Businessmodel of Micron Technology

Customer Segments

Micron has a mass market business model, with no significant differentiation between customers. The company’s customers include any manufacturers who need semiconductors for their products.

Value Proposition

Micron offers two primary value propositions: innovation and brand/status.

The company has a strong history of creating innovative products. It owns over 20,000 patents; many of these are for industry “firsts”, which include the following:

• First 1-GB double data rate (DDR) SDRAM parts manufactured on 0.11µm technology
• First 4-GB DDR SDRAM registered dual in-line memory module (DIMM)
• First 8-MP image sensor on a 1/2.5-inch optical format
• First NAND Flash memory device built on 50 nm technology
• First monolithic 8-GB DDR3 SDRAM Other innovations include 3D Xpoint, a memory process technology that fills the need for high-performance, non-volatile, high-capacity storage-class memory, and Automata Processing, a silicon device that can conduct comprehensive, high-speed searching and analysis of complex data streams.

The company’s impressive portfolio and product performance has enabled it to establish a powerful brand. This reality is reflected in the many prominent forms of recognition it has received. In 2015 it was named the #1 employer in electronic design by Electronic Design magazine, based on factors such as sales growth and R&D investment; it beat out top competitors such as Applied Materials, SanDisk, and Intel. Other major honors it has received include induction into the 2015 Idaho Technology Council Hall of Fame; recognition as having the “Most Innovative Memory Device and Semiconductor of the Year“ in 2014 (TechInsights); selection as 2014 “Design Team of the Year“ by UBM Tech’s prestigious ACE Awards; and recognition for 2013 “Memory Product of the Year“ (EDN).

Channels

Micron’s main channel is its sales force, which includes its internal sales team, independent sales reps, and distributors. These groups market its products to OEMs and retailers. The company also sells its Crucial and Lexar branded-products in physical and online retail stores and through system integrators and commercial resellers. Finally, Micron promotes its offerings through its website and participation in in-person events such as trade shows, conferences, forums, and symposiums.

Customer Relationships

Micron’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website has a number of self-help resources including articles, information guides, and answers to frequently asked questions. That said, there is a community component as it hosts a forum where assistance can be obtained from peers, and a personal assistance element in the form of phone, e-mail, and live chat support.

Key Activities

Micron’s business model entails designing, developing, and manufacturing its products. Its manufacturing facilities are located in the U.S., Japan, China, Singapore, Malaysia, and Taiwan. The company also contracts with independent foundries for the production of certain products such as NAND Flash media items (e.g., USB devices and memory cards).

Key Partners

Micron maintains the following key partnerships:

IM Flash Technologies (IMFT) – The company collaborates with Intel for the design and production of 3D XPoint and NAND Flash memory products.

MP Mask – The company has long maintained a joint venture with Photronics through which it manufactures next-generation semiconductors. That said, it made plans to end the operation in May 2016.

Inotera – The company works with Nanya to manufacture DRAM products for Inotera, a DRAM company based in Taiwan.

Tera Probe – The company possesses a 40% ownership in this venture; its partners are other owners who provide Micron and others with semiconductor wafer testing and various probe services.

Micron’s partners also include the multiple suppliers through which it obtains its raw materials. In addition, it has established Micron Ventures, an endeavor that invests in early-stage tech firms whose offerings are relevant to the company’s strategic interests. The company gives the firms R&D capabilities, process expertise, market intelligence, and strategic insights.

Key Resources

Micron’s main resource is its engineering team, which has significant expertise in semiconductor subject matter and engages in extensive research and development. Another important resource is its collection of R&D facilities. It operates eight “Global Customer Labs” spread throughout the U.S., Europe, and Asia that collaborate with select customers to generate and execute product concepts. Finally, Micron places a high priority on its intellectual property, and is considered a leader in terms of patent quantity. As of September 2015, the firm owned 16,800 U.S. patents and 4,200 foreign patents, for a total of over 20,000. It also has many thousands of patent applications pending.

Cost Structure

Micron has a cost-driven cost structure, aiming to lower costs whenever possible. The company reduces the manufacturing cost of each product generation through advancements in its processes. It also tries to form joint ventuers that enable it to share development costs. Micron’s biggest cost driver is cost of goods sold, a variable expense. Other major drivers are in the areas of research and development, sales, and administration, all fixed costs.

Revenue Streams

Micron has two revenue streams:

Product Sales – The company generates revenues through the sales of its offerings.

Intellectual Property Monetization – The company sells and/or licenses its technology to other entities. It also monetizes its intellectual property through various partnerships.