by transitioning to new technology. This may fare well if the competitive and market conditions favor the company. With such uncertainty looming, Micron and Intel (INTC) have been working on a breakthrough memory solution, 3D XPoint.
3D XPoint progress
At the Winter Analyst Conference in February 2016, Micron’s research and development vice president, Scott DeBoer, stated that the company is currently sampling 3D XPoint designs with select partners in order to enable the end product benefit from the technology. It is also working on its capability to manufacture this technology in a profitable manner.
The company forecasts that 16% of the mainstream server market would be equipped with 3D XPoint by 2020.
Impact of 3D XPoint on MU
If Micron succeeds in shipping some of the devices powered by 3D XPoint in 2017 and it is well-received by consumers, the stock price could increase over the anticipation of future profits. This could also put Micron ahead of Samsung in terms of technology.
However, all this is based on the condition that no other company launches a competing technology before Micron launches 3D XPoint.
However, SanDisk (SNDK), in collaboration with Hewlett-Packard (HPQ), has developed a storage-class memory technology. SanDisk claims that this technology can compete with 3D XPoint. If this claim holds true and the two companies launch the technology before Micron, Micron would not be able to get the first mover advantage and enjoy exponential growth from a breakthrough technology.
In the final part of this series, we will see how 3D XPoint would enhance the performance of various devices across multiple segments.