Thursday, September 26, 2019

Top 3 Takeaways from Micron Earnings (and 2 bonus)

Top 3 Takeaways/Questions from Micron Earnings ... and two bonus takeaways from a Intel Presentation

  • Pricing dropped in Micron FQ4/CQ3: DRAM Prices down 20% after Trendforce and various sell side analysts said price was flat. Now there is some offset in timing but flat and down 20% are in way different directions. There is a reason and data to back what happened to Micron in FQ4 on DRAM pricing. They later stated that pricing was starting to climb on NAND although it dropped 8% in FQ4
  • Micron plans very little to no cost reduction in 2020. Repeatedly stated no NAND cost reduction due to conversion to replacement gate. DRAM cost reduction will be less than 10%. DRAM is somewhat expected and not an issue if pricing holds. But no cost reduction on NAND when it is losing money today has some serious implications for Micron in 2020.
  • FQ1 earnings will be less the FQ4. This was a surprise to just about everyone who thought we would get a 2H recovery. Why the drop in a historically good quarter? and this is including 3-5c/share earnings impact of NAND accounting change (BTW there is a good reason Micron is changing NAND depreciation)

2 Bonus items: Intel announced NAND and Optane Roadmap

  • Intel announced they will have new Optane DIMM Modules "Barlow Pass" in 2020 for servers. This seems pretty soon for a follow on given the delays and slow adoption of Apache pass DIMMS. However it is important to keep new generations coming and Intel sometimes delays new products so maybe it wont step on Apache Pass toes too soon. We have cost models for 1st and second gen Optane memory media. Rumor is that Barlow Pass uses Apache pass memory chip (unverified)
  • Intel announced 144 layer NAND technology with floating gate. Intel and Micron are both going to struggle with their first generation apart..... mainly from a financial point of view. but the fact that Intel is announcing the 1xx layer part for 2020 is good for Intel customers and a welcome surprise for me. I was getting worried Intel would skip the first gen 1xx NAND technology. NAND costs will keep coming down in 2020/2021 ... we have summaries of where each company stands in cost with 96L and 1xx layer.

Lots of new technologies, financial challenges, and we have the macroeconomic challenges too. 2020 will not be a dull year.

Mark Webb