Crucial 2014 Annual Report Download - page 4

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On July 31, 2013, we completed the acquisition of Elpida, now known as MMJ, and a controlling interest in Rexchip, now
known as MMT (together, the "MMJ Acquisition"). The MMJ Acquisition included a 300mm DRAM wafer fabrication facility
located in Hiroshima, Japan, a 300mm DRAM wafer fabrication facility in Taichung City, Taiwan and an assembly and test
facility located in Akita, Japan. These wafer fabrication facilities together represented approximately 30% of our total wafer
capacity for 2014. The operations from the MMJ Acquisition, which are included primarily in our MBU and CNBU segments,
include the manufacture of Mobile DRAM targeted to mobile phones and tablets and computing DRAM targeted to desktop
PCs, servers, notebooks and workstations. In connection with the MMJ Acquisition, we recorded net assets of $2.60 billion,
noncontrolling interests of $168 million and a gain on the transaction of $1.48 billion in 2013. (See "Part II – Item 8. Financial
Statements and Supplementary Data – Notes to Consolidated Financial Statements – Micron Memory Japan, Inc." note.)
The MMJ Companies are currently subject to corporate reorganization proceedings under the Corporate Reorganization
Act of Japan. Because the plans of reorganization of the MMJ Companies provide for ongoing payments to creditors following
the MMJ Acquisition, these proceedings are continuing and the MMJ Companies remain subject to the oversight of the Japan
Court and of the trustees appointed by the Japan Court (including a trustee designated by us, who we refer to as the business
trustee, and a trustee designated by the Japan Court, who we refer to as the legal trustee), pending completion of the
reorganization proceedings. As a result of this oversight and related consent rights of the Japan Court and the legal trustee, our
ability to effectively integrate the MMJ Companies as part of our global operations or to cause the MMJ Companies to take
certain actions that we deem advisable for their businesses could be adversely affected if the Japan Court or the legal trustee is
unwilling to consent to various actions. For more information, see "Item 3. Legal Proceedings – Reorganization Proceedings of
the MMJ Companies" and "Item 1A. Risk Factors."
Business Segments
In the third quarter of 2014, we reorganized our business units. All prior period amounts reflect this reorganization.
Factors used to identify our segments include, among others, markets, customers and products. Segment information reported
herein is consistent with how it is reviewed and evaluated by our chief operating decision makers. We have the following four
business units, which are our reportable segments:
Compute and Networking Business Unit ("CNBU"): Includes DRAM and NOR Flash products sold to the compute,
networking, graphics and cloud server markets.
Mobile Business Unit ("MBU"): Includes DRAM, NAND Flash and NOR Flash products sold to the smartphone, feature
phone and tablet mobile-device market.
Storage Business Unit ("SBU"): Includes NAND Flash components and SSDs sold into enterprise and client storage, cloud
and removable storage markets. SBU also includes NAND Flash products sold to Intel through our IMFT joint venture.
Embedded Business Unit ("EBU"): Includes DRAM, NAND Flash and NOR Flash products sold into automotive and
industrial applications, as well as the connected home and consumer electronics markets.
For more information regarding our segments, see "Part II – Item 8. Financial Statements and Supplementary Data – Notes
to Consolidated Financial Statements – Segment Information."
Products
DRAM
DRAM products are high-density, low-cost-per-bit, random access memory devices that provide high-speed data storage
and retrieval with a variety of performance, pricing and other characteristics. Sales of DRAM products were 68%, 48% and
39% of our total net sales in 2014, 2013 and 2012, respectively. DRAM products are sold by CNBU, MBU and EBU.
DDR3 DRAM is a standardized, high-density, high-volume, DRAM product, which offers high speed and high bandwidth
at a relatively low cost. DDR3 products are primarily targeted at computers, servers, networking devices and communications
equipment. In 2014, we offered DDR3 products in 1Gb, 2Gb and 4Gb densities. We also offered next generation DDR4
DRAM products in 2014 and we expect sales of these products to increase significantly in 2015 as they replace DDR3 DRAM
products in many applications. Sales of DDR3 DRAM products were 40%, 31% and 20% of our total net sales in 2014, 2013
and 2012, respectively.