Memory maker Micron (NASDAQ:MU) is one of the major vendors of memory products for gaming-related applications such as graphics add-in-boards targeted at PC gamers as well as game consoles.
From a business perspective, Micron lumps its graphics-oriented memory technologies (graphics processors today use some type of GDDR memory) under its specialty DRAM segment, which the company says includes revenues from memory aimed at networking, automotive, and "other embedded technologies."
That segment made up a mid-20s percentage of the company's total DRAM shipments in its most recently reported quarter. Micron didn't break down the percentage of its DRAM revenue that came from graphics this time around, but back in September, Micron said that graphics-related memory made up "more than 10%" of its DRAM shipments (and specialty DRAM was in the "low 30% range" then).
From this we can reasonably assume that about a third of Micron's specialty DRAM business comes from sales of memory aimed at graphics. That's not a huge part of Micron's overall revenues, but it's important enough to keep an eye on.
Here's what Micron management had to say about its business performance in the graphics memory market last quarter.
Capturing share and growing sales
Micron CFO Ernie Maddock told analysts during the Dec. 21 conference call that the company "had continued share growth in GDDR with our major graphics customers." He also said that both "new graphics card launches and strong console sales sustain favorable demand for both GDDR5 and GDDR5-X."
Commenting on 2016, Micron CEO Mark Durcan said that the company "grew [its] graphics business pretty substantially this year."
GDDR5X position likely helped Micron
It's not terribly surprising that Micron enjoyed growth in GDDR product sales. The graphics processor market itself has been strong, as graphics processor market leader NVIDIA (NASDAQ: NVDA) reported 35% revenue growth year-to-date in gaming-oriented products (largely graphics processors that incorporate GDDR memory).
However, there's another potential factor at play.
NVIDIA's high-end GeForce GTX 1080 and Titan X graphics cards use a type of memory known as GDDR5X, which is a faster version of the common GDDR5 memory technology that continues to dominate the graphics market.
The market for traditional GDDR5 has several participants, including memory giant Samsung (NASDAQOTH: SSNLF) as well as SK Hynix. This means that Micron is just one of three vendors of commodity components in this market.
However, Micron is the only vendor of the higher-performance GDDR5X memory. This means that Micron currently faces effectively no competition in this segment of the market, which means that the company is likely fetching a significant premium for GDDR5X memory over standard GDDR5 memory.
And, to the extent that GDDR5X-based products sell in place of GDDR5-based products, Micron stands to gain revenue share as well.
Putting this all into perspective, if graphics-oriented memory makes up about 10% of the company's DRAM sales, and DRAM sales make up around 60% of its overall revenue (it was 61% last quarter), then graphics memory sales are good for around 6% of Micron's overall revenue.
That's not a ton, so out-sized successes (or failures) here aren't necessarily going to be big drivers of the company's financial performance. Nevertheless, it certainly wouldn't hurt to see the company continue to perform well here.