Micron Technology Inc

Micron expects the NAND industry’s supply to rise 38.0%–42.0% in 2017 as the transition to 3D brings technological challenges for manufacturers.

In fiscal 1Q17, Micron’s non-GAAP (generally accepted accounting principles) gross margin was 25.0%, a rise of seven percentage points from fiscal 4Q16.

The key highlight in Micron’s fiscal 1Q17 earnings will be the integration of Inotera, which should be quickly accretive to its gross margins, EPS, and FCF.

Micron Technology will have to raise ~$2.5 billion to fund its joint venture acquisition of Inotera, and this move will add to its already high leverage.

A major part of Micron Technology’s (MU) transition to the 20 nm node involves Taiwan’s (EWT) Inotera and its joint venture with Nanya Technology.

The overall DRAM market is slowing and despite this, Micron increased its exposure in this space from 54% in fiscal 2Q16 to 60% in fiscal 3Q16.

Micron is moving a step further and developing 3D NAND Generation 2 technology. It expects to bring this into production in fiscal 2Q17.

Intel’s acquisitions mostly revolve around vertical integration where it integrates the acquired company’s technology into its microprocessors.

Intel is expanding its product portfolio to offer a comprehensive solution to its cloud customers such as Microsoft (MSFT).

Alken stated that in light of changing market dynamics and the capital market scenario, the $19 billion price for SanDisk, which has been posting declining earnings in fiscal 2015, is too high.

Micron’s technology transition will slow down the output and revenue in the short term. The company will be able to meet advanced memory products’ needs.

Consumer trends directly impact the semiconductor industry. For instance, consumers shifted from PC to mobile, negatively impacting Intel’s revenue.

Samsung’s market share for the quarter was 45.2%, a gain of 1.1 percentage point YoY compared to 2Q14. It was Samsung’s best ever quarterly performance.

Western Digital (WDC) and Micron (MU) held 10.2% and 5.1% of the market share, respectively, in the enterprise SSD space.

Micron largely caters to PC and storage manufacturers. Hewlett-Packard (HPQ), Intel Corporation (INTC) and Kingston account for ~30% of Micron’s net sales.

Macroeconomic factors like the Greek debt crisis, the declining Chinese stock market, and global growth issues have made tech stocks not so attractive.

Micron controls costs by developing a manufacturing base in countries where manufacturing costs are low, but it manufactures most of its chips in the US.

Micron’s strategy for coping with competition is to reduce its manufacturing costs. It currently has higher manufacturing costs than Samsung and SK Hynix.

In this series, we’ll analyze the YTD performance of firms in the Technology, Hardware, and Storage subsector and that are a part of the Technology Select Sector SPDR ETF (XLK).

Micron expanded its product portfolio from 64-kilobit DRAM chips in 1980 to NAND Flash Memory devices in 2004, to SSDs in 2007, to NOR Flash Memory in 2011.

Huge investment is required at every stage of semiconductor development to make smaller-sized chips in a cost-effective manner without compromising on functionality.

Qualcomm (QCOM) recently acquired Wilocity to boost its portfolio of mobile chipsets. Wilocity operates high-speed wireless technology WiGig, which works at a higher frequency and promises faster data speeds.