Last week, semiconductor behemoths Micron Technology Inc. MU and Intel INTC unveiled a mutually developed 3D NAND technology to meet the growing demand for personal storage and also cater to the media and entertainment market. Micron and Intel have a partnership for NAND development since 2006.
Equipped with floating gate cells that provide three times higher ability to store data than other NAND technology, Micron addresses its customers' performance and storage requirements through this 3D NAND technology. It also helps its customers fulfill their cost and deliver enhanced performance for networking customers.
The NAND Flash market is expanding at a rapid pace. Demand is propelled by smartphones and solid-state drives that are utilized in personal computers (PCs) as well as enterprise data centers. We believe that key technology inflections in areas like 3D NAND will boost growth and profitability of the company, going forward.
A NAND device enables faster application loading, speedy data synchronization in the cloud and higher streaming capabilities for an enhanced user experience. We believe that Micron’s entry into the 3D NAND market can help Micron increase its NAND market share.
The company derives roughly 28% of its revenues from the NAND Flash market. Micron is the fourth largest player in the NAND Flash segment, after Samsung, Toshiba and SanDisk SNDK. We believe that the long-term NAND supply agreement with Intel will help Micron outperform the NAND market.
According to TrendForce, 3D NAND currently accounts for a mere 3% of the NAND Flash industry’s overall supply. However, it presumes that the 3D NAND’s share of the market share will reach 20% by 2015. Moreover, according to IHS research, 3D NAND technology will account for approximately 66% of total flash shipments by 2017.
Given these factors, we expect Micron to strengthen its market position against the likes of SanDisk.
Additionally, we believe that the acquisitions of Rexchip and Elpida will help Micron’s share in the memory market. The aforesaid acquisition also brought Apple Inc. AAPL onto the customer roster, which is a positive for future growth.
Micron has a Zacks Rank #3 (Hold).
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