Micron barely shipped any own-brand 3D XPoint products. The company's QuantX brand never saw a real product release and the 3D XPoint-based X100 enterprise SSD was sold to a limited number of partners. Intel is still selling 3D XPoint-based products under the company's Optane brand -- but it has already abandoned the desktop PC market. At the moment, Intel has an Optane product for the laptop market but its efforts are mostly focused on the enterprise market.
In the press release below, Micron explains it will shift resources to focus on accelerating the introduction of Compute Express Link (CXL)-enabled memory products. This is a new interconnect based on the PCI Express 5.0 interface. Micron states the limited 3D XPoint demand doesn't justify the ongoing high levels of investment in 3D XPoint technology. The company also shares that it's in talks to sell its Lehi, Utah, fab currently dedicated to 3D XPoint production. Over the years, Micron recorded a non-GAAP operating profit hit of more than $400 million due to underutilization at this fab.
Will Intel abandon Optane or come up with cash?The Lehi fab is the only plant in the world capable of manufacturing 3D XPoint memory. There's been talk about Intel converting some production at its Dalian, China fab to 3D XPoint but so far this hasn't materialized yet. It appears Intel will soon need to make a final choice about the future of its Optane product lineup. Intel has two options. It can equip its Dalian factory with the necessary tools to make its own in-house 3D XPoint memory or it can purchase Micron's Lehi factory.
Intel is the most likely buyer here -- if Intel thinks 3D XPoint still has a future. Over the years, Intel had several opportunities to buy the Lehi factory but this never resulted in a deal. Micron has indicated that the Lehi factory could be used for other purposes than 3D XPoint production. The factory is sold because Micron deemed a reconversion to NAND or DRAM production is uneconomic versus expanding capacity at its other facilities. However, it could also be retooled for the production of analog or logic ICs. There's a big shortage of these chips right now -- so it may be easy to find a buyer in the current climate.
Micron Technology, Inc. (Nasdaq: MU), today announced updates to the company’s portfolio strategy to further strengthen its focus on memory and storage innovations for the data center. Micron will increase investment in new memory products that leverage the Compute Express Link™ (CXL™), the recently introduced industry standard interface that enables flexible connection between compute, memory and storage. With immediate effect, Micron will cease development of 3D XPoint™ and shift resources to focus on accelerating market introduction of CXL-enabled memory products.
“Memory and storage are critical to the data economy, and the need for data center memory innovation has never been greater,” said Micron President and CEO Sanjay Mehrotra. “As a leader in memory and storage, Micron is committed to leading innovation to unleash the next generation of data centers. Today’s announcement reflects our focus to invest in high-value solutions for customers that also deliver strong shareholder returns.”
The broad proliferation of artificial intelligence and advances in data analytics are driving workload requirements that necessitate a change to compute architectures. The CXL interface opens up new paths for platform innovation and optimization in the data center. Micron sees immense promise in new classes of memory-centric solutions that utilize CXL to scale the capacity, performance and content required by applications to run on infrastructure with greater architectural freedom.
In addition, Micron has now determined that there is insufficient market validation to justify the ongoing high levels of investments required to successfully commercialize 3D XPoint at scale to address the evolving memory and storage needs of its customers. Micron’s portfolio changes do not impact the company’s overall technology investment levels as its focus on emerging memory solutions remains unchanged. Micron plans to apply the knowledge it has gained from the breakthroughs achieved through its 3D XPoint initiative, as well as related engineering expertise and resources, to new types of memory-centric products that target the memory-storage hierarchy.
In line with this new strategic focus, Micron is engaged in discussions for the sale of its Lehi, Utah, fab currently dedicated to 3D XPoint production. The company aims to reach a sale agreement within calendar year 2021.
These actions today may result in certain nonrecurring items in the company’s GAAP financial results but are expected to be accretive to Micron’s near-term and long-term non-GAAP financial performance.