The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements such as those made in "Products" regarding growth in demand for NAND Flash products and solid-state drives and the growth in the markets for phase change memory products; in "Manufacturing" regarding the transition to smaller line-width process technologies and increases in output from IM Flash's wafer fabrication facility in Singapore; and in "Research and Develop" regarding tool installation at our new research and development facility in Boise, Idaho. Our actual results could differ materially from our historical results and those discussed in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Item 1A. Risk Factors." All period references are to our fiscal periods unless otherwise indicated.
Corporate Information
Micron Technology, Inc., a Delaware corporation, was incorporated in 1978. As used herein, "we," "our," "us" and similar terms include Micron Technology, Inc. and its subsidiaries, unless the context indicates otherwise. Our executive offices are located at 8000 South Federal Way, Boise, Idaho 83716-9632 and our telephone number is (208) 368-4000. Information about us is available on the internet at www.micron.com. Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments to these reports, are available through the our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (the "SEC"). Materials filed by us with the SEC are also available at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room is available by calling (800) SEC-0330. Also available on our website are our: Corporate Governance Guidelines, Governance Committee Charter, Compensation Committee Charter, Audit Committee Charter and Code of Business Conduct and Ethics. Any amendments or waivers of our Code of Business Conduct and Ethics will also be posted on our website at www.micron.com within four business days of the amendment or waiver. Copies of these documents are available to shareholders upon request. Information contained or referenced on our website is not incorporated by reference and does not form a part of this Annual Report on Form 10-K.
Overview
We are a global manufacturer and marketer of semiconductor devices, principally DRAM, NAND Flash and NOR Flash memory, as well as other innovative memory technologies, packaging solutions and semiconductor systems for use in leading-edge computing, consumer, networking, automotive, industrial and mobile products. In addition, we manufacture semiconductor components for CMOS image sensors and other semiconductor products. We market our products through our internal sales force, independent sales representatives and distributors primarily to original equipment manufacturers and retailers located around the world. Our success is largely dependent on the market acceptance of our diversified portfolio of semiconductor products, efficient utilization of our manufacturing infrastructure, successful ongoing development of advanced process technologies and the return on research and development investments.
We obtain products from three primary sources: (1) production from our wholly-owned manufacturing facilities, (2) production from our joint venture manufacturing facilities and (3) to a lesser degree from third party manufacturers. In recent years, we have increased our manufacturing scale and product diversity through strategic acquisitions and various partnering arrangements, including joint ventures, which have helped us to attain lower costs than we could otherwise achieve through internal investments alone.
We have made significant investments to develop the proprietary product and process technology that is implemented in our worldwide manufacturing facilities and through our joint ventures to enable the production of semiconductor products with increasing functionality and performance at lower costs. We generally reduce the manufacturing cost of each generation of product through advancements in product and process technology such as our leading-edge line-width process technology and innovative array architecture. We continue to introduce new generations of products that offer improved performance characteristics, such as higher data transfer rates, reduced package size, lower power consumption and increased memory density. To leverage our significant investments in research and development, we have formed various strategic joint ventures that have allowed us to share the costs of developing memory product and process technologies with our joint venture partners. In addition, from time to time, we have also sold and/or licensed technology to other parties. We continue to pursue additional opportunities to monetize our investment in intellectual property through partnering and other arrangements.
In the second quarter of 2011, we reorganized our business to better align with the markets we serve. All prior period amounts have been retrospectively adjusted to reflect this reorganization. After the reorganization, we have the following four reportable segments:
DRAM Solutions Group ("DSG"): Includes high-volume DRAM products sold to the PC, consumer electronics, networking and server markets.
NAND Solutions Group ("NSG"): Includes high-volume NAND Flash products sold into data storage, personal music players, and portions of computing markets, as well as NAND Flash products sold to Intel Corporation ("Intel") through our consolidated IM Flash joint ventures.
