The fate of the memory business will be commanded by the non volatile technologies that can supplant the current memories to give another better speed and execution. The growth in demand for the new generation memory is mainly due to its capability of providing better speed and higher scalability.
As per market research the new generation memory market is anticipated to reach$90.7 billion in next three years, signifying a CAGR of 7.3% from 2102 to 2017. The new generation memory market would mainly comprise of Phase Change Memory, Resistive Memories and Conductive Bridging Memory. Various chip manufacturers are constantly upgrading their memory portfolios to acquire the major share of the memory market.
Micron Technologies (MU, Financial) is one of the market leaders providing various solutions pertaining to semiconductors and with an enriched portfolio of innovative memory technologies. It manufactures a complete range of memory devices that comprises of DRAM, NAND Flash memories, Flash memories, Phase change memories that are used for leading edge computing, networking, embedded and mobile products.
Robust growth
This week, the company released its fourth-quarter results for fiscal 2014 and also the annual report for the fiscal year. Total revenue recorded for fiscal 2014 was up 80%, to record $16.36 billion as compared to the total revenue of $9,073 million for fiscal 2013. Revenue increased by 49% year over year, to record $4.23 billion as compared to $2.84 billion in the same quarter last year. It also gained 6% sequentially as compared to the third quarter of the fiscal 2014.
The bottom line of the company was also all growth. For fiscal 2014, net income increased by 153%, to record $3,015 million as compared to $1,190 for the fiscal 2013. For the fourth quarter, net income increased by 43%, to record $1,150 million as compared to $805 million in the same quarter last year. EPS on non-GAAP basis in the fourth quarter increased by 3%, to record $0.82 per diluted share as compared to $0.79 in the same quarter last year.
Overall the company had a strong quarter and fiscal 2014. The earnings in the fourth quarter were partly offset by acquisition of Elpida Memory Inc. and Rexchip Electronics Corporation.
Acquisition providing tailwinds
The company continues to strengthen its memory portfolio by acquiring Elpida Memory, Micron bought this company for approximately $2.5 billion (YEN 200 billion). Elpida was one of the largest chip manufacturers in Japan with over 10% of the DRAM market share. The company had faced a major debt crisis in the past that led it to bankruptcy, as it was unable to refinance its debt. But looking at it established market and brand name Micron acquired Elpida, in anticipation of acquiring a larger markets share in the DRAM memory market
Furthermore, Micron also acquired Rexchip Electronics Corporation. Micron acquired 691 million shares of the Taichung based company in Taiwan at NT$14.03 per share. With this acquisition Micron now poses a stronger grip on the DRAM market as Rexchip was also one of the leading DRAM manufacturer in Taiwan.
After the acquisition of Eplida and Rexchip, Micron becomes the leading U.S. manufacturer of DRAM, which still has a huge demand in the PC market.
Portfolio getting better
The company recently launched a new chip “M600” which further strengthens its SSD portfolio. This is built on the next generation NAND Flash architecture, and also features with an enhanced computing performance. The chip consumes less power that will enable it to be adopted by various handheld devices, where battery life is an important constraint. This is an ideal chip used in devices like tablets, net books and many more. The chip is available with a capacity ranging from 128 GB to 1TB in various form factors to meet the needs of diversified applications.
Conclusion
The company had a strong fiscal 2014, and I feel with acquisitions and new additions in the chip portfolio, it can continue the growth momentum. The earning can further grow in the next quarter results as in the last quarter it was partly offset by the acquisition cost that company had to pay for Elpida and Rexchip. Moreover, with the 2 acquisition Micron now is the leading supplier of DRAM which still has a huge potential in the global market. The revenue in future will certainly gain a higher growth momentum for the company yielding a higher earning and leveraging its stocks price for growth. I would suggest buy for Micron, if you are looking for long-term growth.
