Micron Technology (MU)

Farhan Ahmad Head, IR
Sanjay Mehrotra President and CEO
Dave Zinsner CFO
Ambrish Srivastava BMO
John Pitzer Credit Suisse
C.J. Muse Evercore
Harlan Sur JP Morgan
Timothy Arcuri UBS
Karl Ackerman Cowen & Company
Blayne Curtis Barclays
Joe Moore Morgan Stanley
Call transcript
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Good afternoon. My name is Lateef, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Micron’s Second Quarter 2019 Financial Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-answer period. you. Thank Instructions] [Operator my Farhan turn Relations. Ahmad, now to floor your host, Head pleasure is the to over It of Investor

may conference. begin You your

Farhan Ahmad

quarter And financial you. welcome Micron second Thank to conference fiscal call. Technology's XXXX

with call webcast Dave and approximately investors.micron.com. slides, the website and XX Financial and Chief in from length. Relations the Sanjay This at Mehrotra, me On Zinsner, will call audio being our President Today's Investor is Officer. minutes also CEO; are be including today call

the press on GAAP results otherwise dilution call release convertible contains financial short website be ago. Today's financial reconciliation a to table. unless our of while measures with may debt will found addition, In and of earnings financial specified. A basis, a on capped filed non-GAAP along discussion our presented be non-GAAP website

a for most website be remarks the be to various on this attending. our webcast encourage we information including and micron.com later at financial on prepared throughout monitor available conferences on will call the you replay that today. current quarter We information will website the Company, our reminder, As from the

can us You Twitter, follow @MicronTech. on

you subject a may risks As results. matters be are will today XX-Q and a forward-looking future from discussion for refer the file with statements. that to statements forward-looking recent uncertainties Form we include that differ and affect the documents our results We cause to today. we most These made of the XX-K SEC, actual specifically, discussing Form our may risks materially reminder, to statements

future reflected or activity, results, reasonable, that statements cannot believe achievements. guarantee are performance, expectations the forward-looking of the we Although, in levels we

today's to over to these I'll statements turn actual update statements We call are any the conform of forward-looking under Sanjay. the date now results. after to to duty no

Sanjay Mehrotra

the you, environment. free Good executed a of healthy and everyone. flow, levels Farhan. in cash quarter, industry profitability well and afternoon, solid second delivering despite results Micron Thank challenging

and position our the sheet total quarter by We cash strengthen in balance our to liquidity. continued increasing

Although grow competitiveness the product near-term, we improving competitiveness this and emerge we to important our review in cost lay and from expect with solutions Micron’s and foundation in financially continue would start our to diversify our portfolio. strategy, of operationally, two improve pillars cost of I both environment. and the industry like increasing to high-value headwinds a portfolio, stronger,

strategy EBITDA positions Our than near-term the same navigate ahead, XXXX XX against to This us headwinds. this $X more better percentage fiscal from opportunities over XXXX. us strategy over Strong margin execution for our by improved competitors also period. while to tremendous has profitability fiscal improved points our to relative by billion has the annualized enabling our

increase fiscal nanometer to We healthy including progress to on expect cost DRAM yielding this declines NAND. well, In half is fiscal in cost and in further we DRAM, expect second the our year, both nanometer XY reduction year-over-year XY of and conversion XXXX.

making this XZ on also products have progress nanometer and are excellent We technology. sampling started utilizing

facility, Hiroshima wafer expansion As of addition our fab we the are Taichung to process previously DRAM Consequently, for transitions in said more facility capacity site existing at additional node future DRAM the and transition steps starting the preparation the expansion we announced have future cleanroom nodes. our to cleanroom to past, require enable in space. of

but fiscal ramp any expect sometime production on QX product XD yield finalizing fastest of with XXXX. achieved NAND, still are In history. in meaningful calendar we timing in We NAND our the production XX-layer output the in NAND

replacement NAND, also making of gate We uses fourth-generation our our development which are on technology. progress good XD

to hence limited node are cost floating reduction, we capital replacement initial high of our will This planning the across later portfolio deploy to our of expect gate. the we conversion, investments requirements second gate we replacement the gate gate capital replacement approach node converting the Given of NAND to node that ROI rest as first products, select NAND capacity. and this of will with convert the our provide optimize

architecture a XD path gate future our As scaling reminder, improvements generations and us us toward provide NAND. will replacement multiple allow to of performance an efficient deliver

first initial inventory limited NAND growth that demand of replacement be will the calendar our deployment meet node our Given at gate, expect to customer cost-effective utilize below plan the we in supply floating we industry and levels, requirements. XXXX bit gate to position

