Memory chip provider Micron Technology (NASDAQ: MU) and Intel (NASDAQ: INTC) have recently announced plans to distribute groundbreaking chips for flash drive and digital camera use. The new chip, the 4 bits/cell 3D NAND, will be the first Quand-level cell dies that will provide more memory through higher capacity-dense flash memory. For consumers, the chips will eventually offer a higher capacity storage for a lower cost. For now, cloud computing services and data centers will directly benefit from such new technology.
Given that the new chip will hold more processor dies - rectangular patterns that contain circuitry related to a specific function - technology businesses specialized to maintain data will reap massive benefits. More processing dies will allow these companies to read a greater number of cells, which means companies will be able to offer higher bandwidth and better system processing overall. The chip's Quand-level interface will provide a third more of memory that any other previous technology for memory chips.
Following the announcement of the collaboration with Intel, Idaho-based Micron Technology rose 3.9 percent, and later closed at 6.4 percent. So far, Micron's shares this year have increased by 31 percent overall. The steady increase holds great significance for Micron, which remains as one of the last companies to specialize in the production of memory chips. In recent years, companies specializing in servers, cloud computing, and other services have overshadowed the production and distribution of memory chips. While there were around fifteen companies that focused on creating memory chips before the 90s, this number has quickly dwindled down to three.
Nevertheless, the demand for memory will remain as big data centers and artificial intelligence require more technology to analyze and store information. Micron has stated that they expect an annual growth of 20% in DRAM and 40-50% growth in NAND in the upcoming years. This growth will require larger spending fees for data centers. Likewise, it is the increased expenses for the DRAM industry that have resulted in the steep rise of memory storage prices for data companies. For example, the DRAM industry will spend around $20 billion this year, resulting in a trickle-down effect of data centers investing billions into the very same industries.
Investors of Micron may benefit from the new deal as well, given that Micron has also announced a $10 billion buyback, an amount that currently composes 16% of the company's total market value of its shares. Micro'ns choice to repurchase shares will up its share demand to further benefit itself as well as its investors.