Wireless Solutions Group ("WSG"): Includes DRAM, NAND Flash and NOR Flash products, including multi-chip packages, sold to the mobile device market.
Embedded Solutions Group ("ESG"): Includes DRAM, NAND Flash and NOR Flash products sold into automotive and industrial applications, as well as NOR and NAND Flash sold to consumer electronics, networking, PC and server markets.
Our other operations do not meet the quantitative thresholds of a reportable segment and are reported under All Other. All Other includes our CMOS image sensor, LED, microdisplay and solar operations.
Over the past several years we have been focused on diversifying our product portfolio beyond DRAM products, which historically had constituted a substantial majority of our sales. In 2011, sales of DRAM products were less than half our total sales and in the fourth quarter of 2011 sales of NAND Flash products exceeded sales of DRAM products for the first time in our history.
Dynamic Random Access Memory ("DRAM")
DRAM products are high-density, low-cost-per-bit, random access memory devices that provide high-speed data storage and retrieval. DRAM products were 41%, 60% and 50% of our total net sales in 2011, 2010 and 2009, respectively. DRAM products are sold by the DSG, WSG and ESG segments. We offer DRAM products with a variety of performance, pricing and other characteristics including high-volume DDR3 and DDR2 products as well as specialty DRAM memory products including Mobile Low Power DRAM ("LPDRAM"), DDR, SDRAM, Reduced Latency DRAM ("RLDRAM") and Pseudo-static DRAM ("PSRAM").
DDR3 and DDR2: DDR3 and DDR2 are standardized, high-density, high-volume DRAM products that are sold primarily for use as main system memory in computers and servers. DDR3 and DDR2 products offer high speed and high bandwidth at a relatively low cost compared to other DRAM products. DDR3 products were 21%, 22% and 7% of our total net sales in 2011, 2010 and 2009, respectively. DDR2 products were 10%, 24% and 22% of our total net sales in 2011, 2010 and 2009, respectively.
We offer DDR3 products in 1 gigabit ("Gb"), 2Gb and 4 Gb densities and DDR2 products in 256 megabit ("Mb"), 512 Mb, 1 gigabit and 2 Gb densities. We expect these densities will be necessary to meet future customer demands for a broad array of products and offer these products in multiple configurations, speeds and package types.
Specialty DRAM products: We also offer DRAM memory products including DDR and DDR2 Mobile LPDRAM, DDR, SDRAM, RLDRAM and PSRAM in densities ranging from 64 Mb to 2 Gb. LPDRAM products are used primarily in laptop computers, tablets, and other consumer devices that require low power consumption. Our other specialty DRAM products are used primarily in networking devices, servers, consumer electronics, communications equipment and computer peripherals as well as computer memory upgrades. Aggregate sales of LPDRAM and our other DRAM products were 10%, 14% and 21% of our total net sales in 2011, 2010 and 2009, respectively.
NAND Flash Memory ("NAND")
NAND products are electrically re-writeable, non-volatile semiconductor memory devices that retain content when power is turned off. NAND sales were 36%, 28% and 39% of our total net sales in 2011, 2010 and 2009, respectively. NAND products are sold by the NSG, WSG and ESG segments. NAND is ideal for mass-storage devices due to its fast erase and write times, high density, and low cost per bit relative to other solid-state memory. Removable storage devices, such as USB and Flash memory cards, are used with applications such as personal computers, digital still cameras, MP3/4 players and mobile phones. Embedded NAND-based storage devices are utilized in mobile phones, MP3/4 players, computers, solid-state drives ("SSDs"), tablets and other personal and consumer applications. The market for NAND products has grown rapidly and we expect it to continue to grow due to demand for these and other removable and embedded storage devices.
