| SAN FRANCISCO
SAN FRANCISCO Feb 7 Micron Technology Inc MU.N,
the world's fifth-biggest maker of memory chips, is confident of
its improved competitive position in the volatile industry despite
overcapacity that still plagues the global market, company
executives said on Thursday.
Last year the biggest memory chip makers such as Samsung
Electronics (005930.KS), Hynix (000660.KS), Elpida 6665.T and
Qimonda QI.N all spent handsomely to boost chipmaking capacity
in a bid to gain market share, according to market research firm
iSuppli. Yet so far this year, cuts in capital spending have yet
to bring supply more in line with demand.
"They were much more upbeat than I would expect, given the
state of the industry," said American Technology Research analyst
Doug Freedman, following Micron's annual analyst day. "They are
really very comfortable with their position in the market relative
to their competitors."
Micron in December posted a quarterly loss as the industrywide
glut sent prices below production costs, but Chief Executive Steve
Appleton said then that the Boise, Idaho-based company would
continue to drive down operating costs to help boost margins.
"We think we're very competitive now on a cost basis with the
industry leaders" on flash memory, Appleton said on Thursday at
the meeting, which was webcast. "Relative to the competition we
are really starting to turn the corner" on cutting overhead and
research and development spending.
Micron makes dynamic random access memory (DRAM) chips as well
as flash memory chips that are used in mobile handsets and digital
music players. Flash memory retains data when power to the chip is
The company is also in the process of spinning off its image
sensor business into a separate company because it concluded it
did not fit well with the rest of the company, which is focused
solely on memory chips.
Micron in recent years entered the market for image sensors --
used in digital cameras and picture phones -- to broaden its
"We still like that business a lot," Appleton said. "With
what's happening in our memory business, we can't really do
justice to that part of our business in its current form."
Ultimately, whether Micron takes the imagine sensing business
public or forms a partnership with another chipmaker, it will
function as a foundry for the image sensor chip business.
"Right now they don't feel like it garners any sort of
valuation," Freedman said of the image sensor business. "It will
still have the benefit of diversifying their revenue base (as a
stand-alone entity) but they can monetize it at the same time."
Appleton also said that the company continues to conduct a
search to find a new chief financial officer to replace Bill
Stover, who has left the company. Appleton is interim CFO, and
said he hopes to find a replacement soon, but offered no specific
"It's safe to say they're moving on it and hope to bring in a
high-caliber CFO," Freedman said.
Appleton did not issue any specific financial forecasts at the
analyst meeting, yet he did say that he expects Micron's 2008
capital spending to be $2.5 billion to $3.0 billion, unchanged
from its earlier estimate.
"We'll continue to look at the market," Appleton said, noting
that the company would remain flexible in making changes as supply
and demand in the memory-chip market dictate.
Shares of Micron closed up 13 cents, or nearly 2 percent, to
$7.12. In the past year, the stock has declined some 46 percent
amid oversupply in the memory chip market.
(Editing by Phil Berlowitz)