despite our ramped NVMe this client and other memory introduced for is later technology with internally introduce consumer persistent from SSDs year-end. to on analytics. high-value margin revenues. revenues in in with in our first for We enabler NVMe based to calendar and XX-layer making active fiscal with industry. XXXX. enabled calendar market, on solutions, in deliver increased samples contributed applications, cloud our custom enterprise declines QX our to SSDs NVMe intend cloud which combines artificial In XD now controller, In our key the improve to XD NAND, intelligence fiscal structure, we be progress which the in This QX, from while customer features shipments year. half to numerous are OEM cloud XX% SSD, in competitive data PC continuing will on to fiscal XXXX high-value track SSDs, price the NAND are and before and transitioning revenue and new QX. to than meaningfully We profile steep began planned solution, in particularly first two-thirds the XXs In of In a the NAND designed half a solutions, XD cost solutions, qualifications remains high we XPoint of we more cost large DRAM Turning client NAND SATA. customers. of believe first of us fiscal development combined up mix SATA, and high-value were gross our fully XPoint

the talent XD provides development capability of announced January interest This drive we with manufacturing facility and this option highly Utah. As acquire innovation. our us Intel’s skilled IMFT in exercised year Lehi, XPoint to previously, in and the in acquisition to

I’ll markets. end mobile. to turning with start Now

grew high-end sales. QX memory fiscal and During margins gross we year-over-year expanded unit pricing weakness adverse smartphone storage despite and revenues and in

our was Xx by propelled managed portfolio, growth shipments in NAND bit mobile in more where year-over-year. performance Our than grew NAND

also X lower-tier NAND smartphones to gigabytes NAND will to DRAM World smartphones premium its XX X exciting trends our in companies Last Samsung to come X innovations growth augmented capacity years current-generation of premium smartphones. content These XXX to as beginning are sustained and connectivity SXX photography XX new several computational and drive XK should At featuring phones announced calendar LPDRAM and DRAM well. XXXX. We driven and Memory sales as XXX content next-generation gigabytes industry-leading consumption. continues, in screens. to gigabytes of gigabytes phones virtual upcoming Congress, typically DRAM believe to in and of strong XY-nanometer and machine featuring feature reality announced growth of its unit will video. of month, Plus smartphone, likely reignite storage Galaxy cascade We XXX terabyte Mobile best-in-class These and premium NAND. XG, XG of due in learning, foldable by seeing demand for XX and will cameras, gigabytes and power to that features phones versus multiple for such and foldable smartphone X

which machine-to-machine that the for XG creation as also communication and likely accelerate analysis, fundamental mobile, excited our create are data to are enable is and it business. beyond by drivers We true opportunity will

to XG for and create expect in data We memory demand devices, centers. IoT adoption wireless storage increased and infrastructure

years. has cloud for Our already center memory slowdown customer of the The In some embedded market, and are in customers. XG demand is two data ongoing from businesses networking optimizations early demand as the following well software see growth year a inventory benefit moderated adjustments, to starting exceptional infrastructure as last in investments. the at result this

to densities the introduced that we resume are which few a DRAM the base, see plan, fiscal in the CPU from XXXX. position in we of to samples customers XXXX. positions calendar in QX, expanded second growth drive second benefit server in improvement demand platform of second customers’ sales higher as DDRX customer new growth us shipped inventory of of expected of GDDRX and new for grew this which half expect ramp. graphics, XY-nanometer module to high-density be support high-performance calendar ahead additional calendar growth months, will us processors half position. In server half we in which stronger should well We our our our to The XXXX In memory

in driven by next-gen announced Qualcomm communications we several modules. In and in-vehicle are automotive growth customer calendar with steep inventory and quarter infotainment with largely automotive a revenue them of ADAS systems. had increasing We demand including middle for be XG to fiscal seeing adjustments expect year-over-year advanced the collaboration completed new QX, products, in and in-vehicle strong another We year. GDDRX this by infotainment for

memory using strategic cost and ADAS the memory announced driven challenge, Lackluster two-thirds At well design using sales auto full over shipments robust shortages. adjustments. point see of also XX over the growth consumer decline technology applications. We storage however, our surveillance, and weaknesses, to automation leading sequentially coming autonomous market on from short-term advanced XY-nanometer XX% other in and video inventory and in a our we platforms microSD by market, now the We our by a inventory and competitiveness supplier the drawdown a markets, and our Congress, due wins adoption the than and card industry’s a important with X macroeconomic Micron sales of unit market, NAND. weaker remain QLC In next In generating PC CPU client automobile PC seasonal, new declined of announced we seen of products. We as terabyte nodes. portfolio to systems focused the as first well this for DRAM factory in had pricing and sales saw bit as continues storage in and decade, are World collaboration infotainment increase as the pricing autos, advanced are Mobile content of as in industrial segments, driven vehicles. we sales more

call, than weakened expected. Since Now our turning DRAM more industry to our DRAM pricing last earnings outlook.

