Micron Maintains the Super Cycle

Micron Technology (MU) recently presented at the Citi 2017 Global Technology Conference, debunking the ideas and arguments of a slump or a downward cycle in the business.

Ernie Maddock, senior vice president and chief financial officer (CFO), believes the demand for both DRAM and NAND will stay strong during fiscal 2018. He cited the need for data storage and data processing as the key drivers of growth.

The management expects the DRAM and NAND bit growth to be around 20% and 40% for fiscal 2018; demand growth will be in line with the bit growth, according to Maddock. 

This eradicates fears relating to worsening demand and increasing supply in the industry. Micron is set to grow in the year ahead amid decent demand growth along with stable supply growth. 

Is demand under pressure?

The short answer is no. Collection and use of data, its rate of expansion, along with applications in the automotive industry are driving the demand for DRAM and NAND, Maddock said. He explained that collecting data requires processing while saving data requires memory, which speaks heavily to the demand side of DRAM and NAND.

What about supply?

The investor community is concerned about excess supply in the industry going forward. China is the most cited reason for the expected future bit growth. Further, supply growth of ~40% in NAND also adds to oversupply concerns. According to the Micron’s management, supply is expected to remain in line with the demand; it won’t surpass demand.

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