NOTEMUabout 1 month ago9.7Kviews

Micron: the attach rate is the number that matters

The high-margin attach is growing twice as fast as the headline line. Consensus models it as an accessory rather than as the mix shift it has become.

Nadia Haddad@nadia_haddad

What drives this is mix rather than volume. The incremental unit carries a materially higher attach of adjacent silicon than the installed base does, so gross margin rises even in a quarter where units are flat. The disclosure supports this directly. Attach revenue was broken out for the first time last quarter and grew at roughly twice the rate of the core line, off a base small enough that the mix effect is still ahead of it rather than behind. The position: long on Micron, entry locked at publication and the exit dated rather than open-ended. The target is stated in the call block above and the horizon with it. Sized to the catalyst rather than to conviction, with the invalidation written into the kill-switch card instead of left implicit. The obvious risk is that the channel clears without a guide-down, which happens when a genuine demand upturn lands on top of elevated inventory. That is the bull case and it is not impossible, only unsupported by the sell-through data.

Discussion · 4

Pauline VidalAUG 12

Finally someone put numbers on this. The capital intensity point is the one I keep coming back to. Is there a cleaner way to express this than the equity?

Yael BrennerAUG 10

I came in sceptical. The mix argument is the part I had not considered properly. What does the bear actually have to be right about?

Pauline VidalAUG 10

Agree with the direction, less with the magnitude. The installed base argument is stronger than the cycle argument here. Interested in what the kill switch looks like in practice.

Sam WhitfieldAUG 9

This lines up with what I saw in the filings. The channel data is what makes this hard to dismiss. What is the level where you would walk away?