Micron Technology (MU)

Farhan Ahmad Head of Investor Relations
Sanjay Mehrotra President and Chief Executive Officer
David Zinsner Senior Vice President and Chief Financial Officer
Mark Delaney Goldman Sachs & Co. LLC.
John Pitzer Credit Suisse
Mitchell Steves RBC Capital Markets, LLC
Harlan Sur JPMorgan Chase & Co.
Mark Newman Sanford C. Bernstein & Co., LLC
C.J. Muse Evercore ISI
Rajvindra Gill Needham & Company, LLC
Aaron Rakers Wells Fargo Securities, LLC
Vijay Rakesh Mizuho Securities USA, Inc.
Mehdi Hosseini Susquehanna International Group, LLP
Ambrish Srivastava BMO Capital Markets
Joseph Moore Morgan Stanley & Co. LLC
Call transcript
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Good afternoon. My name is Sherry, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron’s Fourth 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-and-answer period. Instructions] [Operator

my Farhan the Relations. Ahmad, now your over to Mr. host, Head pleasure is floor turn to It of Investor

may conference. begin You your

Farhan Ahmad

quarter and financial you, welcome Micron fourth Thank to conference fiscal call. Technology's XXXX

with call Dave and Financial and Chief the Sanjay Mehrotra, me On Zinsner, President Officer. CEO, are today

This at also Today’s from being length. minutes our call investors.micron.com. audio the Investor XX approximately including will website webcast and be Relations in call, slides, is

filed remarks short In release website and addition, while contains press prepared our ago. earnings the the a

discussion of will convertible financial a our results GAAP A financial non-GAAP on financial be with non-GAAP a Today’s reconciliation debt presented and basis measures to specified. found along on can capped be unless call otherwise website, table. of dilution

webcast later will our replay on a today. available website be a As reminder,

monitor quarter we We the on financial attending. including Micron.com website our most the encourage current conferences at you be various for the information throughout to that information on Company, will the

at You can follow Twitter us MicronTech. on

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

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

the conform statements statements these We results. are duty any today’s after to under no to date update forward-looking to actual of

over turn the call now I'll Sanjay. to

Sanjay Mehrotra

Micron. execution achieved transform XXXX underscores the year industry Fiscal afternoon. to solid which the year Micron. Despite cash of earnings, Farhan. new our and the in for second-best the new continue we we history revenue, challenging flow of Thank strength you, environment, the as another free Good was

reducing our product gap and portfolio. the We by with improved technology competitors structural further profitability by strengthening

billion $X.X billion share to our returning repurchase We program by progress $XX on our also made shareholders.

Market fourth broadly performance fiscal with execution last expectations team’s in our the trends call. were the quarter, Micron the strong resulted ranges. consistent earnings on financial In guidance our exceeding discussed

that growth, rapidly. bounced half dissipated. demand inventories the calendar impacted to causing robust NAND demand back largely industry is elasticity DRAM driving improve as demand factors first

While DRAM encouraging, macroeconomic the of after of will and and the review in our view demand remain our provide a recovery mindful is uncertainties. color we on NAND strategic of trade objectives. on ongoing key progress more I market

engagement mix have we cost significantly profitability improved high-value actions have reduce taken and go-to-market our our increase to solutions, structure, the XXXX, our our relative enhance Since of our strategy customer to and peers.

XXXX, fiscal led the mass starts. leadership In for cost DRAM. and shipments production giving industry’s volume industry our announced despite products, headwinds the quarter, Micron feature In DRAM our plans, we exceeded reduction bit in from declines the and first our of fourth internal XZ began wafer per fiscal the size

We making good leading-edge of nodes. our also production are more progress migrating to

beyond, and While the XX or we half a production with we more XY. of ended nanometer bit portion with on XX meaningful on year approximately with three-quarters than fiscal older our fiscal entered XXXX nodes, on

cleanroom and capacity, calendar space existing our this facility we Taiwan, expect announced, from transitions node we in in expanding future As of Taichung, previously support to wafer are output site our XXXX.

