India Provides Access To Large Pool Of Engineering Talent: Anand Ramamoorthy, Managing Director, Micron Technology
How has Covid-19 impacted the semiconductor industry in India and Micron tech's business continuity?
The pandemic has impacted the cyclical recovery in DRAM and NAND, causing stronger demand in some segments and weaker demand in others. Looking ahead to the second half of calendar 2020, first, we expect the data center outlook to remain healthy. Second, we expect smartphone and consumer end-unit sales to continue to improve, accelerating inventory consumption across the supply chain. And third, new gaming consoles will drive stronger DRAM and NAND demand.
Despite these trends, our short-term visibility across end markets remains limited due to COVID-19, macro and trade uncertainties, as well as customer inventory changes. Turning to industry supply, second-half 2020 supply growth may be somewhat muted compared to preCOVID-19 expectations. Some suppliers have commented about delays in equipment deliveries, which can result in slower node transitions and lower bit growth.
In the longer term, trends like Work for home, online education are expected to stay. These trends coupled with other emerging technologies like Electric Vehicles, drone delivery, robotics will spur the consumption of memory and storage in the long term.
How is Micron adjusting internal operations during COVID-19, given the space that they are in?
Micron was proactive to take required measures both at a business front and from an employee standpoint.
Micron proactively implemented strong safety measures to safeguard our team members, suppliers, and customers at the start of the COVID-19 outbreak, such as putting health screenings in place, requiring social distancing, establishing team separation protocols at all of our manufacturing sites, prohibiting visitors, and suspending all business travel. In addition, we are requiring team members to work from home to the extent possible. We are using our global supply chain network and increased flexibility to mitigate potential production impacts, and we are working to keep our commitment to customers.
With the rapidly evolving novel coronavirus (COVID-19) situation, we are using our global supply chain network and increased flexibility to mitigate potential production impacts, and we are working to keep our commitment to customers. We have been in close ongoing communication with our suppliers to ensure continuity and identify supply gaps. In addition, we have increased our on-hand inventory of raw materials and have begun to store more of that supply on our sites to minimize the impact of any logistics delays. Furthermore, we have increased our focus on multi-sourcing of parts to reduce supplier dependence risk. Micron has a robust business continuity process and system in which we will continue to monitor and mitigate identified potential risks through alternative qualified sources.
Due to the excellent work of Micron's operations team, most of our fab and assembly sites operated at full production throughout the quarter, with our Singapore and Taiwan assembly and test facilities achieving record production. COVID-19's impact to our production early in our third quarter was limited to our backend assembly and test sites in Muar and Penang, Malaysia, and we quickly offset this impact with production adjustments at our other facilities. All our production facilities are operating normally at this time.
On the rising demand for datacentres/storage space in current COVID times – please share figures or reagent data on why do you say so?
Micron’s strong execution in the fiscal third quarter drove solid sequential revenue and EPS growth. Total FQ3 revenue was approximately $5.4 billion, up 13% sequentially and 14% percent year-over-year. Sequential revenue growth was led by the data center and mobile markets.
As the only company with a portfolio of DRAM, NAND and 3D XPoint technologies, Micron is uniquely positioned to benefit from the secular data growth that is driving the cloud, enterprise and networking markets. Our cloud DRAM sales grew significantly quarter over quarter, with strong demand due to the work-from-home and e-learning economy and significant increases in e-commerce activity around the world. This quarter, we started early sampling of 1z DDR5 for enterprise applications.
Additionally, we also started sampling our higher-frequency DDR4 modules for Intel’s Ice Lake server platform, which we expect to drive server DRAM content growth. In networking, our DRAM bit shipments expanded significantly on a sequential basis, driven by rapid work-from-home infrastructure deployment, as well as increased 5G deployments, particularly in Asia.
How is Micron pivoting its strategy during the COVID-19 pandemic?
