The story of Micron

Between the effects of the pandemic, industrial strategy and geopolitics, the US memory chip champ embodies the past three years of America.

Source: AP

You would be forgiven for not knowing much about Micron. They are a pretty innocuous semiconductor company that produces relatively interchangeable memory chips.¹

However, Micron’s story over the past three years is representative of the overall tech political economy landscape, so I thought that today I would talk a bit about what Micron does and why it is wrapped up in recent global events.

Background

Unlike Nvidia, which focuses on logic chips and graphical processing units (GPUs), Micron is dedicated to the comparatively unsexy realm of memory. At its simplest form, memory chips store data. Memory chips are more standardized and commoditized than logic chips. This makes them more interchangeable and replaceable by other firm’s chips (to be discussed more below).

There are two types of memory chips. Dynamic random access memory chips (DRAM) provide temporary memory used to process data and run applications. DRAMs lose content when the power is switched off. It is used to store data and to provide quick access to information. NAND chips are more high capacity, low cost storage over time, and is used for storing data and files on a more permanent basis.

Micron generates the majority of its revenue through DRAM products (over 70% in 2022) with the rest from NAND products (and an immaterial amount from other products). Globally, Micron is the third largest supplier of DRAM products, trailing only two South Korean competitors - Samsung and SK Hynix.

FY2022 revenue by technology ($mn)

Source: Micron’s 2022 10-K (pg 79)

At the end of the 2022 fiscal year (which for Micron was September 1, 2022), Micron was thriving. In response to the pandemic, the stimulus packages in the US had helped support demand for consumer goods, and as these flew off the shelves, manufacturers were constantly replenishing supply. Micron’s revenue growth from 2020 to 2021/2022 does a decent job of reflecting our collective experience.

Unfortunately for suppliers like Micron, this demand would not last.