Chipmaker Micron Technology (MU, Financial) has posted fantastic results. The chipmaker is already seeing tailwinds in several segments as a result of which, it has gained market share. With key customers such as Apple, and a favorable price outlook prevailing in the market, Micron can grow further.
Strategies to drive the business
Micron has worked on various strategies in the past to reduce inventory across the DRAM supply chain. As a result, Micron is expecting favorable returns. Further reduction of inventory across the PC and mobile segments due to the fire at SK Hynix’s Wuxi facility has also helped in inventory reduction across the supply chain. These constraints are believed to deliver outstanding top line figures.
On the technology front, Micron has been making innovations in its product line. It is working on increasing production of 25-nanometer chips. In addition to this, company is going to launch 20-nanometer chips. Due to the smaller platform, the chip size will be small, leading to margin gains. This will help Micron to reduce the prices of its chips as well. Micron, on the other hand, claims to be the first supplier to sample low-power DDR4 to its customers and chipset partners.
More positives
Besides this, Micron is also expecting weakness in DRAM wafer production. On the other hand, the company is expected to keep the total bit production below industrial production. This strategy will help the company keep prices stable. Moreover, Micron is expecting bit demand to increase.
The chipmaker’s 25-nanometer chips are seeing great traction in the market as it provides large storage for portable music, media players, smartphones, and solid state drives. In line with this, the company sees strong gains from the Elpida integration. As a result of growing demand for its chips, Micron has started producing 25-nanometer chips at its Hiroshima and Rexchip fabs. The company is expecting its nano chips to be a growth driver, helping it deliver more efficient products at lower costs.
Micron is focusing on improving its operational efficiencies. In line with this strategy, the company has sold its fabs at places such as Italy and Israel. Now, Micron is laser-focused on just three markets in regions such as Japan, Taiwan, and Singapore.
Also, with NAND flash, Micron is seeing the integration of its technology in consumer applications, automotive, mobile, and storage. The company is focusing on being more user friendly and is trying to make it product mix in such a way that it produces things that customers demand. However, in this segment, the company has introduced new packages and a full system of solutions to address these markets. Such a robust move by the company will surely help it post handsome results in the future.
With the growing mobile and PC market, Micron is seeing NAND penetration into these segments. The growth in demand for SSD can drive good results in the future. The SSD segment is seeing greater demand with an improving electronic market. As a result, SSD revenue is projected to grow at a CAGR of 43% till 2016, achieving $3.5 billion in revenue.
In order to hold a competitive position in the market and to ensure a solid performance every quarter, the chipmaker is making product development moves. In line with this trend and the fast growing SSD segment, Micron plans to produce 60-nanometer SSD chips.
Conclusion
Micron has been performing well. The stock has been impressive on the stock market. Also, the chip maker appears to be geared up with an aggressive outlook, so Micron should probably outperform in future, delivering handsome gains to shareholders.
