The onset of the COVID-19 pandemic cast a shadow of uncertainty across multiple markets, including the semiconductor industry. Fortunately, increase in chip sales and rising consumption of memory chip saw the prospects for the semiconductor sector have improved since midyear in 2020. In June, the World Semiconductor Trade Statistics said for 2021, chip sales will accelerate to 8.4% growth, reaching $469 billion from $433 billion in 2020 with a growth of 5.1%. In a recent interaction with CXOToday, Anand Ramamoorthy, Managing Director, Micron India, sheds light on how the pandemic has accelerated the journey towards digital transformation for companies across the globe, leading to the revival of the semiconductor industry and how technologies such as the internet of things (IoT) and 5G networks are poised to disrupt this segment. He also explains Micron India’s business roadmap for 2021. Excerpt.
CXOToday: Which areas in semiconductor did you see maximum traction in the last one year?
Anand Ramamoorthy: With memory being at the heart of everything we do today, the semiconductor industry played a critical role in helping these enterprises across size and verticals adopt digital transformation with ease. In the data center market for instance, we witnessed a strong demand for our products from key cloud as well as enterprise customers, driven in part by their ongoing strength in cloud markets, increased use of online properties such as e-commerce, and the surge in remote-work requirements due to COVID-19 containment measures. Similarly, IoT is another area in which we have made huge strides this year. With security in this space taking center stage, we announced a partnership with TATA Communications to create a worldwide cellular-enabled connectivity solution that will simplify and accelerate large-scale global deployment of IoT devices globally.
We are optimistic that the overall market demand will improve throughout calendar 2021, following the seasonal patterns of the first calendar quarter. We are very excited by the combination of growth drivers coming into alignment for the industry for calendar 2021. These growth drivers include: economic recovery from the pandemic; new CPU architectures, which are enabling higher server content; cloud, AI and machine-learning growth; robust mobile demand driven by 5G; and strength in gaming and automotive. In the longer term, trends like Work from Home, online education are indeed expected to stay. And these industry trends coupled with other emerging technologies like Autonomous cars, drone delivery, robotics will spur the consumption of memory and storage in the long term.
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CXOToday: What challenges did semiconductor companies in India face in the Covid era? Did Micron have a strategy to grow and survive amid the pandemic?
Anand Ramamoorthy: The pandemic has created some operational as well as macroeconomic concerns. In the current situation, it is vital to react as fast as possible in order to mitigate impacts and risks, as well as to better prepare organizations for business continuity. Economic recovery from the sharp recession in calendar Q2 2020 is still underway, but the pace has certainly been limited. While smartphone, auto, and consumer end markets have started to recover, and we see further demand improvements ahead, we did see the enterprise demand weakening due to lower IT spending and somewhat higher inventories at certain customers. Cloud and laptop demand however continues to be healthy, supported by the work from home and shop from home trends. Gaming demand is robust too.
While the pandemic situation can pose further challenges, Micron’s continued focus on innovation and execution, combined with our solid balance sheet, puts us in an excellent position to navigate this period of uncertainty and capitalize on the long-term opportunities driving our industry once conditions eventually normalize.
CXOToday: We’re now in the middle of a technology transition with IoT and 5G wireless technology evolving. How does the pandemic affect the deployment of these technologies?
Anand Ramamoorthy: Despite the disruption in our lives and the business environment, we believe the pandemic has accelerated demand growth in some parts of the markets we serve. This is certainly true in cloud deployments, where some trends that would have taken two to four years to develop have been accelerated into months and will likely persist into the future.
As we look ahead, we remain extremely excited about the growth and health of our diverse end markets, which will benefit from powerful technology trends including AI, 5G and IoT, as we see these technologies are poised to disrupt the semiconductor industry.
While forcing a hiatus, the pandemic and its outcomes will eventually hasten the adoption of 5G over the long term. 5G’s data intensive economy will see the proliferation of telco/cloud servers alongside an increase in 5G baseband memory for smartphones, VR devices, autonomous car, and various IoT devices. These trends will enable the data economy and thereby increase the importance of DRAM and NAND.
With the potential to enhance connectivity of everything everywhere, the Internet of Things (IoT) has brought a massive change in the manner of doing things. IoT technology in its current form today, is being applied for predictive maintenance in the Automotive sector, Smart city projects, Smart security and Surveillance for safety of citizens from internal and external threats. However, due to the lack of right security and privacy measures, the generated data can be left open for identity theft or misuse of personal information. And therefore, to securely deploy and connect IoT services to devices, it requires deep collaboration between respective Cloud services and the system manufacturers. Autonomous cars is another space which is set to hugely benefit and take off post the IOT and 5G revolution.
CXOToday: The return to offices and factories is happening across the world as well as in India. What are you seeing in the future of work that we should be thinking about?
Anand Ramamoorthy: At present, the industry is focusing on the health and safety of its employees and their return to workplace. This year, COVID-19 presented a real-life stress test of the New Micron’s resilience. Thanks in large part to the commitment and innovation of our team members around the globe, we continued to operate our fabs at normal capacity and achieved record production from our assembly and test facilities in Xi’an, Taiwan and Singapore. Stringent, industry-leading safety protocols have enabled us to gradually return to work onsite. As of today, almost three quarters of Micron team members are back on-site, with our manufacturing operations running close to fully staffed levels.
While restrictions are being eased in India to help reduce the damage to the economy, we are complying with all government orders and implementing additional protocols to protect our teams and the continuity of our operations. At this time, a subset of team members is performing essential work on-site. As conditions improve over time, Micron will take a gradual and measured approach to allow more on-site work to ensure we can continue to maintain physical distancing and best practices
CXOToday: With employees’ mental health becoming a concern, what’s it been like for your company?
Anand Ramamoorthy: Although we are making progress, the stigma around mental health remain high, and that only changes through effort on all our parts. The continuing impacts of COVID-19 and other social issues have brought the topic of supporting our team’s mental health through COVID-19 and beyond. Through a series of interventions over the last few months, Micron has aimed to build awareness around how employees can support each other through knowledge of the Micron tools and programs to foster improved mental health, an increased awareness of warning signs that someone needs support and gaining confidence to discuss this topic in the workplace. A day off was announced to help employees focus on their wellness and families. Webinars on mental health, yoga Zumba have been conducted periodically, and teams in Micron have put in place programs like no-meeting Fridays etc.
CXOToday: What is the business roadmap for Micron in India for 2021?
Anand Ramamoorthy: Micron is excited by the combination of growth drivers coming into alignment for the industry this year. These growth drivers include economic recovery from the pandemic (with the vaccine already underway), new CPU architectures that are enabling higher server content; cloud, AI and machine-learning growth, robust mobile demand driven by 5G and strength in gaming and automotive. For example, the 5G handset volumes could grow to approximately 500M units in 2021, from around 200M units in 2020, and these 5G products feature higher memory and storage content to enable enhanced user experience.
The data center market also continues to be a growth engine for Micron, and the market is expected to start its transition to DDR5 in the second half of FY21, and networking and 5G deployments, particularly in Asia, will drive healthy DRAM bit growth quarter-over-quarter.
In fact this year, Auto DRAM and NAND will continue to see robust demand as autonomous vehicles and even connected cars promise more features including in-vehicle infotainment, 4K displays, AI-enabled features like gesture recognition and natural language processing. We aim to further strengthen our market position by introducing leading industry-specific technologies, while maintaining our competitive position, delivering differentiated solutions ready for heterogeneous computing architectures and optimizing supply growth in line with demand.