Wednesday, April 10, 2019
The memory-chip market conditions will start to improve later in 2019, followed by several years of prosperity, according to Sumit Sadana, executive VP and chief business officer at Micron Technology.
Emerging technologies and applications, such as artificial intelligence (AI), autonomous driving, 5G and machine learning, will be driving the memory-chip market growth for as long as 10 to 20 years, Sadana believes. In a recent interview with Digitimes, Sadana also talked about how Taiwan plays a critical role in Micron's manufacturing capability, the role of memory storage in the 5G era, and issues facing the company such as macro headwinds in the short term and the rapid development of China's memory-chip industry.
Q: Micron has two manufacturing sites in Taiwan where the company has entered commercial production of 1xnm DRAM chips and is gearing up for transition to 1ynm process technology in the second half of 2019. Would you share with us the role of the two Taiwan-based sites in Micron's operations worldwide?
A: I recently paid a visit to our staff stationed in Taiwan and discussed our local cleanroom expansion plan as well as future growth opportunities. I also met a number of Taiwan-based customers, which have performed well in the industrial and IoT fields. Through the local factory sites, Micron continues to maintain and grow its customer relationships in Taiwan.
Q: Micron has cut its capex for fiscal 2019 to US$9 billion from US$12.5 billion amid macro headwinds. Will the expansion plan in Taiwan will be affected?
A: We plan to expand cleanroom facilities in Taiwan, which will still have to be carried out despite market volatility and macro headwinds. But we cannot outline and give specific statistics of the amount of capex to be spent on the plan.
Our expansion plan will remain focused on technology transition. The planned cleanroom expansion is not intended to build additional production capacity.
Q: Micron at its most-recent earnings call disclosed plans to idle up to 5% of wafer starts in 2019. Would you talk about your thoughts on the memory market outlook this year?
A: DRAM and NAND flash demand will be soft. From a macro point of view, economies in Europe and China are slowing and sluggish. Falling graphics memory prices and PC processor shortages have also affected negatively the overall memory-chip demand. However, conditions are expected to improve starting from the second half of calendar year 2019, as some of our customers have managed to see inventory improvements, particularly clients in the cloud computing sector.
On the supply side, chipmakers are slowing down their capacity expansions in 2019 with lower capex than year-ago levels. Growth in the industry bit output will slow in the second half of calendar year 2019, when demand starts to recover. The gap between demand and supply is expected to narrow accordingly.
Q: What are the growth opportunities for IoT?
A: There are opportunities in the industrial IoT segment. IoT has been applied to a diverse range of applications, such as robotics, smart manufacturing and medical equipment. And with the emergence of AI-capable IoT devices, memory storage is becoming ever more critical. Advancements of IoT provide a huge range of opportunities for us for sure.
The rollout of 5G will be stimulating further demand for IoT applications. The next-gen mobile technology with its high bandwidth and low latency will be able to handle a massive number of connected devices. All these terminals will collect and analyze data through intermediate servers in real time, which will require a significant amount of memory.
The arrival of a new-generation mobile technology is always a key engine of memory chip and storage device demand growth. And with 5G significantly faster than 4G in terms of data transfer speeds, demand for memory chips and storage devices will be stimulated dramatically.
Memory is also among the core elements promoting the development of AI potential, which will provide a good opportunity for Micron.
In addition, VR/AR applications are another driver of memory storage market growth. Advancements of VR/AR applications also require a huge number of memory chips to move forward. For example, we see virtual reality transforming the real estate industry.
Overall, emerging applications such as 5G, AI, machine learning, and even autonomous driving, are drivers for the long-term promising outlook of the memory storage market. The memory-chip sector is also gearing up for its next 10-20 years of prosperity. We believe that NAND bit volume demand growth will average about 35% annually in the coming years, and 15-19% for DRAM bit demand growth.
We also believe that the memory chip industry will move towards a less volatile structure. There will be more challenges of transitioning to a new process node in the sub-10nm era while end-market demand will be driven by a more diverse range of applications.
Q: China's memory-chip industry has been developed rapidly. Will Micron see the development as a threat, or opportunities for the company to expand your business in China through some form of local deal and partnership, such as technology transfer?
A: China has been an important market of Micron, and we've already built partnerships with some local players and also a customer base locally. Meanwhile, we are also keeping an eye on the development of China's memory-chip sector. So far, we remain ahead of our China-based counterparts in terms of commercial production capability, product quality and credibility. Nevertheless, we continue to pay attention to each milestone they reach.
Micron currently has no plans to license our technology patents to China-based manufacturers. We do have multiple strategies for China, but details cannot be disclosed.
Micron already has several thousand employees stationed in China, where we have a backend facility, and R&D and technical support teams. Also, Micron through its investment arm has plans to invest a total of US$100 million in AI startups, including China-based ones.
Q: What are Micron's future strengths?
A: Micron is healthy financially, with nearly US$1 billion in free cash flow. We are also confident about our future profitability.
As the world's only company with a technology portfolio that includes DRAM, NAND, NOR and 3D Xpoint technologies, Micron will continue to improve its cost structure while increasing its focus on high value-added offerings.
Our 3D XPoint technology has received positive feedbacks from customers. As an entirely new class of non-volatile memory with dramatically lower latency and exponentially greater endurance than NAND memory, the 3D XPoint memory can be used in diverse applications. Samples are being delivered in fiscal 2019, to be followed by volume production as early as fiscal 2020.
Micron's 3D XPoint technology can deliver game-changing performance for data center applications. It will enable high-speed, high-capacity data storage creating new possibilities for system architects.
Micron is also planning its next-generation 3D XPoint technology. We have reached a deal with Intel under which development beyond the second-generation 3D XPoint technology will be pursued independently by the two companies in order to optimize the technology for their respective product and business needs. Besides, Micron is exercising its right to purchase Intel's interest in the parties' joint venture, IM Flash Technologies, where 3D XPoint products are being manufactured.
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