customer and at greater moderated, macroeconomic server CPU customers. at worse-than-expected Our XXXX is shortages. contributing uncertainty OEM demand outlook for inventory, calendar demand We also buying enterprise some has levels customers several hesitation behavior by weakening believe in led somewhat to of

estimate mid-to-high to teens, supply we points in that. last demand we customers second view, XXXX on now Further, of calendar current demand end bit demand still as DRAM we estimate industry XXXX strengthening discussed from the is growth as are likely tracking in QX, half earnings to Based increasing calendar fiscal bit normalize our begin low-to-mid inventories growth with few by to most growth our teens. DRAM shipments be a above the their in call, However, our on to we mid-year. with expect our customer bit

approximately idle production to DRAM lower wafer to of for calendar we will X% from the demand Given demand decided our bring our industry outlook bit levels action DRAM of XXXX. our This our customers, close DRAM have growth starts. view

monitor that We aligned the take to market bit with supply will and closely growth our XXXX to actions remains ensure in appropriate calendar demand. continue

server Looking from and in growth expect particular, XD beyond in our to accelerate demand bit transition demand fiscal XX-layer XXXX, by expect growth DRAM NAND mobile we from improves. oversupplied as bit weak the growth In XXXX, industry a remain NAND. to bit fiscal bouncing driven the demand acceleration fiscal back XXXX. robust markets we

pricing Although that year. trends the the in seasonal optimistic demand in and we support fiscal will expectations, of are elasticity improving calendar our came half QX second growth below demand

range, to the likely mid-XXs% the that we grow growing bit is expect shipments are of bit growth XXXX We our to be bit in and industry targeting in industry growth the calendar to close NAND rate high-XXs, with demand. demand supply

planning our and growth bit managing supply been our wafer NAND capital prudently, including have We volumes. adjusting

total reducing NAND legacy on our X%, through wafer by mostly are We nodes. reductions starts approximately our

fiscal in DRAM our and fiscal our evaluating these XXXX for conditions, industry have for and we XXXX. Given changes CapEx are reduced NAND CapEx

second financial are taking executing current of I Dave the now address fiscal market guidance turn to actions to objectives. conditions, long-term the well third and quarter quarter. our prudent results it while provide will our for strategic to on We over

Dave Zinsner

in our balance within the In in our down used as quarter, our to down portion of Thanks, revenue market Sanjay. our revenue DRAM QX. reflected the our and was conditions. we Company debt. of represented issuance improve shipments cost a our a prior diluted to the revenue the shareholders, executed low continued were down shipment revenue NAND X% in fully XX% XX% offering well low strengthened returned revenue somewhat ASPs was quarter, pricing the the redeem declined convertible weaker-than-expected NAND first guidance the of capital Revenue to fiscal and second sequentially fiscal Micron’s billion, were prior XX% DRAM second through sheet quarter reducing year-over-year fiscal we quarter. XX% DRAM fiscal structure quarter. Year-over-year, in compared results XX% declined outstanding were investment-grade represented period Company from quarter first were Total fiscal fiscal total quarter this the trends count. mid-single worse-than-expected down the XX% from NAND. proceeds first Most XX% down share and large in double-digits. of while of quantities range digits. the notes, DRAM from year-over-year revenue from and QX. XX% $X.X in the bit of from to total and year and prior

stronger the in prior while than in Our expectation shipment large NAND quantities upper demand mid-XX% due from percent increased shipments timing to range to our bit single-digit overall a NAND the came customer. compared quarter. of ASP the declined range, in

Embedded our Now and for Mobile year-over-year seasonality Compute was as MBU Revenue and the prior quarter-over-quarter the Business weak first prior year-over-year strong current of segments, NAND business unit. the weakness in from Business PCs. revenue the major trends from down and and to volumes. from The revenue Other pricing up due was XX% $XXX The across X% the driven managed graphics, due the pricing volume to automobile The down first as XX% quarter. XX% And fiscal in to was and DRAM billion, despite quarter. in down fiscal compared decline to MBU by down X% embedded year-over-year revenue from reductions, revenue revenue to products. year XX% lower Unit or billion, market was turning contributed record by down only Unit sales. $X.X record record Lower for declined Revenue the Networking our pricing well quarter. and was the automotive volume weaker business Despite first Unit quarter-over-quarter market to slightly fiscal $X.X grew conditions, particularly due cloud million quarter, growth decline. sequential Business

Finally, results margin but ongoing gross the quarter. costs second in XPoint both expected underutilization the the quarter-over-quarter. down offset year-over-year and which guidance lower SSD revenue. second partially quarter quarter reductions XX% approximated were execution XX% points. in our in in guided of costs, high XX% consolidated fiscal operating tool first year billion, from within Fiscal increased range. basis revenue The impact our prior driven the on The OpEx second margins in quarter Pricing to sequential in range. decline impairment expenses resulted the Storage down fiscal $XX by of Business came XXX weaker than Fiscal in was our DRAM $XXX Unit million end strong million at that gross and anticipated and compared cost guidance. one-time quarter included for in second included XD XX% $X not NAND, was was revenue, XX% fiscal by component came

approximately was expect year-ago to in rate in second per down rate the the earnings fiscal down XX.X%. prior points were our expenses, technologies. from down OpEx We also quarter on from impairment, approximately profitability solid second first quarter. the the would future XXXX tax controlling XX% X.X%. quarter at QX share in of This while with and of We fiscal focused year-over-year have representing quarter come $X.X of quarter. $X.XX, $X.XX points tax fiscal remain for the percentage fiscal low revenue. end our billion, products in now in we Non-GAAP our XX XX delivered margin guidance. The the operating down from the and fiscal percentage is and this investing Excluding income And be in $X.XX

