Mobile Business Unit Drove Micron’s Sales Upwards in Fiscal 4Q15
Softness in PC Market Hit Micron's Fiscal 4Q15 Results
Mobile drove sales upwards
So far in this series, we have seen that Micron’s (MU) computing and storage segments, which together contribute close to 60% towards the company’s revenue, have reported a slowdown in sales. Amid the softening in the computing space, which has also affected semiconductor giants like Intel (INTC), mobile DRAM (dynamic random access memory) emerged as a winner in driving sales growth. In this article, we will look at how Micron performed in the mobile space.
MBU’s financial performance
Revenue from Micron’s MBU (mobile business unit) grew 27% year-over-year to $958 million in fiscal 4Q15 while operating income grew 28% to $262 million. Higher revenues were driven by an increase in mobile NAND flash gigabit sales volume. The segment benefited from evolving mobile system architectures that require higher memory density at all product levels.
However, the segment’s operating margin fell from 31.6% in fiscal 3Q15 to 27.3% in fiscal 4Q15 due to early ramp headwinds arising from the transition to the 20-nm (nanometer) node.
Micron shifts focus to mobile
Micron identified mobile as a high growth segment and thus shifted its production away from PC to mobile and embedded solutions. It acquired Japan’s only mobile DRAM manufacturer, Elpida, in July 2013. The acquisition proved particularly fruitful for Micron, as Elpida won a huge order for Apple’s (AAPL) iPhone 5.
Micron increased shipment volume of mobile DRAM from 4% to 24%, driven by an increase in production of low-power DDR4. The company expects LP4 DRAM volumes to surpass LP3 by the end of fiscal 1H15.
Transition to 20-nm
In order to compete with Samsung (SSNLF) in the process technology space, Micron started producing DDR4 and LP4 using the 20-nm node instead of the 25-nm and 30-nm nodes used before. As the node shrinks the size of the chip shrinks, and a manufacturer can produce more chips on the same wafer at a reduced cost per gigabit.
However, it may take a little longer to realize this cost benefit for DDR4 and LP4 dies because they are about 10% larger than their predecessors. Micron president, Mark Adams, expects Micron to realize the 20-nm benefits in the middle of fiscal 2016.
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