Micron Comments on NAND Flash Memory Market (MU)

Micron Technology (MU) reported after the close yesterday. Net income for its third fiscal quarter came in at 12 cents per share, up from a year-ago net loss of 20 cents a share. Earnings beat analyst estimates of 9 cents/share, but a slightly lower than expected revenue line may be responsible for the after hours drop in MU of about 2%. From the MU conference call transcript:

Mike Sadler - VP, Worldwide Sales at Micron

...mobile phones are perhaps the most intriguing market segment for Micron. This is a very large market, approaching 1 billion units per year... Memory subsystems in the mobile phone market are shifting from a base of NOR to NAND flash. We have just introduced Micron’s first version of a NAND multi-chip package, or MCP, combining our own low-power DRAM with an IMFT produced 1.8 volt NAND flash device. Micron is among a select few suppliers with this capability. Many of our current mobile phone customers are designing our NAND plus DRAM MCPs into their future handset lineup...

The newest additions to Micron, of course, are the talented team, brand equity and channel expertise that comes with our acquisition of Lexar. The Lexar capabilities are a great fit and perfect complement to what already exists within the Micron infrastructure. We will leverage the Lexar brand and retail channel presence, combining this with IMFT manufactured NAND, we will quickly become a vertically integrated provider of NAND solutions to retail and OEM customers, thus unlocking incremental value for Micron in the process...

Shawn Webster – JP Morgan

Turning to NAND, can you tell us what your NAND bit production and NAND bit shipments were sequentially in May?

Kipp Bedard -- VP, Investor Relations, Micron

We’re not going to get into bit guidance on NAND flash, we will give you some wafer references. We ran out of our total productive capacity, about 11% was aimed at NAND flash and that will go up a percent or two this quarter, meaning fiscal Q4. Then you’ll see a pretty substantial ramp in wafer outs moving into the calendar Q4 area...

Joseph Osha – Merrill Lynch

Seems like there would have to be some operational and gross margin synergies for Lexar. Would it be fair to say, a year to 18 months out, that the objective is to meet all of Lexar’s NAND requirements with internally sourced wafers?

Steve Appleton - Chairman, CEO and President

First of all, given the growth profile of, I think the NAND demand and given some of the other obligations that we already have in place or that we’re working on, I’m not confident that 18 months from now all supply comes internal.