Micron Technology (MU 0.95%) investors couldn't have asked for a better start to 2014. Micron shares soared after the company crushed estimates in the first quarter, largely due to its Elpida acquisition and favorable pricing trends. Micron is up more than 10% as of this writing, and going by management's commentary over the conference call, it can create new highs going forward.

The company is seeing strong demand for its DRAM and NAND chips, driven by customers such as Apple (AAPL 0.08%) and rapidly growing sales of solid-state drives. Moreover, its acquisition of Elpida has proven to be a masterstroke as it helped Micron improve its share of the DRAM industry and brought a lucrative client in the form of Apple.

As a result of the Elpida acquisition, Micron's revenue more than doubled to $4.04 billion, crushing the $3.72 billion consensus estimate. Bottom line growth was even more impressive. Micron's earnings came in at $0.30 per share, overturning last year's loss of $0.27 per share. Excluding items, the company earned $0.77 per share, comprehensively beating the $0.43 per share estimate. 

Favorable DRAM trends
Looking ahead, Micron should continue enjoying the tailwinds that have propelled its business higher over the past year. Management is confident the favorable demand-supply situation in the memory industry will continue. Micron received a boost after SK Hynix's Wuxi fab facility caught fire late last year, adding to a tight supply situation. This year, Micron is looking at a 5% drop in DRAM industry wafer production as manufacturers look to keep prices stable. Beyond 2014, Micron expects supply to remain relatively stable. 

According to Micron, DRAM demand is robust after a traditionally strong first quarter. The company claims that its largest customers are still looking for DRAM supply in the ongoing quarter, and Micron expects this trend to continue. The company is seeing good demand from the computing, mobile, and networking end markets. In addition, a customer like Apple should help Micron sell its memory chips in large volumes.

The iPhone 5s uses DRAM from Elpida and it looks like Cupertino might need some more units of the device going forward. Apple recently inked a deal with China Mobile, the world's largest mobile carrier with more than 760 million subscribers, and will start selling the iPhone 5s and the iPhone 5c. ZDNet expects this deal to boost iPhone sales by 15 million to 20 million units, which should lead to more DRAM demand. 

Moreover, Micron is seeing a decline in cost per bit in the DRAM segment. Cost per bit is down in the mid-teens so far in the ongoing quarter, indicating an improvement in margins. Next, Micron is striving to bring better and more efficient products to the market. 

It is ramping up production of its 25-nanometer DRAM platform and is set to introduce a new 20-nanometer platform in the second half of the year. Additionally, Micron has also sampled a low-power DDR4 RAM platform for its customers' next-generation platforms, and it is the first in the industry to do so according to management. These innovations should help Micron find more traction in the industry and improve its client base.

NAND to improve further
The NAND business is also going strong as SSD component sales have been growing at a rapid pace. Looking forward, Micron expects its new 20-nanometer enterprise drive to gain traction after it was selected by a large OEM customer in the first quarter. This 20-nanometer drive is already in the qualification phase at major customers and could continue to provide a boost to Micron's NAND business. Also, Micron is expecting an improvement in the average selling price due to increasing sales of embedded products and SSD components. 

The pricing environment is expected to remain stable in the NAND segment as well. For 2014, Micron expects industry supply to grow in the low 40% range, which compares favorably to the five-year NAND bit demand growth rate of around 40%. 

Final words
Micron has started the year with a bang. The positive undercurrents that started off last year are still present in the industry. Micron has seen tremendous growth in the past few quarters and there are enough reasons to believe the momentum will continue.

With a forward P/E of around 10, Micron looks like a good bet. If you haven't bought into this growth story, you should definitely give it a look.