Micron Discontinues Lexar Business, Plans to Focus on Higher-Margin Products

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Micron this week announced plans to discontinue its Lexar removable media storage business as a part of the company’s strategy to shift to higher margin NAND flash-based products. The company intends to sell all or part of its Lexar business division, but promises to support existing customers during the transition period.

Lexar was spun off from Cirrus Logic in 1996 and then acquired by Micron in 2006 in a bid to market NAND flash media. Approximately two years ago, Micron cut down supply of NAND memory to spot market in a bid to concentrate on building its own products and thus earn higher profit margins. Last year the company announced plans to work with its clients to build software for their software storage offerings to improve its profit margins further this time from various SSDs. In addition, the company disclosed plans to develop special memory solutions for emerging automotive applications (which will complement its embedded portfolio). This week Micron went even further and disclosed plans to cease selling Lexar branded products to consumers and OEMs as a part of its strategy to increase “opportunities in higher value markets and channels.” The portfolio of Lexar products includes memory cards and card readers, USB flash drives and even SSDs.

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Given the competition on the market of retail removable media and storage drives, the withdrawal from such businesses may be logical for Micron, which feels increasing pressure from Samsung, Western Digital (SanDisk) and others amid lack of market growth in terms of NAND bits (at least, according to its own predictions). Meanwhile, the withdrawal also means that Micron will have to concentrate on production of SSD-graded memory, whereas NAND for removable storage will be sold on the open market, in case the company continues to develop it. If someone buys the Lexar operations from Micron, the latter will likely sign some kind of exclusive supply agreement with the new owner, which means that it will keep developing the aforementioned NAND. SSD-graded memory is more expensive than chips for memory cards or USB flash drives and for about a year Micron was the only company to sell its SSD-graded 3D NAND to third-party makers of drives, possibly earning higher margin than by selling removable storage devices. However, NAND for the latter is typically used to test drive new production technologies and/or architectures before deploying them to make memory for SSDs.

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Micron will not be the only producer of NAND flash, which does not produce its own memory cards and USB flash drives. SK Hynix and Intel also do not produce such products under their own trademarks, unlike Samsung, Toshiba and Western Digital. That said, while it will be sad to see Micron’s Lexar gone (assuming that nobody buys it), Micron’s withdrawal from removable storage business is not exactly surprising.

Related Reading:

  • Micron Hires New CEO: Sanjay Mehrotra, SanDisk Co-Founder And Former CEO
  • Lexar Launches 'JumpDrive Tough' USB Drives up to 128GB: Focusing on Physical Endurance
  • Micron Presents New SSDs and Strategy: From Components to Whole Solutions, 3D NAND Shipping Imminent
  • Lexar Professional Workflow HR2 4-Bay Thunderbolt 2 / USB 3.0 Reader Hub Review

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