Micron Technology Inc is an American company that focuses on the manufacture of computer memory and other computer data storage, including accessories like dynamic random access memory, flash memory, and USB flash drivers.
The company also works in the production of consumer products and their ballistic products are made available in the market under the brand name Crucial. Micron Technology along with Intel created IM Flash Technologies which produced NAND Flash Memory.
The company was founded by four people namely Ward Parkinson, Joe Parkinson, Dennis Wilson, and Dough Pitman in the year 1978. During the initial stage, the company had its headquarters in Boise, Idaho and it primarily focused its operations as a semiconductor design consulting company.
While looking at the graph of the company’s performance last year, there is not much profit granted to the shareholders of the company as their performance was not up to the mark.
Micron Technology was severely affected by the change in the market value and demand for technology stocks and the weak demand for their manufactured products.
In the past year, the demand for memory chips was critically short, and, being one of the main manufactured products of the company, the share of the company fell more than around 40 percent.
According to the opinions and speculations of experts, the overall outlook for the firm for about five coming years is expected to remain the same. They say that the company’s top and bottom lines have a chance to shrink by 19% and 52% respectively.
But the question of concern is, will the company be able to outdo these calculations and make a comeback in the market that can increase the value of their stocks?
The Expected Future For Micron Technology
It is true that the demand for memory products is facing a serious decline in the market today but that does not make Micron Technology lose hope about the future. One of the main reasons attributed to the cause of low demand for memory products is the decrease in the selling of products like smartphones and laptops.
Even though there are a few challenges for the company in front of them now, there are also ways in which the company can pull out from these situations and ensure a better future.
During their Investor Day in 2022, the company stated that there were many different industries that could have an increased demand for memory in the coming years. One of the examples pointed out on the day to prove their theory was the data center memory market.
The market was reported to have a worth of around $50 billion in the past year. The company expects a data center dynamic random access memory (DRAM) demand to have a compound annual growth rate (CAGR) of 28% in the years till 2025.
The reason behind the expectation is justified by the increasing computing capacity.
Just like this, they also calculate that the demand for NAND Flash Memory will also have an annual increase of 33% through 2025. With these speculations in view, Micron Technology expects a 14% CAGR for the total market for their DRAM and NAND flash chips in the data centers all through 2020.
Just like the expected trends in data centers, Micron Technology also shared their calculations about the growth of demand for memory in other areas like smartphones, PC, and even automotive markets.
People might begin to question their expectations from the smartphone market with doubt as the same industry is having a low demand for the product now. But fortunately, the development of the 5G technology is what comes in as a savior for the company.
Introducing a new smartphone with such innovative and new technology is bound to increase the demand for the phone which will benefit Micron Technology as new phones mean demand for new memory.
While only about 40% of smartphones were able to support the feature of 5G, the company hopes that around 80% of the smartphones will be able to support the feature in 29015, which is double what is available in the market now.
With the introduction of new smart features in cars, the automotive industry is the next hot area for the company. The introduction of features such as evolved infotainment systems, increasing connectivity, and technologies like driver assistant systems are expected to pave the way for a rise in demand for memory, which can be ultimately beneficial for Micron Technology.
With the expectations to dominate the market in the coming years, Micron Technology has revealed their plan to build a new memory fabrication plant in Boise, Idaho which will have an investment of $15 billion by next year from the company. They also have plans to build more manufacturing units in the United States, expecting a rise in demand for memory.
As for the inverters of the company, the current market situation is not at all suitable as the stock value is expected to remain in the same condition unless there is a positive change in the market.
Even though it might not be the best choice for short-term investments, speaking in the light of the words from the company Micron Technology can be considered a possible option for long-term investments.