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Micron’s DRAM Business Shows a Strong DRAM Market Environment

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DRAM

Micron Technology’s (MU) record earnings were driven by the high prices of its core product DRAM (dynamic random access memory). DRAM is the memory inside an electronic device, which is a key element to processing data. The growing demand for high-performance processors has been driving DRAM content per device.

Micron’s DRAM earnings

In the fiscal third quarter, Micron’s DRAM revenues rose 6.0% sequentially and 56.0% YoY (year-over-year) to a record $5.5 billion. These revenues accounted for 71.0% of the company’s revenues.

DRAM demand was strong in the cloud and graphics markets, with graphics revenues more than doubling on a YoY basis thanks to high demand from NVIDIA (NVDA). DRAM earnings are a product of ASP (average selling price) and shipments.

ASP 

In the fiscal third quarter, Micron’s DRAM ASP rose in the range of 5.0%–9.0% sequentially, driven by a richer mix of high-value products like server and graphics DRAM. While the ASP rose, DRAM shipments remained sequentially flat, indicating that the 6.0% sequential revenue growth is a result of higher ASP.

Gross margin

Micron’s DRAM non-GAAP gross margin rose 300 basis points sequentially to 69.0% in the fiscal third quarter. DRAM margin is a product of ASP, shipments, and cost per bit. Although Micron doesn’t provide details regarding its cost per bit, it’s been reducing costs by investing in advanced nodes.

Micron’s DRAM technology

Micron started volume production of 1X DRAM and is on track to reach bit crossover on it in the second half of the year. Bit crossover is achieved when a new technology’s total output capacity exceeds that of the old technology. It also plans to begin production shipments on 1Y DRAM and move to 1Z and 1-alpha node in the coming quarters.

Micron’s CEO, Sanjay Mehrotra, clarified that the company has no intention of taking DRAM market share from Samsung (SSNLF) but aims to achieve cost competitiveness.

Next, we’ll look at Micron’s NAND business.

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