Micron - Look beyond a quarter...and it’s bright!
27 September 2019
- MICRON, a position in our Artificial Intelligence & Robotics certificate, reported its latest quarter results yesterday. The stock is under pressure today as the company guided for lower gross margins for its next quarter. The lowered guidance is due to a pile-up of inventories, falling prices, and Huawei well-known issues. DRAM (64% of its revenues) ASPs declined 20% over the past quarter but company’s mgmt. sees early signs of recovery. Moreover, the company announced that a list of products, not subject to restrictions, have started to be shipped to Huawei during the past two weeks.
- We believe that the significant catalyst for Micron is just around the corner and not one which is overlooked by the Street, namely its IM Flash Technology.
- Earlier this year, Micron bought out INTEL’s stake of IM Flash Technology, a JV that developed 3D XPoint. This non-volatile memory fills the gap between fast, but volatile and costly RAM, and cheap and non-volatile NAND flash. Intel has recently started to ship the family of products under the name of Optane, while Micron will begin commercializing the 2nd generation of this new proprietary technology, called QuantX, later this year.
- Micron's switch of its fab capacity from NAND flash to new 3D XPoint, in addition to the need by data centers for cheaper and non-volatile DRAM’s alternatives, represents short-to-mid-term triggers for the stock.
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