Micron's acquisition, making an already stable DRAM market began to enter a new round of structure adjustment.
March 8, 2006, Micron Technology (Micron Technology) announced the acquisition of Lexar Media. Sources said that Micron Technology Plan is a 688 million U.S. dollars to buy Lexar Media, the acquisition will be completed stock form, Micron shares will be 0.56 to 1 unit in the form of shares on acquisition of Lexar, this way equivalent to the acquisition cost of 8.43 U.S. dollars per share, compared with Lexar Media's stock price now above 19%. News release on the day of the acquisition, Lexar's shares rose 1.33 U.S. dollars on, equivalent to 19% per share, while Micron's stock has dropped 30 cents, equivalent to 2%, the final closing at 14.7 U.S. dollars per share.
Micron NAND to turn over
The United States alone, the world's leading DRAM manufacturers. DRAM Q3 2005 market share of 15.3%, second only to Samsung and HYNIX (see Figure 1).
DRAM PC industry, however well the impact of climate index, resulting in very unstable earnings, coupled with the lack of U.S. manufacturing cost advantage, resulting in 3 consecutive years, Micron has been a loss. Micron DRAM attempt to withdraw from the field, switch to NAND flash. Although NAND flash memory prices continued to decrease, but a huge market for NAND flash memory, profits and stability. Micron in 2005, all attention is on NAND flash memory, the company's NAND flash memory to achieve 2005 sales of 238 million U.S. dollars, while sales in 2004 only 8 million U.S. dollars, an increase of up to 2375%. Micron is also a loss of shame snow a few years, NAND flash memory, Micron is really to turn around.
The three world-renowned advisory body in February 2006 on the NAND market is forecast, which Semico expects NAND market in 2008 up from 10.9 billion U.S. dollars in 2008 to nearly 40 billion U.S. dollars, even the most conservative Gattner NAND market is also expected to will reach 23 billion U.S. dollars (see Figure 2).
However, Micron aware of their lack of stability in the area of NAND based, first of all missing funds and capacity, Micron years of losses, cash on hand tight, and the NAND flash memory is quite burn. So coveted Micron NAND flash memory found in particular Intel.
November 2005 November 21, Micron and Intel announced the formation of a joint production of NAND flash memory specialist company, the new company was named IM Flash Technologies LLC. Intel and Micron in cash, bonds and assets in the form of contributions to the joint venture were approximately 12 billion dollars. Micron and Intel in IM Flash Technologies LLC, respectively, 51% and 49%. With this super-rich support for Intel, Micron's financial problems are solved with money, NAND capacity will not be a problem. The next step is downstream problems. Although NAND flash is also a great demand-side wide, but no guarantee is also in the consumer electronics off-season to ensure a steady demand, demand uncertainty, profits on the instability, in order to stabilize the downstream, Micron must be found downstream partners. The retail market is mainly NAND memory card. Only the market can become Micron Lexar partner.
Lexar's Dilemma
Lexar continuous bad luck in recent years. Lexar is the first partner of Toshiba, the two sides to jointly develop NAND flash memory technology, Lexar worry about technical cooperation during the leak, finally lifted cooperation. Toshiba, SanDisk move and strategic alliances, joint ventures and built a NAND flash memory plant. Toshiba, SanDisk get help immediately after the world's largest memory card manufacturer, and has a 50% market share. Lexar and SanDisk has always been enemies, together with Toshiba and SanDisk co-Laxer that period, the trade secrets leaked to SanDisk, the new enemy is added the old hate, so Lexar in January 2005 to court, and finally the United States Court of compensation required to determine the Toshiba Lexar is about 381 million U.S. dollars in damages. At that time the decision has caused uproar in the industry, because the amount of compensation than the market value of Lexar's even higher. However lawsuit lawsuits go, losing the upstream chip to provide after Toshiba, Lexar to higher costs, began to be burned, loss of 73 million U.S. dollars in 2004, losses of 20 million U.S. dollars in 2005. Stock price continued to fall, while SanDisk is the higher position.
U.S. memory card market share statistics shown in Figure 3, Lexar's market share from January 2005 to 25% all the way down to 12 months of 10%.
Memory card market share of European statistics shown in Figure 4, Lexar's market share is slowly declining.
Rival SanDisk
SanDisk worldwide have joined more than 10,000 retail outlets, but also Wal-Mart and BESTBUY partners.
Lai, however good or second Lexar, Micron feel it is to be of value. The Lexar naturally very pleased with Micron to provide NAND wafer, to improve the lot of cost, can reduce the losses. However, challenging the high noon of SanDisk, Lexar and Micron is not enough strength. SanDisk's super strength is not only a good control of the sales channels, more powerful partner is Toshiba. Toshiba NAND flash memory is the founder, always have the strongest technology, although not as good as Samsung's market share, but technically, absolutely in the Samsung over Toshiba, Samsung's NAND flash memory for each trillion needed to pay royalties to Toshiba.
Figure 5 is a Toshiba and Samsung's NAND die size contrast, Toshiba has maintained the highest density recorded. Toshiba's 8GB NAND flash memory die is smaller than Samsung's 4GB. High-density with high productivity means low cost. Samsung, needless to mention just stepped into the field of Micron NAND. Toshiba NAND attention in recent years more and more high level, it is no wonder that, almost all of Toshiba's profit from the NAND, and therefore continue to invest heavily in this area, from 2005 to 2008, Toshiba and SanDisk is expected to put nearly 50 billion in funds for the expansion of NAND capacity. Micron Despite the strong help of Intel, but Intel NAND technology has achieved absolutely nothing, will make NOR flash memory. The funds, Intel invested substantial increase capacity and improve manufacturing processes used on the NAND investment can not be compared, and Toshiba.
Before SanDisk, after Kingston. Kingston is the authentic owner of Taiwan Province of China, so the mainland of China is the most Kingston memory card businesses to actively explore the market.
Asia-Pacific card market share statistics shown in Figure 6, Kingston rising fastest. Kingston has cost advantage, almost all of Taiwan Province are good at cost control companies, while Taiwan Province of China is the world's semiconductor industry is most developed regions, Kingston native roots to create a strong cost competitiveness.
Acquisition prospects
This acquisition is of course a good thing Lexar, Lexar's stock rose to normal, but not to be optimistic about Micron, Micron tension in the capital, just out of loss of a big acquisition is not very appropriate, Micron Technology Urgent strengthening, of course, productivity. Micron's share price naturally fell, while the memory card market, SanDisk 1 dominate in 2 to 3 years, also will not change.
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