[Introduction]: Micron's earnings report has been raised again. The price increase of memory chips in the last two years has made storage companies live a very moist day. Some research teams have drawn some reports from Micron's financial report. The report said that 2021, fully automatic driving Need 40+ sensor, the following is the report details.
Micron once again raised its earnings outlook, why will it break through the industry outlook again? The large cycle of storage chips is still rising, exceeding expectations. Why? We started the "Semiconductor Essay Series" from March 17th, and the world is leading the world! Optimistic about the global semiconductor super cycle, the exclusive introduction of silicon wafer scissors + fourth silicon content to enhance the industrial logic, China's second big investment once again catalyzed the development of the industry, and the memory chip has been our strong optimistic large variety, the Micron financial report is also detailed Prospects and analysis of various sub-sectors, verifying the essay industry perspective, please pay attention to essays and pay attention to the most essential analysis of global semiconductors!
Micron said that the current fundamentals of the storage industry are the strongest ever!
The growth of storage demand is strong, the supply growth rate is slowing down, and the return on investment of storage vendors will be further improved!
Compared with 2017, the demand for storage for AI, automotive, mobile, data center, Internet of Things, and SSD will increase exponentially by 2021.
1. Strong, and becoming stronger 1.1 Market: Data-hungry-type applications will drive storage growth for a long timeFrom the market point of view:
The PC Internet era generates 250 billion GB of data each year, and the storage market scale reaches 38 billion US dollars. The mobile era generates 7 trillion GB of data every year. The storage market scale reaches 62 billion US dollars in the data economy era. In 2017, 22 trillion GB of data was generated, and the storage market The scale reached $128 billion. It is estimated that in 2021, 62 trillion GB of data will be generated each year, and the storage market will be further upgraded.
Virtuous cycle: driven by increased data value
Creating ever-increasing demands for capturing, processing, transmitting, and storing data creates growing demand for storage
AI brings about a change in the landscape, first of all natural language processing, the next frontier is computer vision, which will bring more storage requirements.
Computer vision driven storage needs:
Intelligent machine storage core driver: multi-high pixel camera 4K+HDR video AR/VR/3D game car storage driver: HD map + 4K screen voice, gesture control 2021, fully automatic driving will require 40+ sensor 2025, there will be 2600 More than 10,000 auto-driving car cloud data centers: In 2021, compared to 2017, 2.6 times capital expenditure is required compared to traditional servers. AI training requires 6 times DRAM and 2 times SSD.
For Micron, the main market drivers are:
Data Center: The potential opportunity market grew from $29 billion to $62 billion, 2.1 times; mobile: potential opportunity market grew from $45 billion to $54 billion, 1.2 times; automotive: potential opportunity market grew from $2.5 billion to 59 Billion dollars, 2.4 times; Internet of Things: potential opportunity market increased from 9 billion US dollars to 16 billion US dollars, 1.7 times
From the demand point of view, from 2017 to 2021, the compound annual growth rate of DRAM bit demand will reach 20%, and the compound annual growth rate of NAND bit demand will reach 40-45%.
1.2 Industry: Structural changes maintain positive industry dynamicsFrom the perspective of industry, the proportion of storage industry in the semiconductor industry will increase to about 35%. Under the trend of strong demand and stable supply, the return on investment of storage manufacturers will further increase.
From the demand point of view, from 2017 to 2021, the compound annual growth rate of DRAM bit demand will reach 20%, and the compound annual growth rate of NAND bit demand will reach 40-45%.
From the perspective of supply, DRAM new processes require higher capital intensity. In 2018, DRAM bit supply growth will slow down to around 20%; 3D NAND requires more clean room space and higher capital intensity, 2018 Year, NAND bit supply growth will slow down to around 40%
On the whole, storage is the cornerstone of the data economy. The growing diversified demand, higher value, and stable supply will bring structural changes to the industry and promote healthy industrial trends.
Micron has a heritage of 40 years, leading scientific and technological innovation, expanding partnerships and manufacturing on a large scale.
FY18Q2 record financial performance:
Revenue was 7.351 billion US dollars, up 58% year-on-year; gross profit was 4.296 billion US dollars, up 140% year-on-year; net profit was 3.495 billion US dollars, up 239% year-on-year; cash flow was 2.234 billion US dollars, up 285% year-on-year
Micron Investment Strategy:
OpEx: Technology extends 3D XPoint storage technology in the existing NAND and DRAM routes. OpEx: Product development high-value solutions for high-bandwidth and graphics high-performance storage Managed NAND, SSD, 3D XPoint products CapEx: Manufacturing Technology transfer for customer needs, competitive manufacturing cost, flexible supply chain
Micron has the most comprehensive technology portfolio in the industry: DRAM, 3D NAND, NOR, 3D XPoint, and emerging technologies.
