Leading memory maker Micron plans to scale back its activity in the PC DRam market, as it looks to generate increased revenue from new markets.
Micron is banking on success in segments outside PC DRam to reduce an over-reliance on the volatile PC memory sector. The company is putting more emphasis on developing Flash memory and image sensors used in mobile phones and digital cameras.
According to Mark Durcan, Micron's chief technical officer, the company will boost the proportion of non-PC-related memory to 40 per cent of overall production in the fourth quarter of 2004, up by 30 per cent on Q4 last year.
The news comes as the manufacturer blamed weak memory prices for failing to meet analyst expectations in its Q4 2004 financial results. Despite this, Micron posted strong turnover of $1.18bn for Q4, up from $885.5m for the same period in 2003. Profit was $94m, a big turnaround from a net loss of $123m in Q4 2003.
For the year, turnover was $4.4bn, up by 42 per cent on 2003, while profit stood at $157m, compared with a $1.27bn loss for fiscal 2003. Investment bank Lehman Brothers was less forgiving, lowering its quarterly forecast for Micron.
Lehman analyst Ted Parmigiani said: "While we are resetting our model to reflect more conservative assumptions, we believe Micron's profit recovery, driven by the combination of favourable DRam supply/demand, ongoing cost reductions and strategic diversification into non-DRam product lines, is intact."
Like other memory suppliers, Micron suffered roller-coaster activity on the DRam price front during 2004. The company said the 'back-to-school' surge for DRam from PC vendors was "lukewarm", but claimed that demand for Christmas is looking strong.
The much-hyped migration to next-generation DDR2 memory in new PCs, however, has failed to materialise, with many PC vendors waiting until 2005 before changing over.
Mike Sadler, vice-president of worldwide sales at Micron, said: "On the DDR2 front, for a variety of commercial reasons, sales of DDR2 memory have not ramped in the marketplace as aggressively as some industry watchers have predicted."
Things have been looking up in non-PC-DRam areas, though, Sadler claimed. "Mobile phone applications consumed substantial amounts of our Flash memory, low-powered DRam, cellular RAM and CMOS sensors as we continue to advance our position in this market."
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