Micron Seeking NAND Flash Memory Growth Through Automotive, Gaming, Cloud

Micron’s strategic move to shift mix from DRAM to NAND memory is paying off, said CEO Steve Appleton during the webcast of Micron’s Summer Analyst Conference in Sun Valley, Idaho. Appleton said the company’s diversified portfolio, despite softness in its low-margin PC and consumer products business, “is very strong."

Appleton said there were numerous similarities in pricing cycles between the DRAM market of the 1980s and the NAND market of the last decade, but diversification of the NAND market is at a point that it took the DRAM market 25 years to reach. DRAM sales were entirely driven by the computing world until 2000, Appleton said, but revenue for NAND is spread over a variety of categories including automotive entertainment systems, tablets, smartphones and TVs, along with PC hard disk drives and SSD. NAND revenue passed that of DRAM at Micron for the first time in Q1 2011, he said.

Micron plans to leverage NAND technology in cloud-based solutions "in a big way,” said Vice President of NAND Solutions Glen Hawk. In the recent past, most of Micron’s NAND supply was going to “large OEMS, the channel and USB and memory cards,” including the company’s Lexar brand of flash storage devices, Hawk said. Well over half of the NAND group supply will now be going to cloud-based business where there’s a “lot of value” built around the technology, Hawk said.

Data intensive applications in newer technologies are driving demand for higher-density memory, executives said. In Micron’s Embedded Solutions Group, navigation and infotainment systems on the factory side have boosted memory opportunities, said group Vice President Tom Eby, who said gaming and automotive are the initial focus for the group. As cartridges migrate from ROM to managed NAND storage in the next generation of game systems, there’s “good opportunity for growth,” he said.

Ten years ago, single-purpose navigation systems had “relatively modest” memory needs at “under half a gig,” he said, and memory represented 5 percent of the total bill of materials. High-end model year 2013 infotainment systems are being designed with 64 gigabytes of NAND and 4 gigabytes of RAM, “equivalent to what you're seeing in a high-end tablet,” Eby said. Vehicle makers want to capture value “that would otherwise go to devices like Tom Toms and iPads,” he said.

That trend is playing out with other embedded devices as well, Eby said. A decade ago, digital TVs packed 32 megabits of NOR memory and 32 megabytes of DRAM, he said. Total bill of materials for memory touched the single digit percentage, he said. Today’s connected TVs with application capability load five gigabytes of NAND and DRAM and cost out at about a fifth of the materials bill, he said. “The DTV guys are fighting” with cable companies, set-top box manufacturers, and tablet makers, he said, “and that creates a very good opportunity for Micron."

In DRAM, Micron is seeing a “bit of a slowdown” in the digital TV segment, said Vice President of DRAM Solutions Brian Shirley. Game console redesigns will help revitalize the market over the next couple of years and, though memory requirements for TVs continue to increase, the market remains “a little soft,” Shirley said. In PCs, the move to thin, low-power notebooks offers Micron opportunity to reduce power with a new architecture, he said.

3D will be a catalyst for sales on the gaming and digital TV sides, Shirley said. Game console business has been flat due to “clunky” systems, but the coming generation of 3D-ready consoles has bandwidth requirements that drive the megabytes per console ratio “fairly quickly,” he said. The company is anticipating “good growth here,” he said. The digital TV market is a “little softer” but growth is positive overall as 3D and Internet connectivity drive up the megabits per box, he said.

Tablets are the big “bit story” for Micron, according to Hawk, who sees tablets as “another way to interact with the cloud.” The company estimates over 55 billion gigabytes of NAND flash will ship in “tablet-like devices” over the next five years, “a tremendous opportunity” representing 15-20 percent of the flash bit market over the 5-year period, Hawk said. “We benefit by providing flash for edge devices and the cloud,” he said.

Hawk said flash memory will drive the cloud, conceding his NAND bias. Not only will cloud-based services need a lot of storage and flash, but “we're looking at a future where consumers want everything at their fingertips,” he said. He spoke about a large-group photo by photographer David Bergman of the Obama inauguration with a 1,474-megapixel image so detailed that viewers to his website could zoom in closely to see individual faces. It took hours to produce and lots of processing time, but “that’s the kind of thing you're going to see more of in the future” and more memory will enable it, he said. His vision is that storage will co-exist in devices and the cloud.

Regarding the company’s plan to move into LED lighting, Chief Operating Officer Mark Durcan said Micron hopes to take advantage of its silicon capability. LED lighting is going to be a “very big market,” Durcan said, and the company expects to see initial revenue of “tens of millions of dollars” in 2012 with greater growth potential down the road. Micron will emphasize substrate engineering and low-power solutions, he said. It also hopes to dovetail the LED business with “some work in solar,” he said.