Micron Technology Inc. (MU, Financial) filed Annual Report for the period ended 2009-09-03.
Micron Technology Inc. has established itself as one of the leading worldwide providers of semiconductor memory solutions. The company's quality memory solutions serve customers in a variety of industries including computer and computer-peripheral manufacturing consumer electronics CAD/CAM telecommunications office automation network and data processing and graphics display. The company's mission is to be the most efficient and innovative global provider of semiconductor memory solutions. Micron Technology Inc. has a market cap of $5.97 billion; its shares were traded at around $7.05 with and P/S ratio of 1.2.
In 2008, the Company established a partnering arrangement with Nanya Technology Corporation (“Nanya”) pursuant to which the Company and Nanya jointly develop process technology and designs to manufacture stack DRAM products. Each party generally bears its own development costs. In addition, the Company has deployed and licensed certain intellectual property related to the manufacture of stack DRAM products to Nanya and licensed certain intellectual property from Nanya. As a result, the Company is to receive an aggregate of $207 million from Nanya through 2010, of which the Company recognized license revenue of $105 million and $37 million in 2009 and 2008, respectively. In addition, the Company expects to receive royalties in future periods from Nanya for sales of stack DRAM products manufactured by or for Nanya.
In the first quarter of 2009, the Company acquired a 35.5% ownership interest in Inotera Memories, Inc. (“Inotera”), a publicly-traded entity in Taiwan, from Qimonda AG (“Qimonda”) for $398 million. In August 2009, the Company s ownership interest in Inotera was reduced to 29.8% as a result of Inotera s issuance of common stock in a public offering for approximately $310 million. In connection with the acquisition of the shares in Inotera, the Company and Nanya also entered into a supply agreement with Inotera (the “Inotera Supply Agreement”) pursuant to which Inotera will sell trench and stack DRAM products to the Company and Nanya. The Company has rights and obligations to purchase up to 50% of Inotera s wafer production capacity. Inotera s actual wafer production will vary from time to time based on market and other conditions. Inotera charges the Company and Nanya for a portion of the costs associated with its underutilized capacity, if any. Inotera s trench production is expected to transition to the Company s stack process technology. The cost to the Company of wafers purchased under the Inotera Supply Agreement is based on a margin sharing formula among the Company, Nanya and Inotera. Under such formula, all parties manufacturing costs related to wafers supplied by Inotera, as well as the Company s and Nanya s selling prices for the resale of products from wafers supplied by Inotera, are considered in determining costs for wafers from Inotera. (See “Item 8. Financial Statements – Notes to Consolidated Financial Statements – Supplemental Balance Sheet Information – Equity Method Investments – DRAM joint ventures with Nanya”)
The Company s process technology research and development (“R&D”) efforts are focused primarily on development of successively smaller line-width process technologies which are designed to facilitate the Company s transition to next generation memory products. Additional process technology R&D efforts focus on the enablement of advanced computing and mobile memory architectures, the investigation of new opportunities that leverage the company s core semiconductor expertise, and the development of new manufacturing materials. Product design and development efforts are concentrated on the Company s high density DDR3 and mobile products, as well as high density and mobile NAND Flash memory (including MLC technology), specialty memory products and memory systems. The Company s R&D expenses were $647 million, $680 million and $805 million in 2009, 2008 and 2007, respectively.
Sales to customers outside the United States totaled $3.9 billion for 2009 and included $1.2 billion in sales to China, $542 million in sales to Malaysia, $470 million in sales to Europe, $447 million in sales to Taiwan, and $990 million in sales to the Asia Pacific region (excluding China, Malaysia and Taiwan). Sales to customers outside the United States totaled $4.4 billion for 2008 and $4.0 billion for 2007. As of September 3, 2009, the Company had net property, plant and equipment of $4.7 billion in the United States, $2.1 billion in Singapore, $180 million in Italy, $112 million in Japan and $53 million in other countries. (See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Geographic Information” and “Item 1A. Risk Factors.”)
Read the The complete ReportMU is in the portfolios of Charles Brandes of Brandes Investment, PRIMECAP Management.
Micron Technology Inc. has established itself as one of the leading worldwide providers of semiconductor memory solutions. The company's quality memory solutions serve customers in a variety of industries including computer and computer-peripheral manufacturing consumer electronics CAD/CAM telecommunications office automation network and data processing and graphics display. The company's mission is to be the most efficient and innovative global provider of semiconductor memory solutions. Micron Technology Inc. has a market cap of $5.97 billion; its shares were traded at around $7.05 with and P/S ratio of 1.2.
