So far in this series, we’ve seen that the advent of AI (artificial intelligence) is driving demand for memory in the server, mobile, and SSD (solid-state drive) memory solutions spaces.
AI’s first level is at the data center. AI would move beyond the data center and enter edge devices such as cars, surveillance cameras, robots, and drones.
This use of AI at the edge would drive demand for memory in IoT (Internet of Things) and automotive. Micron Technology (MU) is a leader in the automotive DRAM (dynamic random access memory) market, as it is a key memory supplier to NVIDIA (NVDA) and Intel (INTC), which are at the forefront of developing autonomous vehicles.
Micron Technology’s EBU (Embedded Business Unit) revenues were sequentially flat but rose 44.0% YoY (year-over-year) to $830.0 million in fiscal 1Q18. This growth has been slow in the EBU space as IoT is a fragmented market and is taking time to gain ground.
Intel has been reporting slow revenue growth in its IoT business. So, it has switched to high-margin markets of autonomous vehicles and industrial IoT to boost earnings from IoT.
EBU’s non-GAAP[1. generally accepted accounting principles] operating profit rose 92.0% YoY to $342.0 million in fiscal 1Q18, accounting for ~11.0% of the company’s overall operating income. This trend saw its operating margin increase from 30.8% in fiscal 1Q17 to 41.2% in fiscal 1Q18. Its operating margin rose faster than revenues due to high DRAM prices.
Micron Technology’s (MU) CEO, Sanjay Mehrotra, expects EBU to be a growth driver as the embedded market evolves. Micron is currently the leader in automotive DRAM. It is looking to strengthen its leadership position by bringing innovative solutions such as automotive-grade GDDR6[2. graphics double data rate] DRAM and 1X LPDDR4[3. low-power double data rate] to the market in 2018.
Mehrotra stated that Micron Technology secured a design win for an autonomous driving platform in fiscal 1Q18. The company is working to secure more design wins in order to retain its leadership position. The company is also looking to develop ultra-high-density storage solutions for edge computing.
Micron Technology isn’t alone in tapping the autonomous car market. Samsung (SSNLF) is also accessing this opportunity and is looking to build an entire autonomous driving platform rather than simply memory.
In the final part of this series, we’ll look at the memory opportunity that autonomous vehicles could present.