for the as we our we NAND a XD cost for or yielding NAND, Meanwhile, dies This short. continuing reduces replacement gate transition. achieved of XXXX. industry RG is In further risk to XX-layer mix. continued RG fiscal milestone during first our declines our outpace using portion increase to

cost select Consequently, deliver set NAND don’t of second-generation is reductions node XXXX a will deployed. until expecting when in expect our for first reductions As RG and to cost We our will minimal RG node fiscal broadly be used be fiscal reminder, RG XXX in meaningful layers products. XXXX. we a are

production capital NAND investments. RG will optimize deployment our Our of ROI the approach

addition, announced of will of XD enable August, our NAND opening technology. existing the expansion generations which Singapore transition capacity in cleanroom the NAND grand wafer future we to In of our

solid to with continuing are and development make XPoint our initial XD to our in on remain launch XXXX. product progress We calendar products track

transition turning Now In at SSDs, the markets. rapid by highlights to in rate. SATA continued a fiscal industry to NVMe from XXXX

to XXXX. us positions our While starting we fiscal the progress have been in gain share late market, to NVMe

shipments client building multiple Tier sequentially OEMs, last more SSD sales quarter, of PC on For revenue NVMe with X OEMs. we penetration than strong in growth tripled our

Prime Our QLC-based North NVMe Day consumer SSD America. best-selling SSD Amazon in on was a

achieved segment bits record reach. with our by channel customer our SSD and pursue geographical to percentage consumer growth unit and extends triple-digit expansion posting shipments revenue Our strategy year-over-year, driven that

elasticity capacities, driving consumer attach an across in rates Price and solid and to demand client leading growth is increase SSDs.

making on markets. NVMe cloud and for also are solid We our roadmap progress of enterprise advancing the SSDs

are product. we this of In to XXXX, center looking fiscal and line NVMe adoption introduced products, XXXX data increasing the applications, of targeting forward high-end high-performance

portfolio highest-density differentiated In industry’s lowest-power products and bring in us outstanding to market our deliver to performance financial challenging enabling mobile, a customers our is environment. helping and featuring the the capabilities industry

the that List. fiscal in only XXXX’s addition significant X% revenue a delivered performance, record we was of the pricing the Huawei XXXX, drop and from Entity down impact market despite to In mobile from

driven and in NAND tripled eMMC discrete year-on-year, and resilient, were by fiscal UFS of margins NAND our shipments MCP managed XXXX bit more growth and than mobile Our products.

fiscal UFS-based LPDRAM. performance we and uses new smartphones. This fourth leading-edge MCP started shipments to bring flagship-like MCP densities will a our mid high-end In volume of XZ that quarter, UFS and new the

positions XXXX. high-bandwidth We LPX XG which are well to begins us as in accelerate also industry leading the power-efficient, in DRAM,

sequential in both growth customer for solid and cloud enterprise reduced significantly, DRAM have for driving data markets. demand server center, inventories solutions In

an creating in modules. uptick DRAM also higher-density for are platforms processor higher-performance New and demand

trend bit growth from the with DRAM and In as DRAM. gaming last the buying graphics, In inventory graphics following quarter, we shortages resumed reductions module saw cards subsided. shipments as PC strong sequential increases consoles, growth, CPU SSD normal for in and market, continued further

industry revenue a auto DRAM weak increase environment. and challenging we year-over-year, unit despite continued industry sales In automotive, to

Our fourth lower-power Xx content quarter fiscal increases, our shipments by DRAM systems. year-over-year, over for becomes in as growth was supported the important new increasingly well-established quality, and were customer ADAS LPX secular superior and Infotainment relationships. higher

to continue industry leading automotive. share in have We

Before on the talking an with and update of our about business provide I the to want uncertainties. Huawei outlook, market ongoing impact trade

restrictions. subject we shipping quarter, that products not some As last we noted Regulations are and Export started Entity to Administration Huawei to List

down fourth In of meaningfully sequentially Huawei quarter, Huawei and anticipated the to List. the fiscal to from the were prior to we levels the Entity sales declined addition

have products, licenses China could and List restrictions in trade to a against unable licenses, to negotiations. see Commerce to for of we no Huawei the We If would to sales but our continue allow on Huawei licenses We been uncertainty decline get decisions the worsening surrounding Department see there are have U.S. that us coming ongoing date. over the applied ship with additional Entity quarters. we

