In 2012 Micron Technology, Inc. (NASDAQ:MU) faced an intense competition, a demand and supply imbalance, decreasing selling prices which all badly affected Micron’s profitability and also its top line growth. However in the year 2013 Micron encountered an increasing demand from Non Pc markets, had a vast diversified product range, better prices for its memory products and there was a better alliance in the Industry. All of these favored Micron and thus it was able to achieve profitability I the year 2013.
This trend went on and Micron was able to achieve record profitability of $ 3billion, a record income of $16.4 billion and a record free cash flow of $2.6 billion in the year 2014 (ended in August). Micron’s stock price has also increased from $6 two years back to $ 35 at present. Micron (NASDAQ:MU) has a large memory product collection that caters to the needs of many market segments and it also has the second largest manufacturing capacity therefore it seems that Micron (NASDAQ:MU) is in a strong position to benefit from the improved market conditions.
Micron aims to be more calculated and cautious in its capital spending in the future. Along with technological improvements Micron’s focus areas for the year 2015 are technology deployment, improved manufacturing capacity and growth of memory systems and system sub solutions. The rapid growth of smartphones and tablets has led to the growth of memory products in the last few years. Micron (NASDAQ:MU) develops DRAM memory devices and NAND flash products, ideal for mass storage devices such as smartphones and tablets.
Smartphones and Tablet PCs have taken over the conventional PCs and this can be seen in the shipment trends too, as global pc shipments decreased by 9.8% (to 315 million units) and it is expected that global pc shipment would drop to 290 million units whereas the total smartphone shipment will increase to 1.7 billion units in the year 2018. Micron (NASDAQ:MU) is looking to expand its sales of DRAMs in the mid and low range smartphones which have evolved and these also use DRAMs although mostly of a low power.
Micron (NASDAQ:MU) expects to have sales of 5billion DRAMs from these low price smartphones. Mobile represents around 25 % of Micron’s DRAMs business. The number of mobile devices getting shipped has increased and thus it will contribute to the expansion of DRAM shipments in the future. Before Micron (NASDAQ:MU) was purchased by ELPIDA MEMORY (OTCMKTS:ELPDF), it gathered less than 10 % of its revenue from the sale of mobile DRAMs.
Because Elpida has a strong presence in DRAM (Apple is one of its customers), Micron was able to benefit from it too and it has now a variety of mobile customers and keeps a balance in developing PC DRAMs and Mobile DRAMs so to be profitable in the long term as well. The requirement of flash memory for games and video streaming on smart phones has helped in the growth of Micron’s NAND Flash bit shipments and it is expected to grow 3.4 times between 2013 and 2016. Micron estimated that 25 % of its mobile revenue will be represented by memory and controller in the next year.