MICRON TECHNOLOGY, INC. This discussion should be read in conjunction with the consolidated financial
statements and accompanying notes included in our Annual Report on Form 10-K for
the year ended
Overview
We manufacture our products at wholly-owned facilities and also utilize subcontractors for certain manufacturing processes. We make significant investments to develop proprietary product and process technology, which generally increases bit density per wafer and reduces per-bit manufacturing costs of each generation of product. We continue to introduce new generations of products that offer improved performance characteristics, including higher data transfer rates, advanced packaging solutions, lower power consumption, improved read/write reliability, and increased memory density.
The ramp of 176-layer NAND and 1? (1-alpha) DRAM across our product portfolio delivers major technology breakthroughs to customers across markets. For the first time in our history, we achieved industry leadership across these two flagship technologies. We delivered initial products based on these process technologies to the market in 2021. In the second quarter of 2022, we expanded our 176-layer NAND-based SSD portfolio with the introduction of the Micron 7450 SSD with NVMe, the world's first vertically-integrated 176-layer NAND SSD for the data center. An increasing portion of our SSDs incorporate vertical integration with proprietary controllers and firmware that we have developed. This new SSD joins our full portfolio of new product entries across memory and storage which have been well received by the market. In the second quarter of 2022, we achieved the first qualification of our 1? LPDDR5 DRAM, which delivers more than a 15% power improvement over the previous generation. We are leading the industry's client DDR5 transition and are well positioned to lead the industry's data center transition as platforms come to market later this year. We have partnered with customers to provide value-added innovation, and speed market adoption of our new solutions. Development of advanced technologies enables us to diversify our product portfolio toward a richer mix of differentiated, high-value solutions and to target high-growth markets and specific customer requirements across data center, intelligent edge, client, and mobile environments.
We face intense competition in the semiconductor memory and storage markets and to remain competitive we must continuously develop and implement new products and technologies and decrease manufacturing costs. Our success is largely dependent on obtaining returns on our research and development ("R&D") investments, efficient utilization of our manufacturing infrastructure, development and integration of advanced product and process technologies, market acceptance of our diversified portfolio of semiconductor-based memory and storage solutions, and efficient capital spending.
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In the second quarter of 2021, we updated our portfolio strategy to further
strengthen our focus on memory and storage innovations for the data center
market. In connection therewith, we determined that there was insufficient
market validation to justify the ongoing investments required to commercialize
3D XPoint at scale. Accordingly, we ceased development of 3D XPoint technology
and engaged in discussions with potential buyers for the sale of our facility
located in
In the first quarter of 2022, we received
In the third quarter of 2021, we recognized a charge of
Impact of COVID-19 on Our Business
Events surrounding the COVID-19 pandemic and their impact on economic activity have been unpredictable. As a result, we have experienced volatility in the markets in which we sell our products. The ultimate extent to which COVID-19 will impact our business depends on future developments, which are highly uncertain and very difficult to predict, including the effectiveness and utilization of vaccines for COVID-19 and its variants, the severity of COVID-19 and its variants, and the effectiveness of the actions to contain or limit their spread.
From the start of the COVID-19 pandemic, we proactively implemented preventative protocols, which we continuously assess and update for changes in conditions and emerging trends. These preventative protocols are intended to safeguard our team members, contractors, suppliers, customers, distributors, and communities, and to ensure business continuity. Government restrictions or severe outbreaks can impact our operations at certain sites. For example, some of our facilities and some of our subcontractors' facilities at times have been required to operate at reduced staffing and capacity levels due to COVID-19 quarantines and other public health protocols. While our global manufacturing sites are currently operating with close to full staff and at normal capacity levels, our facilities or those of our subcontractors could be required to temporarily curtail production levels or temporarily cease operations based on government mandates or our health and safety protocols. We may be required, or deem it to be in the best interest of our employees, customers, partners, suppliers, and stakeholders, to alter our business operations in order to maintain a healthy and safe environment. It is not clear what potential effects any such alterations or modifications may have on our business, including effects on our customers, employees, or on our financial results. We are following government policies and recommendations designed to slow the spread of COVID-19 and remain committed to the health and safety of our team members, contractors, suppliers, customers, distributors, and communities.
We continuously assess our efforts to respond to the COVID-19 pandemic, which have included the following:
•In each of our locations, we implement health and safety protocols based on
applicable regulations and local conditions and, where possible, make testing
and vaccination available and implement health and safety enhancements.
•We require that all
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•We evaluate our supply chain and communicate with our suppliers to identify
supply gaps and have taken steps to provide continuity, to the extent possible.
In some cases, we have added alternative suppliers, executed long-term supply
agreements, and increased our on-hand inventory of raw materials needed in our
operations.
•We have added assembly and test capacity to provide redundant manufacturing
capability through our network of captive operations and external partners.
•We have evaluated all our construction projects across our global manufacturing
operations and enacted protocols to enhance the safety of our team members,
suppliers, and contractors.
•We are working with government authorities in the jurisdictions where we
operate and continuing to monitor our operations in an effort to ensure we
follow government requirements, relevant regulations, industry standards, and
best practices to help safeguard our team members, while safely continuing
operations at our sites across the globe.
We believe these actions are appropriate and prudent to safeguard our team members, contractors, suppliers, customers, and communities, while allowing us to safely continue operations. We cannot predict how the steps we, our team members, government entities, suppliers, or customers take in response to the COVID-19 pandemic will ultimately impact our business, outlook, or results of operations.
Product Technologies
Our product portfolio of memory and storage solutions, is based on our high-performance semiconductor memory and storage technologies, including DRAM, NAND, and NOR. We sell our products into various markets through our business units in numerous forms, including wafers, components, modules, SSDs, managed NAND, and MCP products. Our system-level solutions, including SSDs and managed NAND, combine NAND, a controller, firmware, and in some cases DRAM.
DRAM: DRAM products are dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval with a variety of performance characteristics. DRAM products lose content when power is turned off ("volatile") and are most commonly used in client, cloud server, enterprise, networking, graphics, industrial, and automotive markets. LPDRAM products, which are engineered to meet standards for performance and power consumption, are sold into smartphone and other mobile-device markets (including client markets for Chromebooks and notebook PCs), as well as into the automotive, industrial, and consumer markets.
NAND: NAND products are non-volatile, re-writeable semiconductor storage devices that provide high-capacity, low-cost storage with a variety of performance characteristics. NAND is used in SSDs for the enterprise and cloud, client, and consumer markets and in removable storage markets. Managed NAND is used in smartphones and other mobile devices, and in consumer, automotive, and embedded markets. Low-density NAND is ideal for applications like automotive, surveillance, machine-to-machine, automation, printer, and home networking.
NOR: NOR products are non-volatile re-writable semiconductor memory devices that provide fast read speeds. NOR is most commonly used for reliable code storage (e.g., boot, application, operating system, and execute-in-place code in an embedded system) and for frequently changing small data storage and is ideal for automotive, industrial, and consumer applications.
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