Micron Technology
MU
has put its Utah factory up for sale as it quits from making 3D XPoint memory chips that it had developed in partnership with
Intel Corporation
INTC
. The company expects to find a suitable buyer and reach a sale agreement within the ongoing calendar year.
The 3D XPoint memory chips were developed with an aim to fill gaps in the storage market between the Dynamic Random Access Memory (“DRAM”) and NAND flash. However, Micron now believes that there is insufficient market validation that would justify the continued investment toward developing and commercializing 3D XPoint chips.
Therefore, the memory chip maker intends to shift the resources used for 3D XPoint development toward accelerating market introduction of Compute Express Link (“CXL”)-enabled memory products. The technology maintains memory coherency between a host, such as the CPU memory space, and a device. This allows resource sharing for higher performance, while reduces software stack complexity and overall system costs.
The CXL technology is expected to be used in heterogeneous computing systems, including artificial intelligence (AI), machine learning and data analytics. The shift in the portfolio strategy is likely to further strengthen Micron’s focus on developing memory and storage products and solutions for the data center.
Notably, the company has been one of the rare beneficiaries of the COVID-19 pandemic and saw sales soaring on higher demand for its memory chips across multiple end markets, including data center, PC and mobile businesses.
The work-and-learn-from-home necessity is stoking the demand for cloud storage. Furthermore, the social-distancing trend has boosted the usage of online services globally. Therefore, data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the skyrocketing demand for cloud services, which is fueling the demand for memory chips.
Moreover, the pandemic-induced lockdown and social-distancing measures are spurring the demand for PCs and notebooks as more workers and students are now working and learning from their homes.
During a Morgan Stanley conference held earlier this month, the company’s CFO David Zinsner stated that surging sales of mobile phones and computers are fueling the demand for its DRAM chips. He noted that elevated DRAM chip demand coupled with tightness in supply will make it difficult to meet orders for the rest of the year.
Additionally, digitization across industries, increased adoption of cloud computing and services, and the integration of AI and machine learnings are likely to fuel the demand for Micron’s chips.
The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to propel further growth. Apart from this, blockchain, IoT, autonomous vehicles, AR/VR and wearables are growth prospects.
Micron currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are
Apple
AAPL
and
Facebook
FB
, both carrying a Zacks Rank #2 at present. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Long-term earnings growth rates for Apple and Facebook are currently pegged at 11% and 19.2%, respectively.
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