Memory market outlook
The memory market is currently in an uptrend, and while fears of a downtrend have made investors cautious, many analysts are optimistic about Micron Technology (MU) and Western Digital (WDC) and have given “buy” recommendations for both stocks.
Analysts increased their price target for Micron from $60 in June 2017 to $75 in August 2017 because they believe that the stock will grow significantly if it breaks the resistance of $32.0.
IC Insights forecasts that memory revenue will grow at a CAGR (compound annual growth rate) of 7.3% between 2016 and 2021.
The only enhancement possible in DRAM now is incremental technology, such as the 1X and 1Y nodes, which could increase capacity and reduce costs, bringing higher profits. IC Insights stated that real-time workload applications will likely drive DRAM content per device through 2021.
The NAND (negative AND) flash market is divided into 2D and 3D structures. A majority of the NAND market right now has a 2D structure, but NAND players are transitioning to 3D structures, and SEMI expects 3D to represent 78.7% of the NAND market in 2025, with 3D NAND revenue overtaking 2D NAND revenue in 2020. NAND could become the mainstream memory in low latency data center applications, automotive, and other applications between 2020 and 2025.
Micron has increased its exposure in the DRAM market by acquiring its DRAM joint venture partner Inotera in 2017. Now, Micron is shifting its focus to NAND and is rumored to be one of the bidders for Toshiba’s (TOSBF) NAND business. Even Intel (INTC) is investing in the 3D NAND memory space.
Is China a potential threat to memory makers?
Meanwhile, China (FXI) is looking to manufacture memory chips domestically, which has alarmed memory makers, but analysts do not consider China to be a threat because the nation lacks the necessary IP (intellectual property) and industrial know-how to manufacture memory chips.