Now, turning industry to market turn the and NAND. to assumes levels. Micron’s outlook macroeconomic then deteriorate and our begin DRAM materially that with for outlook, environment our doesn’t current outlook, which I’ll from

is in driven most normalization The in the DRAM growth first customers, and half, a inventories various being calendar compared NAND and growth of industry at the by XXXX, trends half secular demand markets. to primarily end of second

higher from U.S. whom increased in some trade and face In China, levels seen well inventory customers between demand increased the mainland as and recent of making the as of be Korea. months, of we tensions could to strategic headquartered China, have in build Japan decisions

XXXX at of first factors XXXX view impacted Our supply unchanged due that bit to demand. industry growth discussed demand calendar exceeding half calendar DRAM remains mid-teens, demand with previously

to early our of inventories and on of of high-teens we the view only bit Based see industry growth industry expect calendar above enable healthy should mid-teens, normalize which XX%, to supply demand a help growth XXXX, environment. supplier

to mid bit to high-teens. long-term growth demand the expect be CAGR We DRAM

and Turning conditions declining reductions elasticity industry are improving resulting to industry in NAND outlook, inventory. demand and industry supply market

the start industry outage CapEx A industry side, supply fab leading supply a supply inventory. are reductions. wafer at the power and reduced to On also across competitor’s and cuts

XXXX, low calendar now industry we growth growth somewhat industry calendar the which exceed demand demand approximately view mid-XX% of to of industry will estimate high on We XX%. range, low-XX% growing supply supply Based with bit XXXX below of growth XXs to range, our bit expect in bit demand.

NAND which the start increasing the of the year. the that XX in industry rest are years, at for margins, should believe last levels lowest We

to long-term the demand the in bit expect We CAGR low-XX% growth be range. NAND

This Specific segments. our to started to across supply, Micron’s DRAM particularly and outlook, have we customers is we are multiple improving seeing in nodes. demand solid of pockets from tight leading-edge inventory, see

inventory we nodes. still However, on elevated have levels older

of previously DRAM disclosed are a reductions start wafer result, As X%. with continuing the we

growth expect We bit growth of demand be the to market and DRAM growth. bit calendar growth demand supply slightly to our below XXXX be close to XXXX mid-teens, industry supply expect Micron’s calendar

fiscal reductions cost DRAM our to expect to also high-single XXXX in digits. moderate We

for of complexity increasing of a the we the industry. nodes said resulting pace advanced As declines in slower is before, have more DRAM cost

our As we to are committed inventory improves, DRAM price maintaining discipline.

to aggressive profitability. some While market optimize respond started we we we to our having pricing, transactions, away some to walking from look as are have

outlook, growth, supply calendar node growth starts below and start wafer of impacted replacement customer bit Turning significantly supply and expect demand growth above NAND we as in our calendar expect be be to bit slightly industry Micron’s XXXX to growth the Micron’s we XXXX, to industry XX%. by also first-generation limited wafer to will demand. of gate Supply our growth transition reductions portion we use our previously to inventory approximately announced a our be support

for back-end capacity NAND operations manufacturing NAND to some This high-capacity data increases of is our We demand products. solutions. point in are elasticity seeing due tightness another in in high-value on kicking significant

market showing XXXX DRAM reduced our XXXX. fiscal and with than the XX% supply fiscal some from targeting promising more to demand, in equipment CapEx conditions order in are we are to line NAND be bring our While by front-end market signs,

by CapEx macroeconomic Our influenced also profitability. low decision and uncertainty industry is

first for CapEx of limited our RG ramp reflects front-end outlook our Our node. strategy