Our NAND products feature a small cell structure that enables higher densities for demanding applications. We offer Single-Level Cell ("SLC") NAND products and Multi-Level Cell ("MLC") NAND products, which have two or more times the bit density of SLC NAND products. In 2011, we offered SLC NAND products in 1 Gb, 2 Gb, 4 Gb and 8 Gb densities. In addition, we offered 8 Gb, 16 Gb, 32 Gb and 64 Gb 2-bit-per-cell MLC NAND products and 32 Gb and 64 Gb 3-bit-per-cell MLC NAND products. We offer high-speed NAND products that are compatible with advanced interfaces. We offer NAND Flash in multichip packages ("MCPs") that incorporate NAND Flash with other memory products to create a single package that simplifies design while improving performance and functionality.
We offer next-generation RealSSD™ solid-state drives for enterprise server and notebook applications which feature higher performance, reduced power consumption and enhanced reliability as compared to typical hard disk drives. Using our SLC and MLC NAND process technology, these SSDs are offered in 2.5-inch and 1.8-inch form factors, with densities up to 512 gigabytes. We also offer embedded USB devices with densities up to 16 gigabytes. We are sampling enterprise PCIe SSDs with capacities up to 700 gigabytes. We expect that demand for SSDs will continue to increase significantly over the next several years.
Through our Lexar™ brand, we sell high-performance digital media products and other flash-based storage products through retail and original equipment manufacturing ("OEM") channels. Our digital media products include a variety of flash memory cards and JumpDrive™ products with a range of speeds, capacities and value-added features. We offer flash memory cards in a variety of speeds and capacities and in all major media formats, including: CompactFlash, Memory Stick and Secure Digital ("SD"). CompactFlash and Memory Stick products sold by us incorporate our patented controller technology. Other products, including SD memory cards and some JumpDrive™ products, incorporate third party controllers. We sell products under our Lexar™ brand and manufacture products that are sold under other brand names. We also resell flash memory products that are purchased from other NAND Flash suppliers.
NOR Flash Memory ("NOR")
NOR products are electrically re-writeable, non-volatile semiconductor memory devices that retain content when power is turned off, offer fast read times due to random access capability and have execute-in-place ("XiP") capability that enables processors to read NOR without first accessing RAM. These capabilities make NOR ideal for storing program code in wireless and embedded applications. Our NOR sales originated from the May 7, 2010 acquisition of Numonyx and were 18% and 5% of our total net sales for 2011 and 2010, respectively. NOR products are sold by the WSG and ESG segments.
We offer both parallel and serial interface NOR products in a broad range of densities, packages, and features. Our parallel NOR products are constructed to meet the needs of the consumer electronics, industrial, wired and wireless communications, computing and automotive applications. These products offer high densities, XiP performance, architectural flexibility and proven reliability in rigorous industrial settings. Our serial NOR products are designed to meet the needs of consumer electronics, industrial, wired communications, and computing applications. These products offer industry-standard packaging, pinouts, command sets and chipset compatibility.
Phase Change Memory ("PCM")
PCM is a new memory technology that combines the attributes of NOR, NAND and RAM, simplifying memory and producing more capabilities within a single chip. PCM is bit-alterable, non-volatile memory featuring fast read/write/erase speeds that is highly scalable to lower line-width technologies. We currently offer both parallel and serial interface PCM products and expect that the market for these products will increase significantly in the next several years.
Partnering Arrangements
The following is a summary of our partnering arrangements as of September 1, 2011:
Partner(s)
Approximate Micron
Ownership Interest
Formed/
Acquired
Product Market
Consolidated Entities:
IMFT
(1)
Intel Corporation
51
%
2006
NAND Flash
IMFS
86
2007
MP Mask
(2)
Photronics, Inc.
50
Photomasks
Equity Method Investments:
Inotera
(3)
Nanya Technology Corporation
30
2009
DRAM
MeiYa
2008
Transform
(4)
Origin Energy Limited
2010
Solar Panels
Aptina
(5)
Riverwood Capital LLC and TPG Partners VI, L.P.
35
CMOS Image Sensors