Micron has excellent long-term growth prospects despite supply shortage impact

Micron has excellent long-term growth prospects despite supply shortage impact

Mr.Rajesh Gupta, Director, Country Manager-India Sales, Micron Technology

Micron is an industry leader in innovative memory and storage solutions transforming the world. The company delivers a rich portfolio of high-performance DRAM, NAND and NOR memory and storage products.

In an exclusive interaction with NCN, Mr.Rajesh Gupta, Director, Country Manager-India Sales, Micron Technology, reviews the evolving market trends, the marketing strategies adopted for boosting the sales and the morale of partners and how AI & blockchain have redesigned the structure of Micron products.

With the changing data centre market trends, how have you positioned yourself in the market?

The explosion of data is intensifying demands on computation and data center infrastructure. The world is generating and analysing more data than ever before, with the growing pervasiveness of AI workloads, and app-heavy devices – which will only expand with the rollout of 5G. While this transformation has the opportunity to deliver new insights and competitive advantage, the architectural foundation that has driven data center computing for the past two decades is challenged to keep pace with these sophisticated workload demands.

To meet the needs of these data-rich workloads, designing a platform architecture that is flexible and scalable is key. Future data centres need heterogeneous compute, a re-imagined memory and storage hierarchy, and an open, agnostic interconnect to tie it all together and enable composable systems that can evolve with workloads. This is the data center of the future.

Micron differentiates itself with technical expertise in data center workloads and solution architectures; a broad portfolio mix; and strong design collaborations.

There has been a shortage in the chips. How has it affected your company?

The demand environment is very strong, causing semiconductor shortages as well as tightness in our end markets. Micron has excellent long-term growth prospects and despite supply shortage impact, we expect our growth this year to be very strong.

Semiconductor supply chain shortages are having a dual impact on Micron. Firstly, we use semiconductor components in our products. So far, we don’t see an impact to our revenues from these shortages, but it restricts our ability to shift supply between different segments and respond to changes in demand. Secondly, these shortages lead to lower demand for our products as they impact production for our customers.

We expect DRAM bit demand growth CAGR at mid to high teens long term, and NAND bit demand growth CAGR of 30%. We target Micron’s bit supply growth to be in line with the rate of bit demand.We are focused on working with customers to deliver to their needs.We aremaking strategic investments to ensure that we are able to support our customers.

Our goal is to be capable of responding to customer’s needs more rapidly by shortening production cycles allowing for better focus on more valuable and advanced products. Our Centers of Excellence bring expertise together in one location, providing an efficient support structure for end-to-end manufacturing, with quicker cycle times that benefit our business and customers, connecting cross-organizational teams including R&D, product engineering, human resources, procurement and supply chain management.

Which are the industries in which you operate?

Micron is a global leader in memory and storage solutions. Our products are the core of all electronic innovations. Following are the industries in which we operate:

Data Center-The amount of data in our world is growing exponentially. Every two years, we create more data than in the whole of human history combined. And now, every “thing” is producing data, and data stores are mounting. Micron has accelerated our innovation cycle for both DRAM and NAND to keep pace with accelerating data center demands.  We are coupling this with delivery of innovative new products to unlock new capabilities to existing platforms and working with partners and customers on redefining infrastructure into new composable pools of resources delivering independent scaling of memory and storage with compute.

PC & Graphics-We deliver advanced technology used by billions of people around the world – from PCs and mobile devices to communications networks. At Micron we innovate on the edge. Micron’s technology is powering a new generation of faster, intelligent, global infrastructures that make the impossible a reality.

Mobile & Intelligent Edge- We are the only company in the world that can couple 30 years of embedded market leadership with the industry’s broadest memory and storage portfolio for the intelligent edge.  When combined and optimized, Micron technology delivers a data foundation for the intelligent edge.