SSD in are Malaysia. more transition, space front-end in investing on facility we future shell spending are enable reducing While a CapEx, significantly packaging to and new node we also equipment Penang,

for long-term always, discipline and while success. As flexibility maintain will investing appropriately Micron’s we

our emphasize I and CAGR want manage in DRAM bit our demand. industry that growth with is supply NAND to line to goal

NAND, to DRAM on may we markets. expect supply both and technology fluctuate, medium-to-long-term up we approximately rate competitors to cost As DRAM transition but and supply best-in-class of growth equal of growth NAND the growth technology the and catch the across RG to our demand in gaps rate in our

but instead maximizing focused are on our ROI wafer And focusing CapEx growth technology on capacity driven emphasizing also the growth, of reason, for transitions. this bit we investments. by not are We

assembly, and is our In reductions and cost has test, which us our of help bit growth any adding capacity drive increasing without to addition, internal ROI. some dedicated CapEx for packaging good

now to guidance. results it over and turn provide financial our to I’ll Dave

David Zinsner

Sanjay. Thanks

that As earnings. and Micron Sanjay highlighted QX for a challenging industry, results year exceeded for our fiscal by mentioned, revenue ranges throughout resilient the delivered performance guided

healthy generate during evolved expenditures, and capital our year, we free conditions allowing flow. and curtailed market cash us expenses As the preserve to operating planned margins

first We recover. Micron corporate attractive our count. growth rating, our achieved that for industry as meaningfully was conditions fiscal sheet, strengthened year reduced of our share stellar a and All-in-all, balance sets investment grade XXXX progress up

Turning to range largely fiscal was recent demand. $XX.X results. our down revenue fiscal to up XXXX our XX% XX% approximately exceeded year-over-year. guidance revenue billion, financial Revenue $X.X Revenue and X% sequentially billion. Total year-over-year. totaled was QX Full down due better-than-expected

increased significantly. billion, revenue QX declined $X.X XX% total customer revenue XX% Bit as and X% sequentially year-on-year. was year-on-year, percent XX% inventories Fiscal of range in improved the representing grew approximately sequentially and mid-teens DRAM revenue. shipments DRAM

approximately XX% declined ASP sequentially.

billion, fiscal XX%. range bits the was low For revenue as percent grew down XXXX, and DRAM single-digit $XX.X XXXX fiscal XX% declined ASP from in approximately full

revenue. billion, $X.X year-on-year. Revenue declined declined range percent range. approximately was XX% grew low-to-mid-teens or single-digit upper revenue total in was percent up the shipments NAND but XX% in X% ASP of sequentially. the QX Bit sequentially, Fiscal

prices see are portions tightness increase. starting in to market, beginning supply and of the are We to NAND

XXXX NAND offset was more XX% fiscal Full of mid-XX% XXXX, ASP as bit billion, revenue shipment fiscal $X.X range from strong declines down than growth.

the our the revenue. trends year-over-year. down lower billion Unit continued declines of leading Compute unit. to business XX% revenue Business of to Networking X% turning was a fiscal in by sequentially across be cause and ASP QX, $X.X for decline Revenue Now segments and most

For was $XX the XX% revenue down fiscal billion, year-over-year. year,

billion, down had $X.X strong XX% XX% by Business NAND content for bits in in seasonality was growth year-over-year. up Mobile Both smartphones. growth and the sequentially fiscal driven Revenue DRAM and continued Unit and QX

stronger a mobile Our by portfolio. share business driven gained in year, the product

fiscal For revenue MBU $X.X XXXX. billion, full only X% fiscal was the year, from down

and fiscal an $XXX Business Storage fiscal in increase the was for QX of year-over-year. QX from Revenue million, X% down XX% Unit

fiscal SBU billion, year, the revenue XXXX. XX% $X.X was down For fiscal from

$XXX was QX QX, Unit Business Embedded the and fiscal for revenue finally, XX% fiscal And up from in the down from prior million X% year.

