Micron Technology, Inc. (NASDAQ:MU) is, as the reader is likely no doubt aware, probably the most important DRAM play. Dynamic random-access memory (DRAM) is a foundational semiconductor memory form that stores each bit of data in a separate tiny capacitor within an integrated circuit. This is a straight binary process.
The company also provides NAND products, which are electrically re-writeable, non-volatile semiconductor memory, and storage devices. Between the two (DRAM and NAND), the company is a central weather gauge for the memory cycles that underlie a lot of the technology sector business cycle. So, it’s an extremely important stock to understand and follow – probably more than most people really understand.
Micron Technology, Inc. (NASDAQ:MU) shares have been steadily declining for the past few months, with a top that came into place in May. Still, shares are up nearly 300% in the past two years, so it’s tough to really complain about the action if you’re a longer-term shareholder.
A Different Track
Nonetheless, what can alter the allegiance the stock has to the DRAM and NAND cycles?
One possibility is the company’s ambitions around its 3D XPoint technology. Micron and Intel have been collaborating in a JV project called IM Flash Technologies that is primarily centered around developing and operationalzing this new technology.
According to company materials, “3D XPoint technology is an entirely new class of nonvolatile memory that can help turn immense amounts of data into valuable information in real time. With up to 1,000 times lower latency and exponentially greater endurance than NAND, 3D XPoint technology can deliver game-changing performance for big data applications and transactional workloads. Its ability to enable high-speed, high-capacity data storage close to the processor creates new possibilities for system architects and promises to enable entirely new applications.”
MU just announced this afternoon the intent exercise its right to call Intel’s interest in IM Flash Technologies, LLC. In other words, MU is buying out INTC’s interest in the partnership.
Micron can exercise the call option to acquire the remaining interest in the joint venture starting January 1, 2019. The timeline to close the transaction is between 6-12 months after the date Micron exercises the call.
According to the release, “The IM Flash joint venture is already consolidated in Micron’s reported financial statements. Micron anticipates no meaningful impact to overall financial results or changes to its Fiscal 2019 capital expenditures and long-term capital expenditure target.”
“Micron’s acquisition of IM Flash demonstrates our strong belief that 3D XPoint technology and other emerging memories will provide a unique differentiator for the company and be an essential solution for new data-hungry applications,” said Micron President and CEO Sanjay Mehrotra. “This investment provides Micron with an established development and manufacturing facility and a highly skilled workforce with a strong track record of innovation and execution.”
At the time of close, Micron expects to pay approx. $1.5 bln in cash for the transaction, dissolving Intel’s non-controlling interest in IM Flash as well as IM Flash member debt, which was approx. $1 bln as of August 30.
In July 2018, Micron and Intel agreed to conclude their joint development of 3D XPoint technology after the completion of the second-generation node, which is expected to occur in the second half of Fiscal 2019.
Company materials indicate some sort of marketable implementation of the technology in fiscal year 2019. So, having full control of the rights suggests the possibility of a shift in guidance on this basis.