Thoughts on Micron FQ1 Earnings Announcement

Micron announced earnings last night and gave updates on DRAM, 3D XPoint and NAND. Overall numbers were close to estimates. Guidance for FQ2 (Dec-Feb) were lower revenue and earnings due to seasonality. Some interesting items in the presentations.









Some Thoughts:

1) Micron increased NAND bits shipped significantly with slightly increased price. This is a positive. Often we see a big increase in bits at lower price ("we sold out") or flat trend in bit shipments at increased price ("we held out"). Since Micron and the industry overall is losing money on NAND, the prices need to be flat or increasing to get the market healthy. This is a good sign to get to break even and pay for development.

2) Micron continues to press forward on new DRAM technologies. For all the hype about 1Z, the fact is that most of the worlds bits are shipped on 1X or higher. Micron states they they will cross over to have most bits on 1Z/1Y in the next year. A recent Techinsights presentation also stated that Micron is about caught up with Samsung on cell size on new technologies. This has been a push from Sanjay since taking over and is a big success.

3) Earnings are expected to drop again in FQ2 for Micron due to seasonality and Sanjay stated that he is "optimistic" that this will be the financial bottom for Micron. The question is how fast will the upcycle improve and how good will it get this time. In case you were wondering, memory is a cyclical business for mathematical reasons that can be shown with an excel spreadsheet (it has a inherent root cause). For significant increase in earnings, we need to see higher memory prices in 2020. Which requires a shortage of memory. Which requires elimination of some inventory. Which requires supply growth lower than demand growth.

4) Micron floated some interesting number on the future of memory industry. DRAM Bit growth will be 15% in 2020, vs 20% in 2019. NAND Bit growth will be 30% in 2020 vs 40% in 2019. <20% ("mid to high teens") and 30% growth for DRAM and NAND respectively will be the future CAGR. These numbers are lower than historical but are becoming consistent from each supplier. Micron also states that DRAM bits per server will grow 20%  per year. All of these numbers include all of the hyped buzzword technologies. (AI, ML, Neuromorphic, 5G, Autonomous, etc). So again it is nice to have consistent bit growth numbers to plug into spreadsheets (with scenarios as well)

5) Micron gave some updates on NVM technology. Micron announced the X100 3D XPoint SSD earlier in the year and we gave our analysis of how this is built, components, and what the ramp might look like. Other than that, Micron was vague and discussed 3D Xpoint as a promising technology to be developed over the next few years. Micron also announced actions to deal with 3D XPoint which they said is declining in production volume and causing underload charges. At FMS, we presented details on 3D XPoint revenue and manufacturing for the next few years and we have new details since August and what Micron specific impact might be.

On the NAND side, Micron reiterated that 128L will be replacement gate and will have limited ramp on select products by end of Fiscal 2020. Until then, Micron will use existing technologies to support NAND sales. This is a great way to ramp a new technology but IF there is an upturn, it leads to problems on how (or if) to spend capex to meet increased demand... spend on old or new (unproven) technologies.

We give clients inputs on how to monitor all of this and whether actions and reports by companies are supporting or changing the models. Plus we have detailed cost models for all technologies comparing each company.

Mark Webb
www.mkwventures.com

5 Thoughts on China Memory Progress, December Edition

Recent headlines highlight ChangXin Memory (CXMT) plans to ramp manufacturing and also referenced YMTC plans in NAND. Lets “fact check” the status and announcements.

Chinese and all memory companies make optimistic claims stating 10’s of Billions have been spent. They show cartoons of factories that don’t exist yet or are empty. These claims are easy to challenge as companies track shipments to China and China reports equipment delivered by area. So it is very easy to verify the actual amount of capex and model where it is going. Lots of money is going into Chinese owned memory companies but it is no where close to $30B yet and there are not significant shipments yet.

