Crucial 2011 Annual Report Download - page 34

NSG sales for 2010 increased 21% from 2009 primarily due to an increase in gigabits produced partially offset by a decline in average selling
prices per gigabit. The decline in average selling prices was primarily due to declines in prices on sales of NAND Flash to Intel as a result of cost
reductions and were partially offset by increases in average selling prices to trade customers. NSG's operating income improved for 2010 from
2009 primarily due to reductions in costs per gigabit. The reductions in manufacturing costs per gigabit for 2010 were partially offset by the
declines in overall average selling prices per gigabit. NSG's operating income for 2009 included a $144 million gain from termination of a supply
agreement with Intel.
Wireless Solutions Group ("WSG")
In 2011, WSG sales were composed of NOR Flash, NAND Flash and DRAM in decreasing order of revenue. The 152% increase in WSG
sales for 2011 as compared to 2010 was primarily due to the acquisition of Numonyx in May of 2010. WSG experienced pricing pressure in 2011
due to weakness in demand from certain customers. In addition, during 2011 and 2010, a portion of the NAND Flash sold by WSG was obtained
from Hynix at market prices and by the end of 2011, substantially all of this supply was obtained from lower-cost Micron production. The
improvement in WSG's operating income for 2011 is primarily due to a $95 million gain from the Samsung license arrangement recognized by
WSG in 2011.
The significant increase in WSG sales for 2010 as compared to 2009 was primarily due to the acquisition of Numonyx. Operating loss for
WSG improved for 2010 from 2009 primarily due to cost reductions and improvements in average selling prices, partially offset by higher R&D
expenses.
Embedded Solutions Group ("ESG")
In 2011, ESG sales were composed of NOR Flash, DRAM and NAND Flash in decreasing order of revenue. The 92% increase in ESG sales
for 2011 as compared to 2010 was primarily due to the acquisition of Numonyx in May of 2010. Absent impacts from the Numonyx acquisition,
ESG's performance in the automotive, industrial and networking markets was relatively stable from 2010 to 2011. In addition, during 2011 and
2010, a portion of the NAND Flash sold by ESG was obtained from Hynix at market prices and by the end of 2011, the majority of this supply
was obtained from lower-cost Micron production. The improvement in ESG's operating income for 2011 is primarily due to the acquisition of
Numonyx. In addition, ESG recognized a $33 million gain from the Samsung license arrangement in 2011.
The significant increase in ESG sales for 2010 as compared to 2009 was primarily due to the acquisition of Numonyx. Operating income for
ESG improved for 2010 from 2009 primarily due to cost reductions and improvements in average selling prices, partially offset by higher R&D
expenses.
Operating Results by Product
Net Sales by Product
33
2011 2010 2009
Net sales
$
1,959
$
778
$
247
Operating income (loss)
20
(23
)
(63
)
2011 2010 2009
Net sales
$
1,002
$
521
$
178
Operating income (loss)
237
152
37
2011
2010 2009
DRAM
$
3,620
41
%
$
5,052
60
%
$
2,422
50
%
NAND Flash
3,193
36
%
2,555
30
%
1,857
39
%
NOR Flash
1,547
18
%
451
5
%
—
—
%
Other
428
5
%
424
5
%
524
11
%
$
8,788
100
%
$
8,482
100
%
$
4,803
100
%