EBU fiscal year, fiscal billion, the revenue For XX% $X.X was down XXXX. from

million improving demand guidance charges underutilization approximately $XXX at our or negative for impact to our strong to XX.X%, gross above slightly the IMFT. better The consolidated included basis gross QX and approximately margin QX margins range was fiscal execution, due due point XXX pricing.

Starting the of per to incur about for in of fiscal impact approximately non-cash expect of consisting we $XXX million impact QX an foreseeable and continuing future, the with underutilization half items. quarter,

as our as to we takes costs but XD for new on will mitigated, time technology. XPoint time, time. continue expect, impact look business over ramps, and updates it be optimize to Over breakthrough progress our a material will you this to ways commercialize will underutilization provide Meanwhile, can

respect were impact gross than QX on to able continued U.S. in XX tariffs our with basis on With margin points. from we China, consolidated to their imports to contain fiscal mitigation, less

some $XXX were million, expenses Operating and included expenses. one-time

competitors. our and a tightly, We meaningfully our our SG&A continue to of percent is revenue than as lower control expenses

was representing and QX. percentage was Fiscal $XXX points down margin X QX operating down XX from percentage Operating XX% fiscal of year-over-year revenue. points income million,

was Our fiscal revenue. XX% or year operating our of billion full fiscal income $X.X XXXX

was Our effective fiscal tax X.X%. rate QX

For which benefit recorded effective approximately the the in fiscal we tax rate year, included was our QX. X.X%, tax fiscal

Going our forward, we tax rate single digits. be mid-to-high to expect

Non-GAAP and QX quarter. in fiscal in $X.XX year-ago from fiscal $X.XX QX were share earnings $X.XX, in per down the

our down $X.XX, per For $XX.XX in from was full share fiscal fiscal XXXX. non-GAAP XXXX, earnings

we in XX% representing generated cash operations Turning revenue. QX, to of cash spending, flows and billion capital $X.X in fiscal from

was working XXXX, fiscal remained to For XX% from from cash margins Cash $XX.X operations flat revenue, XXXX. flow of revenue representing XX% fiscal almost of management. $XX.X full or effective billion due capital billion, down in

billion, billion the $X.X in down capital net the from $X quarter, prior quarter. was approximately spending, During

XXXX, entering from full was had down billion from in meaningfully CapEx fiscal net to up XXXX, fiscal billion $X.X For fiscal billion, $XX billion our $XX but we $X.X the XXXX. originally plan

net XXXX fiscal of fiscal $X our to meaningfully range from be billion, expect to in $X We down CapEx the XXXX. billion

and front-end more buildings significantly that will the last for year, XX% equipment CapEx from will CapEx expect manufacturing year-on-year. We increase while decline than back-end

in Looking flow free in QX Adjusted cash fiscal approximately fiscal to was of cash for at million $X.X million $XXX cash compared the in generation, billion, from free fiscal in quarter. billion $X.X we generated XXXX. $XXX adjusted $X.X flow QX billion and XXXX fiscal down year-ago

the We in for million our quarter, $XXX approximately from of note million X will count received convertible shares notice ongoing redemptions fiscal which QX. in approximately share remove

XX% $XX. the average purchase fiscal For full we buybacks, cash of returned of at to free in XXXX, form approximately flow, billion $X.X an representing of shareholders price

Including these average convertible at and the returning form fiscal of the diluted shareholders to cash redemptions, our We our note to share outstanding. in remain free share we shares of million by repurchases reduced XX future. least XXXX, share count repurchases our in shares representing in annual X% XX% committed flow of

of billion the from ended inventory end was of increasing in QX. down at the quarter days XXX, $X.X at Inventory XXX Days from $X.X fiscal fiscal billion, QX.

