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Don't Believe The Hype Over Micron Technology Inc's Latest Innovation

Bulls are getting ahead of themselves with the announcement of XPoint technology. It's industry supply and demand that will continue to drive the stock over the near term.

Investors welcomed news from Micron Technology (NASDAQ:MU) that the company had developed, along with Intel Corp. (NASDAQ:INTC), a next-gen memory technology that doesn't use the traditional transistor architecture. Micron popped 9% on the news, as the new memory claims to be 1,000 times faster than traditional NAND and 10 times denser than current DRAM. While that sounds impressive, a look into the details reveals that investors may be getting ahead of themselves, as the technology isn't likely to drive financial results in the near to medium term.

A product without a market?
The new XPoint technology marks an entire change in chip architecture, using not traditional transistors but instead a property change in the material itself. Memory manufacturers have been able to pack more transistors onto a single chip or wafer, but they've always known they would eventually reach a limit on how small these transistors can be, which is why they've been investing in 3D NAND and other technologies such as XPoint.

The technology has properties that place it between traditional NAND and DRAM, while it will probably be costlier than current NAND and slower than DRAM. Computers and mobile devices use both DRAM for "scratch-pad" memory and NAND for storing files and data, and since XPoint doesn't excel at either cost or speed, it isn't going to be replacing...