• Report: CXMT is running 19nm DRAM in production at 20K wafer per month and will ramp to 60K by end of 2020.  Production was started in September
•   Facts: We know based on shipping reports that CXMT is spending $200-250M per month on tools. We know that this is roughly on pace to tool out 1/3 of a large fab. CXMT will have tools to run 20K wafer per month soon and is on pace to ramp those tools to a 40K per month pace at least. The hype over the last 2 years is becoming a reality… it’s a real fab with real tools now!
• Report: YMTC is running 10-20K wafer per month of NAND and will quadruple output in 2020.
• Facts: YMTC/Tsinghua is among the leaders in hype in the past. They were supposed to have technologies shipping for the past two years and have shipped little so far.
• Facts: YMTC is also taking tool shipments at a high pace. 2018 showed tool deliveries of ~$1B dropping dramatically at the end before resuming in June 2019 at a $200M/month pace. We will revisit the plans to quadruple output by end of 2020 but it is possible with current spending level if it continues through 2020
• Report CXMT has production 19nm technology being used for LPDDR4.
• Facts: CXMT has made a number of public statement so we don’t need to guess. The technology is based on Qimonda, they hired former Qimonda people as well as people with DRAM experience from Samsung, Micron, and Hynix presumably. So they have a technology and some expertise
• Rumor (or Alternative Facts!): A recent report online stated that the yields on this technology are very low and this was confirmed with other sources. This is to be expected but they might have some work to do
•  Report: YMTC Technology is 64L Xstacking and will ramp to 128L in 2020.
• Facts: We know they are installing equipment and sources state that have low volume and they are sampling some 64L. The technology might not be competitive but if they get shipments out and supply local customers, then profits don’t matter at this time. 
• SUMMARY PREDICTION (Facts, Alternative Facts, Rumors):
• CXMT and YMTC have their initial fab line set up and are ramping with large tool deliveries. This is new! They plan to ramp to 60K+ wafers per month by end of 2020. Both are running technologies that are not mature and are probably 1 year plus from maturity. We also have no public samples of either technology (despite my attempts to buy them!)
• CXMT and YMTC Combined will be less than 2% of the bits shipped end of 2020
• CXMT and YMTC Combined will be 5% of the bits shipped end of 2025

Help needed: Samples from either technology! THANKS!

Mark Webb

www.mkwventures.com

Status of Emerging Memories and Cost Update

Status of Emerging Memory Technologies. No more guessing, Reality is here!

Mark Webb, MKW Ventures Consulting

The time for discussing possible or theoretical emerging memories is past. We have new technologies that are ready for implementation TODAY. We also have technologies being developed that could reach implementation soon. The key is to know the reality and trade-offs of available technologies today and to track the status and time to market of other technologies.

Cost for Memory Technologies in 2019 and 2020 (LOG Scale required!)

We have costs, revenue, cell sizes, performance metrics for ReRAM, PCM (3D Xpoint) and MRAM technologies today. Plus, we have a Product Lifecycle Model that shows where additional technologies are today, when they can be expected to sell in volume and what the milestones are along the way. Nanotube RAM, Ferro-electric RAM, ReRAM modifications and MRAM modifications are technologies that are being developed.

Some topics to discuss:

• There is no universal memory in existence or even in development. There are always tradeoffs
• Emerging memories being implemented today are not at the theoretical performance, cost, or density shown in marketing presentations. The reality is still useful, but we need to understand the actual performance to determine applications. We have details on this
• Nothing is proposed to replace DRAM or NAND in the next 5-10 years so far. DRAM will not be replaced by MRAM and NAND will not be replaced by ReRAM. In 2020, More bits will be added to both NAND and DRAM supply than all emerging memories combined.
• Embedded memory and stand alone memory have very different solutions and business models. Some technologies work well for one versus another.
• The financial model of how to bring emerging memories to volume production has changed dramatically in the past two years. Foundries and Wafer fab equipment manufacturers have changed the environment so that we can achieve the scale needed.
• Which technology from which company will win? We have evaluations of each on our Product Life Cycle and show how you can monitor them over time.

We will be at IEDM in San Francisco/Bay Area Dec 7-13.  Call or Email to set up meeting to discuss how these technologies will impact markets and how some other projections are based on myths, not reality.

Mark Webb

www.mkwventures.com