to continue fiscal inventory reduction to will our reducing of in We focus further see days QX. on and expect

business. parts As seeing mentioned supply our in of before, certain we tight are pockets of

over our increased result portfolio longer as complexity process a SSDs product to of and greater such cycle of test high-value the has inventory and above as normalized solutions, require that target long-term broadening time assembly days to Our time. XXX

ended up the Total quarter-over-quarter, largely billion a debt $X.X our at as grade quarter result billion, $X.XX of issuance. investment cash

total increased at debt billion. ended fiscal $X.X Our Total to billion. $XX liquidity QX

financing acquisition This We million QX of liquidity will QX. by facility expected drawing fiscal are our venture, and secured loan member $X.XX acquisition of from for billion of the funded will the XXXX. joint IMFT in $XXX approximately in term holding down fiscal approximately billion $X.X be eliminate debt

expected I reporting. guidance, our some to to Before moving on changes to want share upcoming

equipment. spending, rates planned NAND for evaluate node transitions, to re-use continue capital and technology We

fiscal equipment remainder approximately change of fiscal XXXX. of million our million of years cost XXXX. NAND in anticipate Based we by for the on QX our seven million, depreciation quarter changing preliminary per five included and reduce for goods to approximately sold $XXX beginning This the will depreciable our from to life to increasing assessment, expense $XX in QX $XXX

a DRAM already As equipment life for depreciable years. is seven reminder,

we change within QX, to which revenue, in how NAND report starting expect we currently we revenue. Also include MCP

will reported begin this MCP the will in believe revenue of and our DRAM FQX improve our businesses. We revenue and will DRAM change NAND that which transparency disaggregating increasing while NAND, our and DRAM revenue. reduce into We NAND margins help

our to financial outlook. turning Now

we share both portfolio seeing for is As nodes demand growing in and high-value in manufacturing. DRAM segments, particularly our strengthens supply NAND improve back-end are our and this and of pockets in leading-edge we and creating shortage, some

and DRAM. increasing and NAND to to QX, competitive for uncertainties. both grow to than continue remains market more in the economic Notwithstanding However, challenges, inventories these adjust with DRAM fiscal and we industry bit NAND expect geopolitical shipments

With fiscal as mind, for guidance follows. is that in our non-GAAP QX

$XXX to minus basis in expenses a X.XX margin to range billion the shares, points, of $XXX approximately $XX to revenue minus on expect minus minus plus be operating $X.XX, and be or or of million, XXX be range fully million, the of in or $X.XX. expect plus approximately plus plus we million. Based be $X We or billion, to EPS XX.X%, diluted share gross count

storm Despite a strong challenges results. out Micron able and our At trade-related Analyst Day, was fiscal for structurally periods in to we industry improved believed industry. we Micron XXXX even the how delivered the variety in challenging weather XXXX, of and financial laid

through are execution the of cycle. out we the as woods, current proud are of While have not we our moved we

we on program. portfolio, We highest are cash to and our have the our made progress also with a net relationships, and deeper fiscal exiting share buyback position customer liquidity and good year stronger product date,

growth ready capitalize on current the are driving business. We the well-positioned to secular our from emerge to trends cycle

now turn to concluding Sanjay over call the for will I remarks.

Sanjay Mehrotra

accomplishments of to our range on of new the for been Thank structural improvements focus XXXX in as a continue to heights. New functions we you, the performance a Company, to take year Fiscal Micron, across solid Dave. has

over dramatic have best-in-class last couple on go-to-market of there our the product improve our is strategy reductions, drive improve progress competitiveness execution, further engineering made years, to Company the customer deepen opportunity to engagements, of ahead significant core enhance operations, build of the us While levels. and initiatives, we further cost and

long-term our enrich across As by be exciting, life we will and Micron to a and which Micron. how memory world about leaders at way how efforts. XXth, the to Annual use from ahead, extremely we industry established activated have these are together transform opportunities On the New Insight we to and bring the event, hosting look we information we’ll are October data storage are momentum enthusiastic Second can vital discuss the the

live be will Insight encourage Francisco, in. tune I webcasting Micron We all from you San and to

will We questions. now open for


[Operator Instructions] Our with Delaney first comes question Sachs. Goldman Mark from

Mark Delaney

taking Good questions. Yes. thanks the afternoon, for and

So being little debates Or whether stocking inventory your financial And moment in of of seeing, that pickup big at Micron talk going mostly bit community or the concerns the I'm is that driven potential the is inventory about by just because concerns? memory of the think in levels. to a customers' one trade the is it I some volumes fundamentals?