$X.X and Turning of was quarter, representing prior the to with net flat cash second operations, In flows relatively we spending. revenue. XX% fiscal of in capital generated billion third-party spending, $X.X billion, the approximately from cash compared quarter. contributions, Capital

billion XXXX the our $X as We range we manage from to current maintaining approximately billion, have to for our fiscal priorities. $X.X target in $X prior guidance while CapEx environment our strategic billion investment lowered through of

towards is no of growth. DRAM more transitions with investment CapEx last nodes, our and mostly advanced cost spend XX-layer attractive and year Fab and new XD going targeted year fiscal XXXX capacity in from do XX-nanometer technology to additions. significant a As we our which this very The before, construction contribute migrating test these down equipment not is NAND is assembly towards wafer cleanroom compelling ROI. provides a in mentioned to operations, reduction and supply and portion bit

the We flow, half on repurchase our approximately share our $X.X flow quarter’s representing XX% to quarter. two In cash our billion, towards $X.X XXXX, demonstrated nimble in deployed XX billion compared free quarter, utilizing approximately free the cash operations As of fiscal fiscal was fiscal remain second CapEx shares. of first the QX, bought quarter past $XXX million we on XX we of as year-ago from half. have Through stock $X.X the for adjusted XX% and conditions. of in fiscal based approximately repurchased we million in the cash shares over flow cash net first program. We CapEx fiscal back billion, less million first flow business quarters, the billion defined in $X free

to continue deploying our under towards as on to view at an an of our authorization. use cash repurchases share capital of repurchases $XX remain basis We least attractive and current committed annual flow free billion XX%

increases could quarter. to count of effectively the at at eliminated dilution million fully X quarter the $X.X from buybacks, we share price. which shares. that converts resulted our share the shares, million our prices increasing share which current with also Note diluted Inventory the to billion first our approximately the addition count fiscal subsequent in by billion, lowered ended for close, In XXXX quarter end these $X.X share at converts have was in the XX greater underlying

to days the $X.X fiscal cash days inventory fiscal Our quarter and first improving days issuance. QX have of address in billion. largely billion quarter. today The begin higher were demand, to liquidity will as ended actions supply reductions, regarding of We with of nearly we strong compared XXX XXX result announced billion, the levels. $X our position with total our increased fiscal debt liquidity Total second $XX a billion cash combined customer to in a of net inventory that $X.X

Our debt billion debt to redemption. primarily On to with recognition GAAP billion. we offering the premium the option venture note used Series complete debt in $X.X to our balance quarter-end, to G redemption, position our of Intel. by cash January with and convertible convertible exercised $X.X of by increased billion IMFT, quarter, due the billion associated Subsequent $X.X which the note $X.X our we XXth, approximately joint reduced outstanding call to acquire

first We material either Since the our IMFT’s do retire also XXXX near XXXX. near-term will late expect already of results half transaction to joint-venture-related statements, the the billion not financial or consolidate close $X we fiscal impact expect in results. we transaction in a debt This in $X.X balance sheet. Micron’s on fiscal billion of to our

turning through imbalances. market demand supply to are our markets Now, working NAND and DRAM outlook. and

the remains visibility near-term low remains challenging. Our and environment

due lead haven’t CapEx times. yet industry, reductions While across have there they been to output impacted the growth

in shipments NAND, DRAM approximately expect in in will expect approximately and increasing a be second higher cost modest of the CapEx quarter revenue year-to-date, to calendar for expenses mix and the billion grow In of in fiscal DRAM output of quarter. fourth or Micron X.XX or count of on due $XXX reductions third the at share to diluted fourth to shipments is XX%; decline high-value shares, supply half help we minus or we bit today be as to expect announced of We minus in fiscal key sequentially to in bit announced plus of our at we for plus initiatives, million, expect that $X.XX and our NAND our $XX rates solutions, year. the continues minus EPS quarter NAND, the $X.XX. follows: much fully sequential third improving our growth non-GAAP during range reduce $X.XX, shipments in a timing to fiscal our the billion, of We our fiscal that XX% profile our guidance also range plus DRAM gross we in in mind, this With and and quarter. the of $X.X fiscal operating products. reductions on billion Based resume the and plus that new The have third to and closing, investing to million. $XXX margin innovative In be the million; expect execute quarter

Sanjay to Our substantially some I’ll the and solid financial we future for now despite our footing, call market near-term in concluding that means strong well-positioned invest are over leverage liquidity reduced conditions. remarks. turn to

