Amid the Covid-19 pandemic and the global semiconductor chip shortage, many companies in the industry foresee missing their revenue targets this year due to the heightened demand and shrinking supplies.
For instance, Applied Materials — a US-listed company that provides equipment, services and software for the manufacture of semiconductor chips, flat panel displays and solar products — attributed its missed revenue targets for the 4QFY2021 to supply chain issues.
For US-listed memory maker Micron Technology, however, the worldwide semiconductor shortage has barely impacted its business. “The semiconductor shortage that’s impacting automobiles, personal computers (PCs) and few other end markets has been driven not by memory, but by other types of semiconductors like microprocessors and analogue devices,” says Manish Bhatia, executive vice president of global operations at Micron Technology.
Strong demand for memory
“The demand for memory has continued to be very strong as the market for those end-products — whether they are PCs, smartphones, or automobiles — continues to be very healthy,” claims Bhatia.
This is why at a time where companies are missing revenue targets, Micron reported revenue of US$8.27 billion ($11.34 billion) for the 4QFY2021 ended Sept 2, which is the second highest amount recorded for the company. The figure was bolstered by a strong showing across the company’s various metrics, including gross margin, free cashflow and earnings per share.
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To Bhatia, the strong showing is likely to continue, with the company forecasting a record revenue for FY2022 with “very strong margins” due to the strong demand for its DRAM (dynamic random-access memory) and NAND products. “There [might be] some impact from our customers reducing orders because they can’t get enough of other semiconductor components. But over the year, we expect that to improve [as we believe] the shortage in other chips is going to gradually improve as we go through 2022,” he says.
He also shares that memory has been outgrowing the rest of the semiconductor industry for the last 20 years. “If you go back to the advent of the PC era in the late 1990s and 2000s, memory and storage, DRAM, NAND and NOR flash together only [contributed] 10% of the semiconductor industry in 2000. Once the smartphone was introduced in 2010, that number became 20%. In 2020, as AI workloads in the cloud started to build, that number rose to 30%.”
“This trend is just going to continue. Overall, we expect the semiconductor industry to grow faster than global GDP, and Micron to grow even faster than the semiconductor industry,” he states.
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Overcoming pandemic-related challenges by putting people first
In an interview with DigitalEdge Singapore, Bhatia shares that the company’s policy of placing its people first has helped it to deal with the challenges faced amid the pandemic and subsequent supply chain disruptions, especially in Asia.
In January 2020, when China’s central government decided to impose a lockdown in Wuhan — the epicentre of the coronavirus — the rest of the world was just beginning to get to know the Covid-19 pandemic and what it entailed. While the pandemic was not as widespread globally then, Micron’s management team had already begun to take pre-emptive measures. “[We] decided that if China was that worried, then we’d better be worried as well. So we started putting all our protocols in place in Asia immediately that day,” says Bhatia.
Bhatia: Overall, we expect the semiconductor industry to grow faster than global GDP, and Micron to grow even faster than the semiconductor industry. Photo: Micron
At the time, when temperature sensors, safe-distancing and red and blue team protocols were not yet the norm, Micron was already leading the pack. “We pioneered this. Throughout the pandemic, we were able to adapt, [doing] contact tracing and so on. We put in place [these best practices] with lots of our suppliers and local companies. In fact, in the last 18 months, we’ve had almost no lost productivity in our global factories because we were so proactive,” he declares.
“The other thing we had to worry about was our own suppliers. We had to increase the number of suppliers and qualify new suppliers. [By doing so,] if there’s an issue in one place and Covid-19 jumps — say, from China to Malaysia to Taiwan — we’d be able to move the supply of raw materials, chemicals, gases, or other materials that we need in the production process. We’d be able to move the sourcing process between different locations and be able to maintain continuous operations,” he adds.
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In any business, people are the No. 1 asset and value, shares Bhatia. This is why Micron sought to ensure the safety of its staff even during the early days of the pandemic. In addition, during the pandemic, the company gave out the equivalent of US$1,000 each in every area for employees who were lower on the wage scale.
“Even now, as the pandemic continues, we try to ensure our team members have access to vaccines, [which is another example] of how Micron puts its people first in almost everything,” he says.
The role of data and diversity
Micron has also been digitally transforming itself to keep pace with technology advancements and maintain its leadership in the semiconductor industry.
