DRAM/NAND Market Impact
Surprisingly, during Micron's Summer Analyst Conference, CEO Mark Durcan indicated that 3D XPoint could equate to almost half of Micron's DRAM business in 2018, saying: "In terms of how quickly will this market grow and how quickly we’ll become significant, I think that is hard to know exactly today...the 2018 timeframe could easily be of the same order of magnitude as our DRAM businesses in that timeframe. So maybe not the same size, maybe half the size in 2018, but it will be a significant additive revenue stream to Micron at the time."
Durcan could be referring to the revenue 3D XPoint generates, or he could be referencing the bit output, which leaves his statement open to interpretation. In either case, Durcan is indicating 3D XPoint will be comparable to Micron’s $40+ billion DRAM business in two short years. This is an incredibly bullish statement, and it is hard to imagine that amount of production will not affect the DRAM or NAND segments.
The DRAM and NAND markets serve as an oasis of stability for Micron, and both it and Intel have gone to great pains to assuage skittish investors by indicating that 3D Xpoint will not cannibalize DRAM or NAND markets, but will be additive. This, too, is quite optimistic, and it would be more realistic to imagine it eating into a little of both.
The more interesting side effects of 3D XPoint will likely come from IMFT’s competition. Samsung, in particular, is in a nice spot to flood the market with either of the opposing NAND or DRAM mediums. It is in the process of building a $23 billion fab that will be operational by 2017, and that, by some estimates, is large enough to equal the 300mm wafer production of SK Hynix and SanDisk combined.
Samsung isn’t commenting on what its "superfab" will be used for, but it can pump out either NAND or DRAM. If Samsung chooses to flood the market with cheap NAND on one end and cheap DRAM on the opposite end, it can create enough price pressure to relegate 3D XPoint to niche applications, at least until Samsung is ready to roll out its competing technology.
Cue the return of the zero-margin DRAM market endured by the memory manufacturers over the last decade. Admittedly, this would be a bit of a nuclear option for Samsung, as it would also pay dearly in margins, but the key takeaway is that the company has the option of pushing the red button.
SK Hynix also recently announced it is investing $38.9 billion for three semiconductor fabs, so the attacks could come from multiple angles. Another possibility is that IMFT’s competitors could embrace, or create, an industry standard protocol for their own non-volatile products, which would fly in the face of Intel's proprietary interconnects.