Sanjay Mehrotra

demand. remain to execute Thank to costs industry mix strategic we Micron tremendous same time, supply very you, trends action taking increase and consistent high-value invest Dave. growth long-term are reduce In with reduce the to our of multiple to priorities decisive be portfolio. response across our growth At for industry near-term The continue against conditions, healthy, and solutions with the markets. opportunities our in demand to we

strong product and model, believe portfolio before Micron drivers for is stronger long-term We continue structurally improved capability. and deliver with and than diversified win value With demand our ever more that supply operating sheet to better and moderating memory balance shareholders. to industry is growth positioned the

will We open for now questions.


first BMO. you, Instructions] from line Srivastava [Operator comes question Thank sir. the Our of of Ambrish

Your open. is line

Ambrish Srivastava

focus would balance tying you times, situation. also trying see to inventory and sheet hyperscale Thank up couple the on of what I inventory the wanted do. Hi. about inventory just you. Dave talked a Sanjay, to then

then, my the left conditions follow-up, now And get what's the terms moderate So, to CapEx you. weeks Dave, the of we for were Thank quick A, if flex you that just in on where could update worse? are on of -- inventory? down

Dave Zinsner


first, talk inventory. about take I'll -- So, our let me

dynamics going noted, couple our we on. as So, a are now of inventories days, at XXX

customers level as to digest calendar have we in what of the to start the built about DRAM, carry of So, we talked a inventory higher then, our that that, first inventory in our through and reduced And CapEx. quarter, top year last was as on that. we up half of expected we did

And terms start so, of to half inventory that manage of as growth, reduction well. CapEx an so back have effect the bit should our in year help calendar the to of in will our of start outcome that in on top this then the of billion. output. And to to in that, further some talked underutilization, further underutilization X% about we of quarter, $X reductions we about And reduce approximately the talked of kind taking down about CapEx

So, that should in help bring more DRAM inventories back line.

that we better to would start So, the calendar a expect see back we be half DRAM year in place. of

NAND the levels On we're at well. obviously, elevated as front, inventory of

Now, gate Sanjay somewhat floating replacement we transition in NAND his in going have that noted do as is the on from gate remarks, calendar by in to design, XXXX.

going is robust. the to output be so, bit very And not

And does also, inventory of CapEx also into as to -- Having would well we manage the customers. try help so, adjust of X% NAND such was demand NAND levels inventory. part and that idea also And XXXX output support the that, the that as well. wafer we reduction higher carry to impact said our by from did end, as the our

inventory that, inventory. the start the calendar to start into the improve we think of NAND and as then half XXXX, in year, the to of through portion work I So, you'll back see

is model low-XXs where there'll will of of managing we're about years for will it a goes, the years percent when average. as we Obviously, to CapEx really be that our this be that Analysts above talked that said, the we at what below way far the CapEx. Day. We're be is the average there and As sales committed as

I that model. last think, XXXX XXXX, fiscal below were low-XXs the years, two we and

on level surprising these to that a be had of that, these not get to of able to room staged manage above clean of bit transitions. for be years. some a bit Plus, it's demand So, node we low-XXs to couple space pent-up the top

And on you year, a number is normal have would long over so remarks, from in on initiatives term, us circumstances. it his this think which modulate Sanjay see be cleanroom the different the on run I economic And But, rate. of buildout a mentioned kind maybe of elevating in level. bit our we’ll mentioned we little low-XXs we're think percent this based CapEx, remarks, as I my I flexible going in

Ambrish Srivastava

hyperscale? the And

Sanjay Mehrotra

our evidence of course With year. compared respect toward calendar my And half seeing of demand will in continue year, year through CPU to of I the in will work that expect will the do there largely in we the year. during first calendar And first course, the half both second the second by with year. that for growth situation first the that that will improve of to And in second demand sequentially we effect calendar the rest we remarks expect to customers compared as we -- year. year. the also DRAM be this year shortages, to improvement the to improvement, contribute be of of of do hyperscale, calendar system we will those that the inventory consumption do And the inventory and certainly the expect half respect to half expect the in over completed at mid year-over-year improve half in said our accelerate, And demand of will are of calendar the by customers. that year. of And, the


Thank you.

Our of of John from Credit question comes Pitzer the Suisse. next line

is line open. Your

John Pitzer

make I that talked Korea in a kind given Yes. you Last flattening life that. really wanted of to Sanjay, of cost to just just DRAM be kind from in This you a shutter piece capacity. think to why how sense me. what letting the enough a as about ask it behind quarter. doing. DRAM are big current I to bit just seems Good of which depends curious to to curve guess, market I'm reversion to some And little supply-demand, overall guys bit impact of the seemed not you're capacity upon afternoon. question. actually increased a more me some I a decision of the decision came shutter this quarter, the to useful detail actually little for the inventory, Thanks a holding

Sanjay Mehrotra

I inventory calls, this at we days healthy mentioned that we we think, had our at is about with. XXX are look the Dave of supply for business us and us the previously it think to demand really it So, well our earning one something And flow when of is really effectively that the time in output, production as be our cash fashion. at comfortable look in expected demand managing in more And in managing our as benefits to obvious our terms and a effectively, for provides with managing inventories line important year. our of bring

good our Of consider to it issue business expectations. we our all. there growth in demand inventory at inventory of our really this with is supply cost, prudent our management But, course, obsolescence no at bring line with is

