Micron Technology Inc. MU has developed a new consumer-class flash storage device based on Triple-Level-Cell (TLC) NAND technology. The new flash storage device is built on the company’s 16-nanometer (nm) process and thus, named — 16-nm TLC NAND.
This TLC NAND product offers a more efficient and cost effective solution, and is suitable for applications like USB drives and consumer solid state drives (SSDs). Furthermore, Micron claims that the device requires 28% lesser die area compared with Multiple-Level-Cell NAND storage devices of the same capacity.
The TLC NAND-based flash storage device will capitalize on the growing opportunity in the TLC design-based storage devices. According to Micron, “the market appetite for TLC is projected to be strong throughout 2015, constituting almost half of the total NAND gigabytes shipped.”
The new product is aimed at further innovation in memory technologies which in turn will strengthen the company’s product portfolio. We believe that the momentum from the launch of 16-nm TLC NAND will help Micron to emerge as a major player in the fast-growing storage market, thus lending greater stability to its revenue stream. Additionally, this will help Micron gain new customers, going forward.
Micron foresees strong demand for TLC NAND storage devices, going ahead. Therefore, the company reaffirmed its earlier plan of starting the production of 3D NAND TLC in 2016.
Micron has already collaborated with Intel Corporation INTC to mutually develop 3D NAND technology. The NAND Flash market is expanding at a rapid pace propelled by smartphones and SSDs that are used in personal computers and enterprise data centers. We believe that the 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 on the cloud and higher streaming capabilities for an enhanced user experience. We believe that Micron’s entry into the 3D NAND space can increase its market share.
The company derives roughly 28% of its revenues from the NAND Flash market. Micron is the fourth largest player in the segment, trailing Samsung, Toshiba and SanDisk Corporation SNDK. We believe that the long-term NAND supply agreement with Intel will help Micron outperform the NAND market.
According to TrendForce, 3D NAND’s market share will reach 20% of the total NAND Flash market by 2015. Moreover, according to IHS research, 3D NAND technology will account for approximately 66% of total flash shipments by 2017.
Nevertheless, we remain skeptical about Micron’s near-term prospect as management issued tepid third-quarter fiscal 2015 revenue guidance anticipating weak performance of its DRAM products. The main factors affecting the DRAM guidance are weak PC DRAM sales and unfavorable pricing environment.
Currently, Micron carries a Zacks Rank #4 (Sell). However, a better-ranked stock in the broader technology sector is Cirrus Logic Inc. CRUS, sporting a Zacks Rank #1 (Strong Buy).
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