Chipmaker Micron Technology (MU) recently started the mass production of 16Gb DDR4 products using 1z nm (nanometer) process technology. With this, Micron became the first memory chip company to scale up its DRAM efforts with the smallest DRAM node.

The production of 16Gb DDR4 products using the 1z nm node would consume less power. Notably, the DDR4 products would reduce the power consumption by 40% in comparison to the previous 8Gb DDR4-based products. The smaller 1z nm node also has higher density and can perform better in the modern data center. Micron’s new products would be integrated in various customer applications, including artificial intelligence, 5G, autonomous vehicles, and mobile devices.

How Is Micron Scaling Up Its DRAM Efforts?

Micron’s LPDDR4X DRAM for smartphones

Separately, Micron has also begun volume shipments of low-power double data rate 4X (LPDDR4X) DRAM for smartphones. Notably, Micron’s 1z nm LPDDR4X is the 16Gb monolithic DRAM and is designed to tap the emerging 5G mobile technology. As a result, Micron’s new DRAM with 5G technology would be able to enhance smartphone users’ experience. Micron’s LPDDR4X comes at a time when consumers demand high-capacity memory and storage in mid- to high-end mobile devices.

Micron’s LPDDR4X is also available in a multichip package (UPS based) to offer extended battery life in low-power mode to mobile device manufacturers. Micron’s 1z nm LPDDR4X products also feature the lowest power consumption and maintain a speed of up to 4,266 megabits per second.

Micron’s Mobile Business Unit

Micron has delivered revenues of $1.2 billion from its Mobile Business Unit in the last reported quarter. The unit’s revenues declined 33% year-over-year and 27% on a sequential basis due to lower shipments to Huawei. The trade restriction with China’s Huawei also hurt the sales of Micron’s DRAM and NAND products during the third quarter.

In May, President Trump restricted US companies from trading with Huawei due to national security concerns. This trade ban has resulted in business losses for tech giants such as Google, Intel, and Qualcomm.

Huawei accounted for nearly 13% of Micron’s revenues in the first two quarters of fiscal 2019. Amid declines due to Huawei trade ban, Micron’s new DRAM for smartphones is expected to provide a boost to the Mobile Business Unit.

Micron struggling with falling DRAM and NAND prices

DRAM chips are mainly used in PCs, smartphones, and other devices, while NAND chips provide longer-term data storage. However, the company is witnessing declining memory prices over the past year due to an oversupply of chips.

Micron’s key customers NVIDIA (NVDA) and Intel (INTC) also suffered due to chip supply constraints. As a result, Micron’s investment in the next-generation DRAM chips is expected to help combat falling chip prices.

Micron expects the DRAM market to return to marginal growth in the second half of 2019. Meanwhile, the company expects the NAND market to stabilize in the latter half of the year.

Stock price movement

Micron stock has returned over 37% year-to-date. In comparison, Micron’s peer companies NVIDIA and Advanced Micro Devices (AMD) have returned 19.8% and 68.9%, respectively, this year. However, Intel gained only 1% YTD through August 16.

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