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How Micron Makes Money

(Investopedia.com By NATHAN REIFF Updated Jan 9, 2021)

Micron Technology, Inc. (MU) develops and manufactures memory and storage technologies used in personal computers, networks, data centers, and the automotive industry.1

 Across its global brands, including Micron and Crucial, the company produces memory cards, drives, and infrastructure technology.2 As one of the leading semiconductor companies, Micron faces major competition from Intel Corp. (INTC), Taiwan Semiconductor Manufacturing Company (TSM), and other chip producers.

KEY TAKEAWAYS

  • Micron Technology is a semiconductor company that develops and makes memory and storage solutions.
  • Micron products are used in automobiles, consumer electronics, communications products, servers, and computers.
  • Its Compute and Networking Business Unit generates the largest share of revenue and operating income.
  • Micron is joining forces with Tata Communications to provide IoT solutions.

Micron’s Financials

In Q1 of its 2021 fiscal year (FY), the three-month period that ended December 3, 2020, Micron posted net income of $803 million, up 58.1% year over year (YOY).Revenue rose 12.2% to $5.8 billion during the same period.3 The robust performance was partly driven by strong end-market demand.4

The growth in Q1 FY 2021 built on last quarter’s strong financial results, marking a sharp turnaround after a string of poor performance during 2019 and the first part of 2020 that reflected a global supply glut in memory chips.

Micron’s Business Segments

Micron breaks down its revenue and operating profit into four major categories: Compute and Networking Business Unit (CNBU), Mobile Business Unit (MBU), Storage Business Unit (SBU), and Embedded Business Unit (EBU).5 It also reports an additional miscellaneous category to cover other revenue sources. This “All Other” unit contributes a negligible amount to total revenue.As a company focused on memory and storage products and solutions, Micron’s business segments are distinguished primarily by the markets and clients that each one targets.6 The data shown in the pie charts excludes segments with negative revenue or negative profits.

Compute and Networking Business Unit (CNBU)

Micron’s CNBU segment includes memory products which are sold into markets for cloud server, enterprise, graphics, networking, and other clients, and includes sales of certain 3D XPoint products.7 For Q1 FY 2021, CNBU generated $2.5 billion in revenue, accounting for more than 44% of the company’s total revenue. Operating income for the quarter was $483 million, comprising about 50% of the total. That makes CNBU Micron’s largest source of both revenue and operating income. The segment’s revenue rose 28.7% while operating income grew 20.4% compared to the year-ago quarter.8

Mobile Business Unit (MBU)

The MBU segment includes memory products sold into the mobile device and smartphone markets, such as flash storage drives, and discrete DRAM.9 For Q1 FY 2021, MBU generated $1.5 billion in revenue, or about 26% of Micron’s total revenue. MBU Operating income for the quarter was $370 million, accounting for about 38% of the company’s total operating income. The segment’s revenue grew 3.0% as operating income rose 25.4% compared to the same three-month period a year ago.8

Storage Business Unit (SBU)

Micron’s SBU segment includes solid state drives as well as component-level solutions sold to cloud, client, enterprise, and other storage markets.10 For Q1 FY 2021, SBU generated $911 million in revenue, about 16% of total revenue for the quarter. Revenue fell 5.9%. Operating income for the segment was $4 million, a significant improvement from the operating loss of $217 million posted in the year-ago quarter. SBU operating income makes up less than 0.5% of Micron’s total operating income.8

Embedded Business Unit (EBU)

The EBU segment covers memory and storage products used in a variety of industries, including automotive, consumer markets, and industrial applications. These products help to power applications including voice and gesture control in automobiles, machine-to-machine communication, and automation processes.11 EBU accounted for $809 million in revenue for Q1 FY 2021, or about 14% of the total. Operating income for the segment was $116 million, comprising nearly 12% of the company’s total operating income. The segment’s revenue rose 10.2% while operating income grew 2.7% compared to the year-ago quarter.8

Micron’s Recent Developments

On November 9, 2020, Micron announced that it had begun shipping its 176-layer 3D NAND flash memory product. The company said that the new 176-layer technology is a radical breakthrough that enables enormous gains in application performance for a variety of different storage use cases. Micron also said that the product is “the most technologically advanced NAND node in the market.”12

On October 27, 2020, Micron announced that it was partnering with Tata Communications Ltd. (NSE: TATACOMM) to collaborate on the creation of a cellular-enabled connectivity solution that will help to accelerate a large-scale global deployment of internet of things (IoT) devices. The company said that the solution will be powered by the first cloud-based embedded subscriber identity module (eSIM), enabled by Micron’s Authenta Key Management Service. The two companies plan to launch the solution in 2021.13

How Micron Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Micron and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Micron releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Micron discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Micron breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Micron Diversity & Inclusiveness Reporting
 RaceGenderAbilityVeteran StatusSexual Orientation
Board of Directors    
C-Suite 
 
    
General Management✔ (U.S. Only)   
Employees✔ (U.S. Only)✔ (U.S. Only)

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