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Intel’s Memory Business Was Close to Breaking Even in 2018


Feb. 7 2019, Updated 9:00 a.m. ET

Intel’s memory business

Previously, we learned that Intel (INTC) had reported demand weakness in the PC and data center markets, from which it earns over 80% of its revenue. However, both businesses reported YoY (year-over-year) growth.

Intel’s third-largest business is its NSG (Non-Volatile Memory Solutions Group), which supplies 3D NAND (negative-AND) and 3D XPoint-based Optane chips to its data center business and outsiders.


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NSG’s fourth-quarter earnings

In the fourth quarter, Intel’s NSG revenue rose 24.5% YoY to $1.1 billion driven by strong growth in the data center space and the increasing adoption of Optane memory. This growth was partially offset by falling NAND prices. Its memory partner Micron’s (MU) NAND revenue rose 20.6% YoY in the first quarter of fiscal 2019, which ended in November 2018.

On the other hand, falling NAND prices sent the revenues of other NAND chip makers spiraling down. The world’s second-largest NAND chip maker, Western Digital (WDC), saw its revenue fall 21.3% YoY, and Cypress Semiconductor’s (CY) NAND revenue fell 32% YoY in the quarter.

Intel’s NSG was striving to break even in 2018, and it almost succeeded with a full-year operating loss of just $5 million. The company reduced its costs by producing more than 75% of its data center and client solid-state drives on cost-effective 64-layer 3D NAND.

How will the first quarter be for NSG?

We expect Intel’s NSG revenue to fall in the mid-single digits YoY in the first quarter of 2019 as data center growth fades and NAND prices continue to fall. Even Micron’s NAND revenue is expected to fall 8.6% YoY in the second quarter of fiscal 2019.

Next, we’ll look at Intel’s memory joint venture with Micron.


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