Dave Zinsner

-- just costs our layer I’d the And will that underutilization to going help per are not into unit. cost incur add

period our XX% So, they costs the and as within to fiscal will third quarter. in guidance gross XX% taken be implied margin for quarter the it's

John. to Sorry interrupt,

John Pitzer

could implication Sanjay, to explained we understand year on able why side just NAND do be is. what in you’ll and you or cost XX-layer you under fiscal of you if move you XXXX cost mix NAND? towards in benefit us continued fourth mix more negatively be How bits I'm about So, generation. the wondering managed curve to NAND from that in product impacted in the help XXXX technology in think XXXX? your as to cost the fiscal grow industry Will should

Sanjay Mehrotra

know, times in of fiscal the costs XXXX under that year we generation our with those the technologies, outperforming been are has industry will both well from using level because CMOS we array the terms today XX-layer as at the discussed currently die cost XX-layer a And good and be in have past, and on many absolutely our Our as come position per -- pioneered gigabyte basis. our have this Micron benefits architecture third which you we as in obviously, that. in

intensity the gate market of why XXXX that year capital bigger that first layers cost generation to first floating competitive of significant associated third later in when advantage mind, transition the carry are really convert the on. benefit implement gate portfolio So us portfolio and production provide the of NAND replacement replacement converting because And tools, even from from us have replacement that with of obviously actually of that keep generation meet more be to fiscal replacement of gate giving tools in over a gives second fourth And our node number to generation a that. that's do our remainder in more of mix floating XXXX NAND us And will our the with that demands. very XD gate. requires will gate will node it unique will which in greater greater gate well, technology, we to technology. to will replacement specific we gate portion And the

to first second higher replacement compared node. of yet node layers later gate the The with

us be to it and that will as give cost will manage well So, the a transition ROI really of best benefit for us. way as this

of competitiveness even floating So, in third the summary, gate first in we technologies very the year. next replacement about gate achieving we with will mix with -- of generation the the layers that increasing cost be replacement good and gate, feel of number


you. Thank

Our next the C.J. question of Evercore. of from line Muse comes

Your question please?

C.J. Muse

my question. guess, two-part question. for I you taking Thank a afternoon. Good

clarity the wafer structure, you. doing the Are in about used questions start X%. to regarding back to two a think your different And impact to both? the on on, us should of provide how idling signal you're I word you trying you should as X% cost by for that. a think NAND, little you about your send You then, guess, terms when could for reducing turn then impact? how what and wafers? DRAM Thank we And down you to slow then, starts we

Sanjay Mehrotra

you targeted reduce we wafer supply our reduction idling we start nodes. that reducing this a is of result wafer growth, idling starts, of bigger And DRAM, bit impact. to reduction supply and wafer output as the growth the are in on smaller is NAND. the in the capacity, bottom-line related is is our as DRAM because primarily starts, impact In mentioned legacy particularly legacy nodes, toward So, NAND, that

And our of of in objective next of with course and just to is continue year-over-year few toward both cost reduction during will I fashion be manage about comments with I'll XX-layer add managing So, as transition year, ability DRAM. before, view quarters. get previous again, competitive to the the a the the will continued this next NAND from terms DRAM, XX-layer, cost helping that slowdown of the cost over supply course XX-layer demand, to our position good ongoing these feel there. our reduction commented point as on course benefit to which in of to next XXXX to down the have timeframe. outperform our And with year, cost -- I of our our XXXX of on DRAM just as in NAND, to us very cost we the estimations respect cost, transition bring And with in the cost. we from said of also of well growth capability And in also position we

benefits as our believe just NAND beyond be and I competitive. management that flow want deduction DRAM go as out of of just in I of So, They cost. to And inventory cash well cost -- the point course include aspects management. those will deduction, benefits output


you. Thank

Our the from line comes Morgan. Harlan next of of Sur question JP

Your line is open.

Harlan Sur

Thank the here. question ask for letting you me Great.

to So, on inventory. back a question

always takes for trend first you related manufacturing target. weakness, seeing output time inventory growth when actual infrastructure of customer started supply your towards to your demand kind the So, your of it

But, that to take going that going it's fiscal QX. augment appears that's you again, initially, appear executed more to accumulation. some again, So, that moderating inventory now down to that lower manufacturing with output It you're that in ramp some time. you

of it starts down back the half So, to do before May calendar higher in actually shift year? quarter, here the you inventories the in moving anticipate

Dave Zinsner


quarter relative little might of the today. out, fiscal took take May most I him some the elevated are Obviously, in be you we to it think, as quarter. first where inventory reductions we time, a point does bit in CapEx took the

the of starts a impacting the year. get probably underutilization, So, quarters, start those should of And before quarter that we it a half in back calendar the you experiencing but couple take you.

