Micron Has a Stake in the Flash Market
By Melissa McGrath, The Idaho Statesman, Boise
Oct. 16–Micron Technology Inc. helps create some of the flash memory that technology companies use in the MP3 players, iPods, cell phones and memory cards that plug into computers.
The Boise-based company has made an impressive entry into the growing market, analysts say, but Micron is still far behind Samsung and other memory producers in its technology.
Micron, Idaho’s largest private employer, entered the fast-growing NAND flash memory market last year. It shipped its first NAND flash memory — a 2-gigabit chip that holds more than 2 billion bits of memory — in December.
Since then, the company has increased sales in its newest product line, posting fourth-quarter NAND flash sales five times higher than sales in its third quarter, said Joseph Unsworth, a senior analyst of semiconductor memories at Gartner, a technology research firm. That success has allowed the company to grab about 3 percent of the NAND flash market share earlier in the year, he said.
The jump in flash memory sales in the most recent quarter represented “a pretty significant achievement for Micron,” Unsworth said. “They have a few quarters of solid production behind them now, and they are able to get more accounts and more clients.”
Micron had an advantage coming into the market because the equipment used to make NAND flash memory is similar to that needed to manufacture its main product, DRAM, or dynamic random access memory, Micron officials said. And they hit the ground running, unveiling a 2-gigabit chip right away while other companies entered the market with chips that could not hold as much memory, such as the 1-gigabit or 512-megabit chip.
Micron also has done well in the NAND flash market because it has been able to cater to smaller flash memory clients while its competitors, like Samsung, are dedicating more of their memory supplies to Apple Computers Inc. to use in its iPods, Unsworth said. Apple sold 6.4 million iPods in its most recent quarter.
“They are like a car getting on the highway,” Unsworth said of Micron. “They came on at the right time, but their competitors were going much, much faster. Now, they need to catch up.”
For example, Samsung, one of the leaders in the flash memory market, announced last month it is developing a 16-gigabit chip, which stores eight times as much memory as Micron’s 2-gigabit chip.
To stay competitive, Micron needs to increase the amount of flash memory it makes and push its technology further, Unsworth said.
Micron said it is going to be able to make 4-gigabit and 8-gigabit chips by stacking its existing 2-gigabit chips.
But if it wants to compete in the future, Micron will have to create single chips that can hold more memory without stacking, like Samsung has done, Unsworth said.
As the NAND flash market continues to grow, Micron plans to grow with it, said Achim Hill, senior director of marketing for Micron’s Mobile Memory Group. Micron can expand in NAND flash in two ways: increasing the amount of chips it produces and improving its technology to develop smaller chips that hold more memory.
“Micron is committed to increase capacity for NAND,” Hill said, but he could not say specifically how or when Micron will increase its capacity or market any new technology.
Micron said it plans to spend between $1 billion and $1.5 billion on capital expenditures next year, but has declined to say how much of that money would go toward its NAND flash memory product line.
Right now, the company is doing well with more demand for the flash memory chips than it can supply.
“If we had more, we could sell more,” Hill said. “The market is growing strongly. We are right there with the pack in front and have no trouble selling what we have here.”
The NAND flash market is expected to continue growing at a rapid pace in the coming years. This year, the market had about $10.1 billion in revenue, a 45 percent increase over the previous year, Unsworth said.
He expects the total revenues in the market to jump 35 percent next year. In 2007, sales of flash memory will probably slow down a little as companies create enough supply to meet demand, but “the prospects are good for 2008,” he said.
By 2008, technology companies will probably create more innovative uses for flash memory and increase demand for those products, Unsworth said.
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