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Why 5G Technology Could Drive Micron Stock

Micron Technology (NASDAQ:MU) stock is rising today in step with the rest of the stock market, but some would argue that the company’s 5G technology should drive even bigger increases. Micron has published several posts about 5G on its website over the last several months.

Micron explains 5G technology

In a post last month, Micron explained that 5G adds a 20 times boost in throughput, bringing it up to 20 Gb per second. It also drops system latency by 10 times to below 1 millisecond. Further, it supports an increase in the number of connections by 10 times. The technology does all three things while also significantly reducing the amount of power that’s consumed over existing networks with “nearly unlimited availability and area coverage.”

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The company said the improved connectivity, responsiveness and bandwidth make possible many use cases that weren’t possible before. It explained that infrastructure must also be updated to allow new 5G devices to deliver on those promises.

Micron said it is “uniquely positioned” to speed up 5G across all parts of the spectrum from the cloud and data centers to enterprise users, networking and smart devices at the edge of the network. Its memory and storage are optimized for workloads and employed end to end. This enables the company to move data seamlessly and quickly across the network.

Five areas of 5G

The company went on to highlight five areas in which it is ready for 5G technology. They are mobile, automotive, the Internet of Things, networking and the cloud.

In the area of mobile devices, Micron has developed next-generation memory that balances performance and power efficiency. With Xiaomi as its partner, the company was its first to get LPDDR5 DRAM into mass production for use in smartphones. The company’s LPDDR5 memory enables 5G smartphones to process data at speeds of up to 6.5 gigabytes per second. Micron’s GDDR6 graphics memory supports bandwidth speeds of up to 16 gigabytes per second.

In automotive, Micron produces automotive-qualified storage and memory for cellular vehicle-to-vehicle and vehicle-to-infrastructure (C-V2X) solutions and autonomous driving technology and infotainment. The company said 5G technology will be perfect for use in vehicles because of its low latency. C-V2X technology enables vehicles to see around corners and through walls and anticipate pedestrian behavior.

Micron said almost 42 billion devices are now connected to the Internet of Things, and it expects the IoT to also benefit from 5G technology. The company said data from these connected devices is part of the massive “data deluge.” The International Data Corporation expects 79.4 ZB of data to be generated by IoT devices in 2025. The company added that IoT devices will eventually be connected via 5G networks to enable near-real-time analytics.

It also said that 5G technology will push data centers to boost their storage fourfold so they can handle mobile broadband connections. Micron has been working with manufacturers on high-bandwidth, low-latency solutions to transfer data quickly from one place to another. The company’s SSDs, NAND and 3D XPoint technology provide the highest bandwidth in the industry.

Micron also said the benefits of 5G technology move beyond the network and extend into the cloud. The company said data centers will have to increase their memory and storage by four to tenfold to handle all the mobile connections. Latency reduction will be an important part of the process. The company said data will have to be stored, hosted and streamed “at volumes and speeds not universally seen yet for 5G to become a reality.”

Micron stock and 5G

Traditionally, Micron stock has been driven by memory prices, but some investors would argue that 5G should be driving the shares instead because of the company’s advances in the technology. Prices for NAND and DRAM memory have been volatile, but 5G technology could serve to smooth things out for Micron.

Unlike the memory business, the 5G business has been focused on developing platforms rather than just chips. This could be a good thing for Micron stock, especially given how historically volatile memory prices have been.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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