“By embracing a data-first approach and artificial intelligence techniques, [we’re] able to automate the operations in our facilities as well as drive productivity, quality and output levels higher,” says Bhatia. This has enabled two of Micron’s factories — one in Singapore and the other in Taiwan — to be recognised as part of the World Economic Forum’s (WEF) Global Lighthouse Network. Lighthouse factories are seen as leaders in applying Fourth Industrial Revolution technologies to increase efficiency and productivity, along with environmental stewardship.
Bhatia also highlights the need for a different mindset to become data-driven. “Typically in schools, you learn the scientific approach. This means you start with a hypothesis and then determine a set of experiments to prove your hypothesis before evaluating and making conclusions,” he says.
“But in a data-driven world, you flip that on its head. You get the data first because you can. Then, you’re going to apply a different bunch of algorithms and see the trends in the data that maybe you didn’t know of previously. Those trends can allow you to glean insights that you can then utilise to optimise and control your operations and detect a quality issue earlier,” he adds.
Another factor that has given Micron a real advantage over its competitors is its global footprint. The company has semiconductor manufacturing factories in the US, Japan, Taiwan, Singapore, Malaysia, as well as R&D operations in Germany and Italy.
“When we look at our global footprint, that diversity produces tremendous creativity as well. It’s learning how to work as a global company and getting the Japanese, Singaporean, Taiwanese and American engineers to work together and interface with each other instead of working in their own factory,” says Bhatia.
“That has spurred tremendous creativity, which is why diversity, equality and inclusion [are crucial to us]. With diversity, [we can] make sure we get the best ideas from the best talent, and I think that has helped us harness innovations from every corner of the globe and apply them. That’s how we got into leadership,” he adds.
He continues: “We have representation [from various countries in our workforce]. In Singapore alone, we have over 40 countries represented. For Micron globally, it’s going to be double that. We’re able to attract diverse talents by making sure they feel comfortable sharing their best ideas, engaging with others, and being creative and innovative.”
Thanks to its diversity efforts, Micron is currently a leader in both DRAM and NAND technology, when it was neither just five years ago. “In Singapore, we built the world’s most advanced 3D NAND: 176 active layers of NAND devices stacked one on top of the other. We would not have been able to achieve this without the innovations in the US, Japan, Taiwan and Singapore altogether,” he stresses.
Driving the future of memory manufacturing
Micron, on Oct 20, announced that it aims to invest over US$150 billion globally in leading-edge memory manufacturing and in R&D, which Bhatia says is an “expression of [the company’s] confidence in scaling its current roadmap”.
“We believe DRAM and NAND both have scaling roadmaps for the next decade and that they are going to be central to the computing paradigms and systems that everyone engineers and works on. Today it’s a smartphone, tomorrow it’s a 5G-enabled smartphone. And the 5G-enabled smartphone can have a terabyte of storage. Today it’s a combustion automobile, tomorrow it’s an electric vehicle (EV). After that, it’s an EV that is autonomous. An autonomous EV will have as much memory and as much storage as a server does today,” he shares.
Using the example of an Apple Watch — which currently has about 50 different semiconductor chips, including DRAM and NAND flash — Bhatia stresses that is going to become more pervasive and ubiquitous over the next decade.
On the R&D areas Micron will be looking at, he shares that a lot of the company’s innovation will focus on increasing memory bandwidth. Bhatia says: “[We will] take advantage of the twin pillars of growth in our industry, [which are] AI and 5G.” One area Micron is investing in, he says, is a new interface for computing to access centralised memory capability, called the Compute Express Link interface. It is a new standard being jointly introduced by microprocessor computing companies, like Intel and AMD, and memory companies, including Micron, to create a new way to optimise memory and increase memory bandwidth to enhance high-performance computing.
Bhatia says: “We’re also investing in high bandwidth memory, which is marrying processing and memory much closer to each other so that you can reduce the lag-time and increase the IO throughput between the two devices to increase [computing time]. In addition to our core DRAM and NAND flash products, [we are] always investing in emerging memories… There may be another memory that will be able to come in at the outer end of the horizon or beyond, and Micron, as a memory leader, needs to be at the forefront of that as well.”
He asserts: “We need to be the best at manufacturing because that is one of the core pillars of competitive advantage in our industry. And that starts with the collaboration between our tech development and research development teams to implement new technologies quickly and then to ramp up those technologies with high yield, high productivity, high quality, high performance, and being able to drive cost out of the manufacturing operation and reduce cycle times, improve quality and increase scale.”
Cover photo: Bloomberg