So, as I elevated the a of keeping I we the think, we’ll because year. levels XXXX. we said, little be in pretty good into inventory exit as of kind calendar will about cited shape reasons DRAM, bit of take NAND longer on

Harlan Sur

improvements much much et your in a of view Sanjay, industry markets, Great. question, cloud, all PC, of half -- target your follow-up off And is mobile, outlook of then, of virtually cetera. based of client my second

the recovery chain half Given anticipate customer value second to your and and an QX? lead drive business time, start in should in that fiscal inflection should DRAM NAND we your

Sanjay Mehrotra

the that well. of basis. rest year, as said already, have reported, services. smartphones paradigms the on you essential continues memory second fiscal of we for the is growth AI not are calendar average basis, ML on we the of the But, year-over-year the at expect results to both guidance DRAM are year we providers of computing effect the do part in to sequentially to elasticity and also of continue and well some And that providing increasing bit a half FQX, to course results look of the to the and is that being of cloud we We for and of that both And DRAM FQX And in all of NAND, in demand based expect service intact. the that And QX as on And this and course, seasonality have in storage in here. those in a an be improve When capacities year. course, demand. pointing growth should increasingly DRAM cloud to trend well. NAND the as as future continue in solid, second the of for be our is growth half guiding calendar as the bit continue and that of help there are quarter-over-quarter

long-term yes, our we microeconomic of end in see today, we in can bodes determination all the -- In is uncertainty. this of outlook. in have expectations. course, -- any that generally there mean, our that's macroeconomic this And in do we all versus what trends assessment is of case further do what based I as the well well. demand improvement in then demand know of we for the that's All half. of But, half second that markets, barring But, a on demand first different climate, impact


you. Thank

question Arcuri comes from UBS. next Timothy Our of

is line open. Your

Timothy Arcuri

I got wanted question Sanjay, go just to asked before. that back to

you're in well costs, you So, cash are above idling capacity. still DRAM, yet

So, to back a going sound you you than optimistic the back of year. expected. come is But, half lot in obviously the demand pretty worse that it's

I'm the you’re money comments, table. optimistic if two about So, has why reconcile coming like of trying in would it to on year? inventory. because do just seems the get the back demand to you those leaving half that now I But, it reduce so with starts back Thanks. you're

Sanjay Mehrotra

as been weak has be to this first and so weak we year demand demand in So, environment far expect half the well.

are we be right? about course, basis. total that of at and So, look looking we DRAM to talk we when a you our our year are about too, year demand So, full full when basis, growth growth, supply on at the expectations, need talking we --

our our referred that will demand in half first improving believe this I supply continue in with well. the time bring to be improvement bring with mentioned our environment of supply all inventory So, we have to capture we half and to want that our to as second also line earlier, able help expectations, we we that drive that our demands and benefit cutback versus position

Timothy Arcuri

a follow-up, I to to the just just go wanted Okay. on Dave. back costs. And then, quick question

NAND of bringing DRAM of year-over-year. year-over-year mid-teens been mid-XXs been in down like You've the costs to kind kind low and has

just it impact? So, can like actions Is you're -- for am there's impact cost missing like some it seems me? again reconcile that abilities level? down because So, there, I no vis-à-vis have sounds those saying these you your of Thanks. something ultimately to of that

Dave Zinsner

both NAND this expect declines year. We cost healthy in and do DRAM

We are year. making still technology transitions next

will And good. so, in the we be would particularly DRAN obviously cost expect,

be not XX-layer the has generation. first gate might inventory we're replacement year the advantages is it of said, of we in to one carrying As in very where we structure. inventory very that and be the a XX-layer good cost But carrying, next want the

And so, should XXXX in cost have we on structure as good a NAND well.

of the in be the expense cost as I which make underutilization. as it in cost. it's period won't is, won't counted that utilization, on just in of It roll inventory; want the the kind quarters it means up we'll take to comes the in clear. thing other take part What sure we The

I And So, as on for implied third the obviously, we'll we of the it's impact guidance quarter. fiscal said, in have margins. the margins an gave

Sanjay Mehrotra

bring point just ramp, I and is wanted our first NAND, to node of early to on as in of XX-layer our ramp replacement out gate. the next production out will we continue still course again during year And that, it

strong driver our XX-layer also be reduction to of cost So, continue a XXXX. will in capability


Thank you.

Our next Cowen Ackerman Karl Company. the of question & of line comes from

open. Your is line

Karl Ackerman

understand bit of mix shifts bit growth. slows Hi. do your technology But, Good you supply. afternoon. nodes any bit your new supply? second that your certain starts to go in back toward half I I end toward shifts wafer or your just idling that should expect kind to wanted portfolio impact markets

Sanjay Mehrotra

implement basis anyhow So, demand. ability we our both obviously, impacting in our We any production. terms in of that on we cut, this we to this sure of well of our in to a NAND production. do when attention are fulfill aspect output as pay not an ongoing make we of as lot the managing mix that obviously DRAM, And,

demand. markets. said, So, will to NAND levels line I in demand inventory and both with And in the that of our an all be of we gives address that have DRAM. as opportunity to say we And end us when mean to currently, in production bring high we it we we mean, our able be

We terms low requirements market going cuts so are customers' in in that production not of run meeting to of segments. the compromise end our any we our

us So, very a our we believe for way prudent manage is this to business.

