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Musing on Micron’s manufacturing plans |
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Oct 08, 2007 at 02:10 PM |
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Last week Micron Technology produced 4Q07 financial results and provided some interesting snippets on its manufacturing plans in 2008.
Although the company ended the year in the red, its losses had been reduced due to the successful ramp of NAND flash memory at its 300mm fabs in Virgina and Lehi. The majority of capital spending of approximately $4 billion in 2007 has been allocated to the ramp of these fabs as well as to the initial conversion of DRAM manufacturing at its TECH Semiconductor operation in Singapore to 300mm wafers.
In 2008, Micron is cutting CapEx from $4 billion in 2007 to $2.5 billion in 2008 with the vast majority of the dollars being spent on 300mm fab tooling in NAND and DRAM. Approximately $750 million of that will come from Intel for the NAND JV business of IM Flash.
Most people shouldn’t be surprised at the big drop in CapEx for 2008, as Micron had previously stated that 2007 would be a peak for spending for the foreseeable future.
I must admit I thought the CapEx figure would be cut to about $2 billion as the company restructures and cuts costs in an effort to return to profitability late in 2008.
Spending in 2008 will be split between Lehi (NAND), TECH Semiconductor (DRAM), and the new IM Flash fab in Singapore (NAND).
The new fab in Singapore is said to be slightly ahead of schedule with first silicon expected in the second half of 2008. This suggests that the CapEx spending on this fab will spread over 2008 and 2009 with full capacity reached in the first half of 2010.
Interestingly, Micron executives actually revealed the expected capacity of the fab for the first time, putting it at approximately 60,000wspm when fully ramped.
So it seems that the majority of spending will go on Lehi and TECH in 2008.
On the DRAM front, Micron has reached 78nm node yield maturity at Virginia and is commencing the production ramp at TECH at the same node. This means that the majority of DRAM production additions for 2008 are coming from TECH.
Bearing in mind that the Virginia fab is split between DRAM and NAND production, it seems that bit growth for both memory devices will primarily come from die shrinks from this point on as the fab is fully ramped.
Micron said that it was in the early stages of its volume ramp of 50nm NAND flash memory at Virginia. Lehi will follow suit shortly afterwards. Bit growth of DRAM Q-on-Q is expected to be in low double digits while NAND will push 40 percent growth Q-on-Q.
It shouldn’t come as surprise that NAND supply/demand ratios are again not looking good after only a short period of improvement. The strong ramp at IM Flash won’t help that situation!
However, it was interesting to hear that Micron will be pumping Lexar, its flash storage retail business, with as much NAND as it can take in 2008, which it was unable to do before now. To what degree that absorbs capacity is simply not known at this time.
Executives also commented on the company’s 200mm fabs, which are used for legacy DRAM production and image sensor manufacturing. Although there is no immediate need to convert these fabs to 300mm as the technology required to produce these products is easily catered for on 200mm process equipment, executives did say that in the next two years a transition to 300mm would probably begin.
Micron would use older 300mm equipment pulled out of its newer 300mm fabs to do the fabrication, therefore keeping costs down using fully depreciated 300mm equipment.
Overall, Micron is still attempting to gain market share in NAND and DRAM over the coming 12 months and with aggressive scaling coupled with capacity ramps, it looks certain they will be in a strong position to do that. Making money may prove to be more difficult.
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