Micron partnership changes no cause for concern

Micron is going in and out of partnerships with other technology companies, but the consensus is that this isn’t a bad thing.

So far, the Boise-based company has mutually agreed to end one of its partnerships with chipmaker Intel, while starting up another partnership with three other companies using GDDR6, a faster type of synchronous graphics random-access memory that is used in graphics cards, game consoles, and other kinds of high-performance computing.

“This announcement will mean that designers outside the graphics market will be able to use GDDR6 in their designs for the first time,” said Andreas Schlapka, director of marketing, networking segment. “The combined solution will have two main benefits: One, make it easier for customers to use GDDR6 memory in their designs and two, it opens up new markets for our GDDR6 memory technology.”

Micron is also continuing its relationship with Intel to produce chips using 3D XPoint technology, developed by the companies in 2015 for nonvolatile memory, meaning memory that remembers its data even when the device is shut down.

“We continue to work with Intel on 3D XPoint memory, but will end our NAND collaboration with them after the next generation is completed,” Schlapka said. “Micron anticipates no impact to customers and partners as a result of this decision.” He wouldn’t say what other partnerships the company might be working on, citing competitive reasons.

Of course, any change to Micron – the state’s largest publicly traded company, and with more than 6,000 workers one of the state’s largest employers – is cause for concern.

“When Micron sneezes, Boise catches a cold,” Boise Mayor Dave Bieter said at a recent fundraising event for Trailhead, introducing Micron CEO Sanjay Mehrotra. But the change in partnerships could simply reflect the new CEO’s interest in looking over the business and restructuring it, said Jim Handy, general director of Objective Analysis, in Los Gatos, California. “Some things he’s going to look at and size them up,” he said.

In the particular case of the ended Micron-Intel partnership, which produced nonvolatile NAND flash memory like that used in solid state hard disk drives, the companies had actually been moving in that direction for a long time, Handy said. That partnership had started in 2004 and Intel had dropped out of a partnership involving a Singapore plant around 2010, though it maintained the relationship involving a plant in Lehi, Utah. Once Intel decided to retool a plant it already had in China to produce its own NAND chips, it didn’t need NAND chips from Lehi, so the companies retooled it to produce 3D XPoint chips instead. “Lehi was producing all of Intel’s flash memory,” he said. “Now it’s not producing any flash and Intel is producing the flash they need, so there’s no reason for Intel and Micron to have a flash agreement any longer.” But Intel and Micron maintain a tight agreement about their other technologies, including 3D XPoint, he added.

The agreement with the other three vendors means Micron can make more money on dynamic random access memory (DRAM) chips, typically used in computers, rather than competing in the commodity market, Handy said. “What’s important about this is that anybody who has the next generation of DRAM interface stands to be able to sell more profitable chips than the commodity chips that are made by everybody,” he said. “By providing a faster way to get the data out of the DRAM, Micron could have higher margins on their DRAM than their competitors could be able to have.”

Micron’s competitors in that market segment are primarily the Asian companies Samsung and Hynix, Handy said. “They’re the only three companies making DRAM in high volume.”

“The market is so strong now that Intel’s move won’t have any short-term impact,” said Dana Blankenhorn, a writer who follows chipmaker stock. “If I had to choose between buying Intel or Micron stock, I’d buy Micron today,” due to recent security issues with Intel chips. “Intel is just in a world of hurt. Micron, by contrast, knows its business.”