DRAM, we've shifted a lot of kit, mumbles profit-munching chip firm Micron

Second quarter results up nearly 60% from last year

Micron's latest quarter revenues were up 58 per cent year on year, its CEO told an earnings call full of analysts eager to nibble at the chip-fryer's plate.

The semiconductor firm reported $7.35bn revenues for the second fiscal 2018 quarter, up 58 per cent compared to $4.65bn a year ago and $6.8bn in the preceding quarter, up 8 per cent.

The net income was $3.3bn, up from $894m in last year's Q2 - and amounting to more than twice NetApp's revenues for its latest quarter. Operating income was $3.6bn, up from $1.0bn the previous year. The world wants what Micron is flinging; it can't make enough DRAM and NAND to satisfy demand and prices are high.

Micron's revenue estimate for the next quarter is $7.2bn to $7.6bn.

President and CEO Sanjay Mehrotra could be excused for talking of Micron executing "exceptionally well" in the quarter. "We grew sales to our cloud, mobile and automotive customers and set new records for SSDs (sales up 18 per cent year on year) and graphics memory," he said.

Was the earnings call anything more than a revenue and profits jump gloat session?

Micron confirmed 64-layer 3D NAND sales were strong. The automotive market needs more smarts and that means memory and NAND. Mobile phones need more memory and NAND to cope with high-res video and cameras. It has qualified its 1x nanometer DRAM at three of the world's largest hyperscale customers with others on the way.

The firm projects DRAM industry bit output to grow about 20 per cent for calendar 2018 and NAND growth to be somewhat higher than 45 per cent in the same period.

DRAM is being driven by hyperscaler and cloud data centre demand. Mehrotra said AI use there was hugely promising: "We are barely starting with AI in cloud computing and data centres."

This affects both DRAM and NAND demand. In DRAM: "We project that, 2017, about 145GB per server going to about 350GB per server by 2021. Similarly, if you look at flash storage, 1.5TB average in 2017 going to something like 6TB average with each server by 2021 time frame."

That's a 4x increase in average NAND TB/server in just four years, and a more than 2x increase in DRAM.

The Storage Business Unit reported weaker results, where on a sequential basis revenue ($1.25bn) declined 9 per cent from Q1's $1.38bn, with growth in SSDs offset by a reduction in components revenue. SBU revenue was up 17 per cent y-o-y, though.

QLC NAND

On QLC (4bits/cell) NAND, Mehrotra said: "QLC is certainly an exciting opportunity for Micron in the years ahead. And QLC is in the development stages and it is not a 2018 phenomenon; that is something that is more like [a] 2019 opportunity starting in 2019 time frame."

He talked about read-intensive use cases - quite naturally as QLC NAND write endurance is expected to be lower than today's TLC (3bits/cell) flash.

XPoint

Overall the good news just doesn't stop coming, until we get to 3D XPoint, where Micron has been lagging partner Intel consistently. It can make the chips but it can't make and sell XPoint devices, or hasn't been able to. That's going to change, it said

CFO Dave Zisner proclaimed: "Product developments for 3D XPoint solutions is now under way ... the first of our 3D XPoint products are expected to launch in Calendar 2019."

DRAM node lithography shrinks

Micron is building out incremental clean room space in its fab in Hiroshima, Japan, to produce 1y nanometer DRAM in calendar 2019.

It appears that sub-1nm DRAM lithography may not happen. Possibly some kind of 3D DRAM technology will emerge as a way to increase chip density.

Analyst Hans Mosesmann of Rosenblatt Securities asked: "After 1y in the DRAM world, how many more node transitions or half-transitions do you expect you and the industry to have before you hit a wall, if you will?"

Mehrotra answered: "We have talked about our 1z technology node in DRAM and will continue working that. And then there's, of course, continue to look at opportunities for further scaling. And, incrementally, we are working on other advanced technologies of the future, as well."

Mosesmann's comeback: "OK. But there's no letter after 1z at this point?" Mehrotra was quick on his feet: "You know, there is no letter in the alphabet after 1z..." ®

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