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     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3442 Registered: 05-2011 Posted From: 65.35.45.47 Rating: N/A |
MU Micron ups the ante in the data center market with its new product portfolio strategy (92.26 +0.83) Semiconductor bellwethers Micron (MU) and Intel (INTC) are making waves today after MU announced last night that it's undergoing significant changes to its portfolio strategy. At the center of the shift are 3D XPoint memory products, which MU will cease producing in order to focus on new data center memory systems that utilize the Compute Express Link (CXL). INTC's involvement in this news dates back to mid-2015 when the company and MU formed a partnership to develop 3D XPoint technology. The concept was to create a non-volatile memory offering that fills a gap in the storage market between DRAM and NAND flash. Utilizing a different architecture than traditional flash products, INTC and MU promoted 3D XPoint as being many times faster than NAND, while also benefiting from more storage density than DRAM. Although the rivals worked together on the technology, the companies produced and branded their own 3D XPoint products. In 2017, INTC launched its first product based on the technology under the Optane brand, while MU brought its version to market under the QuantX banner. MU's decision to halt development may seem sudden and surprising. However, the pieces come together after realizing that INTC discontinued its lineup of Optane SSDs for desktops back in January. This move almost entirely eliminated Optane's position in the consumer market, leaving only one high-end SSD that's targeted for laptops. About a month earlier, INTC announced the launch of Optane SSD P5800X, which is designed specifically for data center applications. Therefore, MU's new portfolio strategy isn't necessarily a repudiation of INTC, but, rather, it's a decision that's in alignment with INTC's recent maneuvers. It's not difficult to understand why both companies are ramping up their R&D activities and investments for the data center market. Last quarter, healthy demand for DRAM chips fueled a 29% increase in MU's Compute and Networking segment, which includes sales in the data center and cloud markets. A primary catalyst that's driving robust growth for semiconductors in data centers is the buildout of infrastructure to support the surge in data resulting from the digitization of businesses and the work-from-anywhere transition. Last night's press release from MU states that the company will "shift resources to focus on accelerating market introduction of CXL-enabled memory products." Technical jargon aside, CXL is an industry standard interface that supports high-speed data processing by enabling fast connections between computers, memory, and storage. In the press release, the company states, "... Micron sees immense promise in new classes of memory-centric solutions that utilize CXL to scale the capacity, performance and content required by applications to run on infrastructure with greater architectural freedom..." Although MU didn't offer specific financial implications regarding this transition, it does anticipate that the actions will be accretive to its near-term and long-term performance. Since the company intends to sell the facility that was manufacturing 3D XPoint products, nonrecurring items are likely to materialize in the coming quarters. The main takeaway is this: We view MU's updated portfolio strategy as a logical and positive development since it more fully aligns the company with the high growth opportunity still evolving in the data center market. |