Micron will launch 3D XPoint products in 2019
10 times higher than DRAM density; 1000 times longer than NAND; 1000 times faster than NAND.
1.4 Micron's winning strategyThe five cores of Micron's winning strategy:
Cost competitiveness, superior execution, high value solutions, focus on customer talent and culture
Micron cost reduction is much faster than the industry
DRAM cost reduction is 1.3 times that of the industry; NAND cost reduction is 1.9 times that of the industry.
Micron's excellent execution:
Technology mature time record 1Xnm DRAM technology mature speed increased by 25%; certification time to improve 1Xnm DRAM certification speed increased by 20%; 64-layer NAND certification speed increased by 30%; TLC share increased FY18Q2 accounted for 80%, up 25pct .
High-value solutions: The proportion of high-value products continues to increase.
Focus on customers: rely on trusted partners for rapid deployment
Micron's superior execution brings structural growth in operating profit: it is expected to increase by $6 billion in 18 years and $3 billion in 18 years compared to 18 years. That is to say, in 2021, compared with FY2016, there will be an operating profit increase of 9 billion US dollars.
Micron's talent and culture:
Talent: 30% of new employees, more than 1,200, with high education; Equality: 99% gender pay is equal, goal is 100%; Team: innovation culture, resilience, urgency and responsibility
Our focus areas:
The execution of the strategy is based on the growth of ROI's investment profitability, bringing higher value to shareholders.
AI server
Compared to 2017, the standard server averages 145GB of DRAM. It is expected that the AI ​​server will be configured with 2.5TB of DRAM per 2021. Compared to 2017, the standard server averages 2TB NAND, and it is expected that 2021 AI servers will be configured with 20TB NAND each.
Self-driving car:
In terms of DRAM, L1/2 currently requires 8GB; in 2021, L3 requires 16GB; in 2025, L5 requires 74GB. For NAND, L1/2 currently requires 8GB; in 2021, L3 requires 256GB; in 2025, L5 requires 1TB.
Mobile: 5G, AI NPU, HD, AR, etc. to improve storage requirements
In terms of DRAM, the current average is 2.7GB. It is expected that in 2021, the flagship model will be equipped with 12GB. In terms of NAND, the current average is 43GB. It is estimated that in 2021, the flagship model will be configured with 1TB.
Internet of Things: Smart Security brings edge storage requirements up to 16 times
In terms of DRAM, the network camera will be upgraded from 0.5GB in 17 years to 8GB edge storage in 21 years. On the NAND side, the network camera will be upgraded from 0.25GB in 17 years to 1TB edge storage in 21 years.
Client PC: Value Driven Permeability, Capacity
The SSD penetration rate will increase from 36% in 17 years to 81% and 2.3 times in 21 years; the average unit capacity will increase from 264GB in 17 years to 597GB in 21 years, 2.3 times.
All of Micron's business groups benefit from growth in these five areas:
CNBU benefits from data centers and PCMBU benefits from smart machine SBUs benefit from data centers and PCEBU benefits from cars and IoT
2.2 Value DrivenAccelerate time to market for high value solutions:
Managed NAND products have increased speed by 54% from components to solutions; SSD products have increased speed by 70% from components to solutions.
The proportion of NAND solutions continues to increase:
The proportion of independent parts sales is declining. The proportion of SSD and Managed NAND is rising. QLC innovation
Micron is one of the DRAM leaders:
High-performance market-leading GDDR performance GDDR products enter the automotive, Internet, AI field, high-bandwidth HBM product development, long-term (durable) market, automotive market share, first Internet market share, first mobile market, LPDDR4X: the world's lowest power consumption, the world's first 12Gb Die cloud market FY18Q2, compared with FY16Q2, 8 times the cloud DRAM revenue led the migration of NV-DIMM-N in the future 3D XPoint and emerging technologies
Micron is the only company in the world with both NAND, DRAM, and 3D XPoint technologies:
One of the six largest NAND vendors; one of the three largest DRAM vendors; one of the two largest 3D XPoint vendors;
3. Technology Leaders 3.1 HeritageThe history of Micron has been the first in the industry:
In 2007, Pattern MulTIplicaTIon technology reduced the process to below 40nm; in 2015, CUA technology brought 3D NAND to a new level. 2017, Array Stacking technology paved the way for 3D NAND development
3.2 DRAMMicron's DRAM process is advanced to 1Xnm and the certification cycle is reduced by 20%.
Micron DRAM product advantages:
The reliability of the two competitors is 1.4 times and 2.9 times higher than that of the competitors. The power consumption of the two competitors is 1.2 times and 1.25 of Micron's respectively. Times; the fastest bandwidth.