Highlight of Business Operations:
In 2009, 2008 and 2007, the semiconductor memory industry experienced a severe downturn due to a significant oversupply of products. The downturn was exacerbated by global economic conditions which adversely affected demand for semiconductor memory products. Average selling prices per gigabit for the Company s DRAM and NAND Flash products declined 52% and 56%, respectively, for 2009 as compared to 2008 after declining 51% and 67%, respectively, for 2008 as compared to 2007 and declining 23% and 56%, respectively, for 2007 as compared to 2006. These declines significantly outpaced the long-term historical pricing trend. As a result of these market conditions, the Company and other semiconductor memory manufacturers reported substantial losses in recent periods. In 2009, the Company reported a net loss of $1.8 billion after reporting net losses of $1.6 billion for 2008 and $320 million for 2007.In 2008, the Company established a partnering arrangement with Nanya Technology Corporation (“Nanya”) pursuant to which the Company and Nanya jointly develop process technology and designs to manufacture stack DRAM products. Each party generally bears its own development costs. In addition, the Company has deployed and licensed certain intellectual property related to the manufacture of stack DRAM products to Nanya and licensed certain intellectual property from Nanya. As a result, the Company is to receive an aggregate of $207 million from Nanya through 2010, of which the Company recognized license revenue of $105 million and $37 million in 2009 and 2008, respectively. In addition, the Company expects to receive royalties in future periods from Nanya for sales of stack DRAM products manufactured by or for Nanya.
In the first quarter of 2009, the Company acquired a 35.5% ownership interest in Inotera Memories, Inc. (“Inotera”), a publicly-traded entity in Taiwan, from Qimonda AG (“Qimonda”) for $398 million. In August 2009, the Company s ownership interest in Inotera was reduced to 29.8% as a result of Inotera s issuance of common stock in a public offering for approximately $310 million. In connection with the acquisition of the shares in Inotera, the Company and Nanya also entered into a supply agreement with Inotera (the “Inotera Supply Agreement”) pursuant to which Inotera will sell trench and stack DRAM products to the Company and Nanya. The Company has rights and obligations to purchase up to 50% of Inotera s wafer production capacity. Inotera s actual wafer production will vary from time to time based on market and other conditions. Inotera charges the Company and Nanya for a portion of the costs associated with its underutilized capacity, if any. Inotera s trench production is expected to transition to the Company s stack process technology. The cost to the Company of wafers purchased under the Inotera Supply Agreement is based on a margin sharing formula among the Company, Nanya and Inotera. Under such formula, all parties manufacturing costs related to wafers supplied by Inotera, as well as the Company s and Nanya s selling prices for the resale of products from wafers supplied by Inotera, are considered in determining costs for wafers from Inotera. (See “Item 8. Financial Statements – Notes to Consolidated Financial Statements – Supplemental Balance Sheet Information – Equity Method Investments – DRAM joint ventures with Nanya”)
The Company s process technology research and development (“R&D”) efforts are focused primarily on development of successively smaller line-width process technologies which are designed to facilitate the Company s transition to next generation memory products. Additional process technology R&D efforts focus on the enablement of advanced computing and mobile memory architectures, the investigation of new opportunities that leverage the company s core semiconductor expertise, and the development of new manufacturing materials. Product design and development efforts are concentrated on the Company s high density DDR3 and mobile products, as well as high density and mobile NAND Flash memory (including MLC technology), specialty memory products and memory systems. The Company s R&D expenses were $647 million, $680 million and $805 million in 2009, 2008 and 2007, respectively.
Sales to customers outside the United States totaled $3.9 billion for 2009 and included $1.2 billion in sales to China, $542 million in sales to Malaysia, $470 million in sales to Europe, $447 million in sales to Taiwan, and $990 million in sales to the Asia Pacific region (excluding China, Malaysia and Taiwan). Sales to customers outside the United States totaled $4.4 billion for 2008 and $4.0 billion for 2007. As of September 3, 2009, the Company had net property, plant and equipment of $4.7 billion in the United States, $2.1 billion in Singapore, $180 million in Italy, $112 million in Japan and $53 million in other countries. (See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Geographic Information” and “Item 1A. Risk Factors.”)
Read the The complete ReportMU is in the portfolios of Charles Brandes of Brandes Investment, PRIMECAP Management.