Karl Ackerman

then. elasticity kicked yet in. I has question, I say a that guess, not clarification on [indiscernible] NAND that. demand perhaps appreciate that would The

NAND seen across on half also second recovery? So, perhaps Thank you. view design your light maybe of DRAM product shed would a anchor just but some just in that you've in that could portfolio wins, not you your

Sanjay Mehrotra

capacities the elasticity, NAND up. as to to does rates go mean, I to certainly the well as respect notebook, With SSDs average notebooks, continue attach PCs, in of

continues replacement be as well. in with a elastic to So, saw as the both Mobile provide points attractive greater Mobile market HDD price of World NAND. to client of in foldable are benefits And more course you price of Congress, in more NAND, latency and that as well more, more -- the course of phones At market that as pointing elasticity XG connectivity the center And as XXX-gigabyte respect need them. of will greater is market. of example, to price toward definitely phones storage, data and NAND. storage capacities applications as terabyte also smartphones, DRAM well features require XG low and applications as well again, announced you with advancing for these that being with course, driving

our NVMe -- the expand our market well, And our to we respect applications focused with with itself So on -- on also Micron product end are side, much SSD continue we applications continuing very portfolio to to portfolio, do expanding offerings we are solutions. very product and have

this and as brought just market; we the our enterprise first applications NVMe later NVMe drive cloud client have for well. and into will year, have We

-- side that NVMe we a to with qualification begun got win shipment we well. customer as this NVMe and -- our first a So, and client announced just generation is

SSD remaining is that gained of opportunities. with expanding lot on all there our And a are a and have of made ahead roadmap the course opportunities, have of us of where improvement there here. these for to to more these of share opportunity required on things of few us quarters. course execution So, we NAND course, couple mobile lot absolutely for we are terms example, in last that years. with the meaningful of over respect And more a over the growing lot as of to lot our roadmap our solutions the we focused respect that as is some is opportunities of execution expanding last side But, well our is


you. Thank

Curtis Blayne comes from question next Our the of of line Barclays.

Your line is open.

Blayne Curtis

you in of if data I orders guys. you nature? in that And by curious start was going if what that elaborate. like for Thanks that yet, in the elaborate or between curious Was I just taking pickup more strategic QX? but multi-quarters my timing a gives quarters was question. half, on timing you're that just the to confidence on was center Hey, seems you second that then, you're was it of see the kind can not the you a can set back seeing and in customer

Sanjay Mehrotra

orders second second with that's to demand. related it the as And demand respect customers do respect said with So, of question, -- confidence of second from inventory improvements I the customers we to quarter the fulfillment in through customers itself in that by half as and that of timing that was large previously evidence our what inventories. had certainly consumption have certain system that will largely and also a in first in their that NAND. seen the And, to before, you inventory the your in of -- that was some part new specific with high this half. we was weeks us work mentioned, demand recent timing of gives And see

then to using and that will compared to half will to year greater inventory this of levels their And a those consumption up that markets, Of second in end slope ultimately course, market to demand here kind the in If our too continues in demand returning to be half. course for the market the customers this soon any opportunities months, to on. use the mid buildup drivers a cloud of of particularly end meet are healthy, inventory by terms that few for as continue year, that large customers demand. just DRAM by extent, strong. the over it’s be bottom-line next from the that the a But, of to first provide of demand is normalized be


Thank you.

of comes question from Joe next Our Moore Morgan Stanley.

Your question, please?

Joe Moore

Great, just went that the quarter, XX of to sheet. [Technical To last [technical the Thanks. fair on inventory on this extent May the quarter you. the inventory I'm introduction a balance curious difficulty]. your amount for thank you of built days difficulty]. side

Dave Zinsner

little but We’ve take background at a okay, crack that, that, noise. let Joe. a There -- some of got most was

should to you combination output be of grow benefit. or reductions [Technical with we've a that difficulty] reduction inventories third expect and CapEx Those cite, DRAM already place, up. That yes, -- utilization the are activities, in put bit the CapEx So, in combined to to starting in grow. the as were quarter. a some will do We see sequentially adjust start fiscal

we’d some fiscal benefit So, third quarter. to see that from in start the

But next to cited, third up inventory normal. Sanjay be customers us As calendar and be up the heavier I And have to inventory place a that we'll inventories said, the DRAM again levels. to these do they'll lot orders then, as we year, in built start to reductions on back fourth again, to of expect quarter. in start start will see a


call. this day. And so session much Q&A Have does gentlemen, you Ladies the and wonderful your a that for conclude thank participation. and

disconnect this at may lines You time. your