Micron DRAM technology development:
1Ynm: As planned, it is expected to start production in the second half of 18 years. Confidence in the future 1Znm and subsequent processes. EUV is not a necessary lithography technology to optimize capacity and cost. After 1β, EUV will have the advantage to continue to promote Stacking technology DDR4/5 high-performance products: Enterprise cloud, network, automotive applications HBM high-bandwidth products are still in the R & D center: AI, machine learning, network and graphics applications
3.3 NANDMicron's NAND products are advanced to 64 layers in 2017, and the certification cycle is shortened by 30%.
Micron's NAND products are leading in the industry, benefiting from TLC technology, calculated by GB/wafer, leading by 15%.
Micron's 3D NAND technology development:
96L 3D NAND: 50% increase in layer count combined with Array stacking and CUA technology The world's smallest 512Gb die 4th generation 3D NAND write bandwidth increased by 30% unit Bit power consumption reduced by 40% QLC technology The world's first 64L QLC SSD solution worldwide The first 1Tb die density increased by 33% compared to TLC
3.4 3D XPointMicron 3D XPoint Memory: The World's First Commercial Storage Memory
The second generation of integrated high-performance, high-density, non-volatile CUA technology breakthroughs will bring a broader market
4. Operational Excellence 4.1 ScaleMicron's global layout:
Japan Technology R&D Wafer Manufacturing Test Line Taiwan Wafer Manufacturing Packaging Test Packaging Technology R&D China Packaging Test Module Manufacturing Singapore & Malaysia Technology R&D Wafer Manufacturing Test Line Packaging Testing SSD Manufacturing
Advanced processes have greater demand for clean room space, and Micron's global expansion plan:
Japan's clean room expansion 10% space Taiwan area packaging test Singapore's first phase expansion clean room 35%
In addition to Fab, capital intensity is also increasing, and CapEx investment in testing, R&D, and IT is 1.3 times that of the original.
Micron supply forecast:
DRAM: flat with the industry, 20% growth; driving force for 1X technology NAND: slightly higher than the industry's 40-45% growth. The driving force is 64-layer 3D NAND
4.2 CostMicron technology research and development is faster than the industry
DRAM: The two-year Bit/Wafer growth rate is 1.3 times that of the industry; NAND: The two-year Bit/Wafer growth rate is 1.5 times that of the industry.
Micron's mature mass production speed has doubled.
Micron cost reduction is higher than the industry
DRAM: Two-year COGS/Bit slowdown is 1.3 times that of the industry; NAND: Two-year COGS/Bit slowdown is 1.9 times that of the industry. Benefit from migration from MLC 2D NAND to TLC 3D NAND
4.3 QualityPutting equipment into production in Utah, Virginia
Utah: 3D XPoint Virginia: Long Life Products, NAND, NOR, DRAM
High value solutions require high quality products:
Customer quality evaluation first in the automotive storage share first in the network storage share first
4.4 speedMicron adopts a networked assembly test pipeline, which integrates on a large scale and vertically, increasing flexibility and increasing cost competitiveness.
5. Profit-driven, creating value 5.1 Diversification of income structureDRAM: The downstream distribution of revenue is more balanced. More than one-third of the business is PC. Now PC, server, mobile, and dedicated DRAM. The four downstream markets balance NAND: revenue diversification, high-value product share increase. More than half of the business revenue comes from component sales, and the share of components sold separately is now decreasing.
5.2 Financial improvementIn 2017, revenue increased by 64% to reach 203 US dollars. The median revenue of FQ3 is expected to be US$7.75 billion. It is estimated that the accumulated revenue in the first three quarters will exceed the total revenue of US$20.3 billion in the previous year. EBITDA reached US$9.6 billion last year, an increase of more than 200%. It is expected that the EBITDA ratio will continue to increase the free cash flow to positive, and the free cash flow ratio is expected to continue to increase. Estimated 21 years compared with 16 years, operating profit will increase by US$9 billion. R&D investment is increasing. The decline in R&D expense rate is due to revenue growth. It is expected that the management expense ratio will further decline. The gross profit margin is expected to further increase, which is 43% in 17 years. The return on capital is expected to increase further, from 22% in 17 years to 1% in 16 years.
5.3 Upgrade Q3 GuidelinesThe increase in Q3 is expected to reach US$7.7-7.8 billion, with the original guidance of US$7.2-7.6 billion; the EPS is raised to US$3.12-3.16, and the original guidance is US$2.76-2.90.
5.4 Announced $10 billion stock repurchase programFrom FY19, at least 50% of free cash flow is used for repurchase
6. SummaryStrong market demand combined with positive industry dynamics:
Data economy drives storage industry growth Industry supply side growth slows down the strongest industry fundamentals ever
Create higher value for shareholders:
Based on ROI investment, strong execution force drives operating profit improvement from FY19, $10 billion repurchase plan, at least 50% of cash flow for repurchase
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