Automotive-Micron is the world’s #1 memory and storage supplier for automotive, providing advanced solutions that meet stringent quality, reliability and compliance requirements. Micron’s broad portfolio of NAND, NOR and DRAM technologies are optimized for automotive and 5G V2X connectivity.

Gaming-Micron’s leadership in gaming goes beyond consumer product excellence. When it comes to PC gaming, they have a complete portfolio of solutions designed to deliver premium performance and power-efficiency in this cost-sensitive market. n’s broad range of memory and storage solutions include cutting edge 3D graphics cards, customized DRAM, and fast SSD solutions.

At Micron, we are committed to supporting our customers innovations in 5G, AI, data centres, edge computing and automotive. We continue to develop DRAM and NAND with increasingly complex architectures and smaller feature sizes, with high quality standard. 

Which areas of the semiconductor industry have received maximum purchase?

Calendar 2021 is shaping up to be a solid year, and our overall outlook across DRAM and NAND has improved with broad strength across nearly all end markets and similar trend should be visible in India. Recovery from the pandemic and pent-up demand are expected to drive strong demand growth in markets such as enterprise, cloud, desktop PCs, mobile, auto and industrial.

In products, Micron is on track to support customers as they begin to introduce DDR5 in the fiscal second half of 2021. We are also driving an increased mix of QLC NAND, which helps to make SSDs more cost-effective and accelerates the replacement of HDDs with SSDs. QLC SSD adoption continues to grow, and we achieved a record high QLC bit mix in FQ2.

Turning to Micron supply, we target our long-term bit supply growth CAGR to be in line with the industry bit demand growth CAGR for both DRAM and NAND. However, there can be year-to-year variability caused by node-transition timing. In both DRAM and NAND, we expect our calendar 2021-bit supply growth to be below the industry demand growth, and we have used our inventory to add to our bit shipment growth this year.

With the emerging work from home option now, there has been a rise in AI and Blockchain to a great extent. Explain

Technology solutions are rapidly helping society adapt and manage the temporary and permanent changes stemming from this pandemic. Consumers are significantly increasing online activity, including e-commerce, gaming and video streaming, all of which drive additional data center capacity requirements. Trends like working-from-home and online learning are likely to drive long-term changes in how we think about workforce flexibility and education.

2021 is going to see AI-as-a-service become mainstream, intelligence migrate to the edge, and 5G come to life. These advances are going to propel fundamental changes in the way server systems are architected. AI enables insights from knowledge and uncovers value rapidly and at scale. Enterprise, healthcare, customer experience, and smart cars/homes are all implementing AI/ML/DL. 

Micron memory and storage have been foundational in AI’s transformation to these highly adaptable, self-training, ubiquitous, machine-learning systems for mainstream use. Mainstream AI demands a new generation of faster, intelligent, global infrastructures. Micron’s fast, vast storage and high-performance, high-capacity memory and multichip packages power AI training and inference engines, whether in the cloud or embedded in mobile and edge devices. Leaders look to Micron flash storage, DRAM, GDDR graphics memory, FPGAs, and other innovative memory technologies to help them serve up huge volumes of data in real time to training AI systems, accelerate inference with high-performance, low-power memory for AI chips, enable edge devices with memory and storage to keep them smart.

What were the challenges that you faced during the pandemic last year and this year?

The pandemic has quickened digital transformation – The fabric of our society in 2020 would have looked much different without cloud-derived digital services, including online shopping, virtual meetings, and telehealth connections. Boundaries between memory and storage are blurring- in 2021 we are seeing AI-as-a-service becoming mainstream, intelligence migrating to the edge, and 5G coming to life. 

Today, the challenge is to fuel broad adoption of multi-cloud infrastructure to enable broad deployment of AI enabled applications. Memory and storage are sitting at the heart of the semiconductor industry and is important as a critical enabler of the most advanced technologies driving economic growth and well-being.