The pandemic has impacted our financial performance trajectory, which was shaping up for a robust outcome this calendar year. Nevertheless, we have moved with the agility to leverage the new opportunities in the marketplace and have further strengthened our product portfolio. Micron’s portfolio is now dramatically better positioned from a competitive perspective, and we have driven a tremendous transformation here over the last three years. In the coming quarters and years, we will continue to strengthen our business foundation. And as the industry environment improves, Micron is exceptionally well-positioned to take advantage of long-term trends and drive superior returns for our shareholders.
The new Micron is undergoing a dramatic transformation to combine product leadership with technology, manufacturing, and supply chain excellence. Across our entire portfolio of DRAM and NAND products, we will continue to focus on product differentiation and portfolio expansion to grow our share of industry profits while maintaining a stable bit share.
Looking at the current scenario with GOI's push towards Make-in-India, how does Micron plan to scale its operations in India over the next two years and hire across the spectrum of talent?
Micron continually evolves its global footprint to optimize its resources and best address dynamic market needs. While we launched a new office in Hyderabad in October 2019, Micron will be moving its Hyderabad Global Development Centre to a new campus within the next two years to give the company more flexibility for expected growth. As part of Micron’s ongoing strategy to build a scalable, agile, and well-positioned global capacity model, Micron is increasing its presence in India to support several functions.
Micron’s India sites play a critical role in strengthening the company’s technology leadership position, developing technology that is instrumental in driving breakthroughs in a wide range of areas, such as artificial intelligence and machine learning. This increased presence will enable the company to strengthen and accelerate its capabilities around critical engineering tasks by hiring for existing skill gaps as well as drive operational efficiencies through local support for the site’s ramp and overall operations. Micron is also focused on strengthening and accelerating the company’s capabilities around internal controllers, DEG team set up, critical technology development tasks and emerging memory development and reliability.
What is the talent availability for chip design in India and your thoughts on skill development in this sector?
India provides Micron with the opportunity for value-added growth and access to a large pool of engineering talent. The quick ramp-up of our design and engineering teams is a testimony to the talent India has developed in this space. We have expanded the scope of our campus hiring from two Indian Institutes of Technology last year to five this year.
For the last two consecutive years, Micron has made more offers to students at the Indian Institutes of Technology (IITs) in Mumbai and Chennai than any other company did; we also made the largest number of international offers. We continue to hire selectively and have remotely onboarded over 60 employees. Micron has decided to honor all 200 offers made in the last campus cycle and continue to hire aggressively in this year’s campus season. We expect to grow aggressively, employing around 5,000 team members within the next four to five years.
The opportunities and challenges that lie ahead
Our short-term visibility across end markets remains limited due to COVID-19, macro and trade uncertainties, as well as customer inventory changes. Market segments driven primarily by consumer demand have seen a negative impact. Calendar 2020 analyst estimates for end-unit sales of autos, smartphones and PCs are meaningfully lower than pre-COVID-19 levels, even though estimates for enterprise laptops and Chromebooks have increased. The reduced level of global economic activity has also curtailed near-term demand. Second-half 2020 supply growth may also be somewhat muted compared to preCOVID-19 expectations. Some suppliers have commented about delays in equipment deliveries, which can result in slower node transitions and lower bit growth.
However, the pandemic has impacted the cyclical recovery in DRAM and NAND, causing stronger demand in some segments and weaker demand in others. We have noticed rapid change in consumer and corporate practices around the world. Consumers are significantly increasing online activity, including e-commerce, gaming and video streaming, all of which drive additional data center capacity requirements. Trends like working-from-home and online learning are likely to drive long-term changes in how we think about workforce flexibility and education. Several governments around the world are considering ways to ensure a level playing field by considering significant programs that provide Chromebooks or tablets to students who cannot afford them, as online. Additional government fiscal stimulus programs are also supportive of economic activity and will accelerate trends like electric vehicle production. Emerging technologies such as drone-based deliveries and the increased use of robotics across many applications are now being pursued with urgency.
Technology solutions are rapidly helping society adapt and manage the temporary and permanent changes stemming from this pandemic. Clearly, certain trends that would have taken 2 to 4 years to develop have been accelerated into months. It is easy to see how these changes will drive higher consumption of memory and storage in the long term. The faster pace of digital transformation in the economy is here to stay.
