Crucial 2014 Annual Report Download - page 35

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33
CNBU sales and operating results track closely with our average selling prices, gigabit sales volumes and cost per gigabit
for our consolidated sales of DRAM products. (See "Operating Results by Product – DRAM" for further detail.) CNBU sales
for 2014 increased 112% as compared to 2013 primarily due to (1) the MMJ Acquisition, (2) higher average selling prices, (3)
increased DRAM supply from Inotera as a result of the restructuring of our supply agreement and (4) higher output due to
improvements in product and process technologies. CNBU sales for 2014 as compared to 2013 were adversely impacted by the
transition of production at one of our Singapore wafer fabrication facilities from DRAM to NAND Flash. CNBU operating
income for 2014 improved from 2013 primarily due to the MMJ Acquisition, higher average selling prices and manufacturing
cost reductions.
CNBU sales for 2013 increased 30% as compared to 2012 primarily due to increases in gigabits sold partially offset by
declines in average selling prices. CNBU operating margin for 2013 improved from 2012 primarily due to manufacturing cost
reductions as a result of improved product and process technologies partially offset by declines in average selling prices.
CNBU results of operations for 2013 included sales of $153 million and operating income of $21 million from the acquired
MMJ Group. CNBU sales and operating margins for 2012 were adversely impacted by a $58 million charge for a settlement
with a customer.
MBU
For the year ended 2014 2013 2012
Net sales $ 3,627 $ 1,214 $ 1,176
Operating income (loss) 683 (265)(371)
In 2014, MBU sales were comprised primarily of DRAM, NAND Flash and NOR Flash, in decreasing order of revenue,
with mobile DRAM products accounting for a significant majority of the sales. MBU sales for 2014 increased 199% as
compared to 2013 primarily due significant increases in mobile DRAM sales as a result of the MMJ Acquisition. MBU
operating margin for 2014 also improved from 2013 primarily due to the MMJ Acquisition and manufacturing cost reductions,
which significantly outpaced declines in average selling prices.
MBU sales increased 3% for 2013 as compared to 2012 primarily due to higher sales of mobile DRAM products as a result
of the MMJ Acquisition partially offset by declines in sales of wireless NOR Flash products. MBU results of operations for
2013 included sales of $192 million and operating income of $22 million from the MMJ Group. Sales of wireless NOR Flash
products declined in 2014 as a result of weakness in market demand and our customer group in particular, as well as a
continued transition by customers to NAND Flash. The improvement in MBU operating margin for 2013 from 2012 was
primarily due to reductions in manufacturing, SG&A and R&D costs.
SBU
For the year ended 2014 2013 2012
Net sales $ 3,480 $ 2,824 $ 2,842
Operating income 255 173 199
SBU sales and operating results track closely with our average selling prices, gigabit sales volumes and cost per gigabit for
our sales of NAND Flash products. (See "Operating Results by Product – NAND Flash" for further detail.) SBU sales for
2014 increased 23% from 2013 primarily due to increases in gigabits sold partially offset by declines in average selling prices.
Increases in gigabits sold for 2014 were primarily due to the transition in 2014 of production at one of our wafer fabrication
facilities in Singapore from DRAM to NAND Flash and improvements in product and process technologies. SBU sells a
portion of its products to Intel through our IMFT joint venture at long-term negotiated prices approximating cost. SBU sales of
NAND Flash products to Intel under this arrangement were $423 million, $387 million and $718 million for 2014, 2013 and
2012, respectively. All other SBU products are sold to OEMs, resellers, retailers and other customers (including Intel), which
we collectively refer to as "trade customers."
SBU sales of NAND Flash products to trade customers for 2014 increased 26% as compared to 2013 primarily due to an
increase in gigabits sold partially offset by declines in average selling prices. SBU operating income for 2014 improved from
2013 primarily due to higher gigabit sales volumes as manufacturing cost reductions were essentially offset by declines in
average selling prices.