There is a complete shift in the outlook of businesses and the industry. We can foresee new paradigm when it comes to changes in the way companies are working today because of the new hybrid working models that have come into play post Covid-19. On the consumer front, there is a significant change in the consumer behaviour leading to increasing online activity, including e-commerce, gaming, and video streaming, all of which is driving additional semiconductor requirements. 

The pandemic has driven changes in our economy that we believe will not only benefit us this year, but also serve to accelerate the digital transformation of the economy and drive new opportunities for Micron. Data center demand is expected to be strong in calendar 2021, particularly in the second half of the calendar year, due to a combination of factors: First, enterprise demand has started to come back as the economy recovers and is expected to further strengthen through the calendar year. Second, our opportunity at cloud service providers will continue to strengthen through calendar 2021, driven by robust demand for their solutions and offerings, as well as secular growth in AI and data-centric workloads. And finally, the introduction of new CPUs will support more memory channels and higher-density modules, contributing to increases in server memory content across both cloud and enterprise. 

Have you planned any special programmes for motivating your partners? If yes, please explain

While Micron is doing several partnerships to facilitate innovation globally, but from an India standpoint we had recently partnered with Tata Communications to announce the launch of the world’s first cloud-based embedded SIM, a ground-breaking solution that will accelerate and simplify the deployment of IoT devices at a global scale. The virtual SIM brings secure cellular connectivity to even the most remote IoT devices, going beyond the limits of close-range and insecure Wi-Fi, and the complexities of local operator contracts and roaming fees. In place of a physical SIM card, Micron’s Authenta Key Management Service (KMS) (the industry’s first silicon-based security-as-a-service platform for edge devices) handles device identity verification via a silicon root-of-trust using strong cryptographic identity and security features baked natively into flash memory. Authenta also allows late binding of security certificates to devices, freeing customers from vendor lock-in and allowing them access diverse third-party IoT services, unleashing the full potential of the IoT services ecosystem.

In addition to this Micron Technology, Inc. also introduced the Micron University Research Alliance (URAM) to foster economic growth and foster technology innovation. The alliance will focus on building talent in science, technology, engineering and math (STEM) and aims to reach over 10,000 students. Micron with bring to bear its 42-year history of industry-defining innovations and legacy of more than 43,000 patents will guide the program’s efforts to bridge collaboration across different institutions and advance research and development in 5G, artificial intelligence (AI), internet of things (IoT) and autonomous driving.

Could you describe the roadmap of 2021?

Despite shortages across the semiconductor ecosystem in various assembly materials and assembly capacity, Micron delivered record assembly output this quarter, which helped fuel our strong revenue performance. Our assembly and test success was the result of a strategic decision we made several years ago to increase our captive footprint and strengthen relationships with suppliers and partners.

Turning to our market outlook: While the pandemic remains a risk factor, CY21 is shaping up to be a strong year fueled by the macroeconomic recovery combined with secular drivers, such as AI and 5G, that are creating sustained demand increases across broad end markets. 

As a result, our expectations for CY21 DRAM and NAND bit growth have increased since our last earnings call, and we now expect CY21 DRAM bit demand growth to be somewhat above 20% and NAND bit demand growth in the mid 30% range. There is currently unmet demand for DRAM and NAND due to end market strength. This unmet demand would have been even larger had it not been for the non-memory component shortages influencing our customers’ ability to manufacture their products, particularly in the PC, automotive and industrial markets. These shortages can cause variability in demand patterns as customers experience challenges sourcing matched sets of non-memory components. We are hopeful that foundry capacity coming online can begin to alleviate some of the component shortages in the second half of CY21 and support robust memory and storage growth. 

Additionally, as a result of strong end market demand trends, the lessons of the pandemic and ongoing geopolitical uncertainty, some customers will change their inventory management strategy from just-in-time to just-in-case and increase the target level of what they consider normal inventory levels. Long term, we see a DRAM bit demand growth CAGR of mid to high teens and a NAND bit demand growth CAGR of approximately 30%.