Micron energizer: Chief steering chipmaker into a new era

BOISE -- Just as he completed a low-level aerobatic loop above the Idaho desert, Steve Appleton's single-engine stunt plane stalled 25 feet off the ground while traveling 160 mph.

In the second before the aircraft plowed into the sagebrush, Appleton stomped the left rudder pedal, slightly raising the right wing and elevating the nose.

"That's about all you can do, because the fact of the matter is you're going to hit," Appleton told The Associated Press recently in his first interview about the July 2004 crash, which left him with a gash across his head. "I got it in a slightly better profile for impact and obviously I lived."

Appleton, 45, uses that same detached risk analysis in his day job: chairman, president and CEO of Micron Technology Inc., the biggest maker of computer memory chips in the United States.

Slowing growth of personal computer sales combined with a worldwide oversupply of Micron's mainstay product, dynamic random access memory or DRAM chips, add up to free-falling prices that threaten the company's future.

In seven of its past nine years, Micron has seen the per megabit average selling price for its digital memory products drop, including a 24 percent decline in 2005. Many times, the glut of semiconductors on the market means Micron is selling chips for less than it costs to make them at its plants in Boise -- where the 10,000 employees make Micron Idaho's largest private employer -- and worldwide.

To smooth the financial turbulence, Appleton has steered Micron into non-PC memory products, including new image sensor chips that are used in cell-phone cameras, medical pill cams and on-board video systems for cars and trucks.

And now he's betting his company's future on advances in the solid-state memory known as NAND flash. Used today to store photos in digital cameras and songs on the iPod Nano, Appleton believes NAND -- a logic function used in computers, the name formed by combining the operators Not and AND -- will eventually overtake mechanical hard drives as the preferred way to store data in mobile computers.

"Because there are no moving parts, it won't crash," Appleton said. "And with NAND in notebooks, you'll have instant on, no more of that ridiculous boot-up process."

Patience has never been part of Appleton's resume. The son of a doughnut cutter and a school teacher, he was raised on the sketchy side of Los Angeles and won a tennis scholarship to Boise State University.

"By the time my dad was 21 and my dom was 19, they had three kids," he says. "The reality of the circumstance is that parents with three kids at that age do not have a lot of money."

After graduating in business administration, he went to work in 1983 at Micron, a fledgling startup on the fringe of Boise near a log yard. He earned $4.46 an hour working graveyard on the chip fabrication line. Shortly after he started, the struggling company eliminated all benefits and cut salaries.

"I remember a number of occasions, talking to the founders Joe and Ward Parkinson, where we were two weeks from bankruptcy," Appleton recalled.

But the company survived and Appleton was promoted eleven times to become Micron's president by 1991, then chief executive officer in 1994.

In November, he announced that the fiercely independent Micron was embarking on its first major partnership, joining forces with the world's largest maker of computer processing chips, Intel Corp., to produce more and higher density NAND chips under a new company, IM Flash Technologies.

Some of that new company's work may make it to Micron's plant in Lehi, which originally was designed for manufacturing but now has 500 workers involved in chip testing.

Over the next three years, Micron and Intel will invest a total of $5.2 billion in IM Flash to challenge the dominance of Asian chipmakers Samsung and Toshiba in supplying NAND for the emerging array of consumer digital devices dependent on flash memory.

The demand for NAND -- Apple Computer Inc. is prepaying $250 million each to Micron and Intel to secure a supply for its iPod line -- may help trigger the second coming of the tech boom. The technology analyst firm Gartner says worldwide annual NAND chip sales have risen from $1.5 billion in 2000 to $10.7 billion in 2005. The firm predicts $18 billion in sales in 2008.

"For a long time, we have done DRAM by ourselves," Appleton says. "But when you look at the strength of Samsung and Toshiba in the NAND market, success alone would have taken a lot longer than we wanted given that the market is at such a high-growth stage. We just can't do it all by ourselves."

Some semiconductor industry analysts have long expected a joining of Micron and Intel, and Intel Chairman Craig Barrett even joked in 2004 after Appleton presented him with an award that he was announcing the merger of the two companies.

"Steve is a real competitor in everything he does, whether skiing, flying, motocross, or making semiconductors," said Barrett, who got his first snowboarding lesson from Appleton.

Appleton has a passion for high-risk recreation. He's a regular at a Boise-area motocross course, and he began flying high- performance aircraft after he became bored with sky diving. He owns 20 airplanes and moonlights at air shows under the guise of Appleton Air Sports.

The company's motto is "I take my adrenaline straight up," but Appleton says what he really craves is the precision and critical decisionmaking involved in tumbling earthward in his Extra 300L stunt plane after a controlled stall or blasting 200 feet off the ground at 650 miles an hour while upside-down in one of his customized British Hawker Hunter military jets.

"Making a decision around here, even if it takes an hour, is like a lifetime," he says in his office, which is noticeably void of any aircraft photos. "But hitting a jump on a motocross bike, flying an aerobatic maneuver in an airshow or deciding when to pull the ripcord, you've got to make decisions quickly and you've got to make the right ones or you'll get hurt. Making those decisions improves my business skill set."

He puts it another way when Micron's board of directors asks why the CEO of a Fortune 500 company in a volatile business is spending his weekends pulling 12 Gs in a stunt plane.

"I tell my board that the reason I fly high-performance aircraft is I have to do something less riskier than the DRAM business," says Appleton.

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