Micron Technology, Inc (NASDAQ:MU) – Where DRAM is the future

Posted by George Brook June 7, 2013 0 Comment 1891 views

Investors who have been following the DRAM industry will surely know that prices have been on a veritable slide, which has been a whiplash on the back of the DRAM manufacturing industry. This dip has been attributed to the slowdown in the PC market. Another reason that has been cited is that Windows 8 does not need any more minimum memory than the Windows 7 required. Micron Technology, Inc (NASDAQ:MU) is a key DRAM manufacturer along with companies such as Samsung.

The see-saw…

In May, the prices of double data rate 2 (DDR2) memory dipped below the $2 mark while their manufacturing cost was $2.50- $3.00. Over the past three years, the demand for DRAM has lost muscle. Memory makers have been cutting back on capital equipment and the supply has dropped to match the demand slowdown. As the market slowly shuffles its feet and finds a firm hold, there will be a point where the supply will actually drop to a point where demand stands higher. This will result in the stabilization of price.

So what can bring about a change?

For several years, DRAM manufacturers such as Micron Technology, Inc (NASDAQ:MU)  and Samsung have hoped that there will be an uptake for DRAM in mobile devices and that massive orders from handset manufacturers will pull them out of the swamp that is currently dragging them into the mire. Mobile DRAM’s have been developed to meet the requirement of increasing computing power for the current day smartphones. Having a feature rich OS will also necessitate a solid base to hold it and also offer added memory to support other functions.

The snowballing demand for tablets and smartphones is the bright spot now, for DRAM. In comparison to PC DRAM, there is a 20% margin in the low-power DRAM’s that are used in mobile devices. This has egged-on manufacturers to shift manufacturing capacity to low-power memory. The rapid pace of smartphone purchases across the world has ensured that the future of DRAM will be bright. Currently, Mobile DRAM is used in around 30% of all mobile phones. However, in the future, as devices take on an increased number of computing functions, almost every handset will use it.

And so it seems that the sliding DRAM price trend may soon near an end.  At the moment however, industry consolidation seems to be the one and only effective strategy that will put a brake on the price decline. Micron Technology, Inc (NASDAQ:MU) is definitely an interesting investment in the DRAM space.

About George Brook

George Brook covers money and politics for GDP Insider. George is a veteran journalist who has also covered Congress, national political conventions and presidential politics. George also covers the White House as well as economic and domestic policy for GDP insider. George's reporting has won numerous awards, including two Scripps Howard awards, two National Headliners, two Gerald Loeb Awards, as well as honors from Sigma Delta Chi and the National Press Club.

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