think of coming inventory center. bit potential comments talked inventory about but like data I factors in also Sanjay, your stock, you both down a in maybe prepared some and important And some markets

trade So maybe those much driven primarily put is level been and set just stocking you. and of maybe because think is together pickup or do concerns? your inventory fundamentals that in of how this you of by of Thank the business some kind you can things it

Sanjay Mehrotra

in back remind saw the a as a market that in inventory I demand is you the And growth as well customers was up to producers as that business by have built down coming applications and all levels, first in the mean the strong of as the be certainly now I low, you results the worked to the our driven DRAM fiscal XXXX – continue result, producers in customers is demand the half robust. because fundamentals. pickup just calendar to end normal inventory the had of calendar the their to NAND. like QX yet bit for demand industry would the think being to I

build I is But demand the level to mentioned some on that you back no think we is the due of to is yes, I'll maybe half year, close tell – demand of And customers. the that build do where second to so inventory second the that not inventory by half in inventory is that materially had there China, certain build reasons that back. kind customer anywhere that level. in close the gone of last And

of environment ago our is DRAM DRAM, about is the overall in So some industry solid. particularly fast; supply actually some we demand overall, certainly in talked inventory some we leading-edge and see improving we there anticipated perhaps excess return producers. would the products on shortages side. even than Certainly some is the faster with the in inventory terms still time But improving

is at especially at average being are rapid normal architectures So DRAM continuing clip. driving demand year new cloud back DRAM the think trends the that industry, at NAND. CP to of to demand look use applications increase you new inventory that overall well both for consumed as through drivers smartphone NAND when and greater we platforms, solid, be of use trends and more producers AI levels. you capacity higher DRAM, and next to look as is XG, allow capacities The being a at continuing and And used

demand/supply QX point place. will lot overall healthier but that of trends, will XXXX XXXX maybe calendar a believe think in industry be So in healthier a view, Yes, be demand/supply environment look the I the may in at place. I demand from some the cyclicality, when I much industry fundamentals have

David Zinsner

of to look at up it of back you bit kind mathematically range. if the at quarter the way year-over-year only kind in XX% in and it's is kind growth look this of fourth Another the

inventory. stocking industry backs of the so that that more it is So really is kind than this up idea about about fundamentals,


Thank you.

comes question Suisse. with Our from Pitzer Credit next John

John Pitzer

guys. quarter. the just guidance around given have gross solid first results fiscal uncertainty. I the guess afternoon, the questions, on I for margins macro the Good Congratulations Yes. several

of getting on the sequentially gross a drop up kind kind sort If think incremental, you're of offset flattish margin XXX change from yet you basis of revenue. the to of in point still and by look in you IMFT that's getting at kind you more depreciation than

you of comment talk puts around gross guys that impacting you know pricing, that cost of I kind other but future I as takes mix of can fiscal joint whole into higher guess the And is don't hit go get second the given the by quarter and it negatively the receipt in that you be IMFT about and taking the and full about for probably of margin why month quarter. you incremental might driven November venture have the wouldn't

David Zinsner


me a So of of little of bit And the for in yes, let factor talk walk a and necessarily puts the first through don't kind pricing. the fiscal takes. gross forward course, Obviously is about margins pricing around expectations we quarter.

total But got declines be cost. declines we the mentioned, fiscal versus Sanjay high-single And lower XXXX. digits second the our in fiscal in piece cost cost that's of as XXXX XXXX for than kind is fiscal will

on in And seeing a as DRAM, migrate are we course given declines we face to side, about minimal we complexities transition rate as very NAND we're the we we that nodes. indicated something of have so slower coming to was declines And for as obviously of cost cost and the kind gate. of we've going that's replacement talked

those first minimal. very quarter So tell cost I certainly in the that factors and declines you are would are that,

piece is third The mix.

gross overshadowing margins move higher mix margin than and solutions, which quarter mix what at of mix next DRAM. And but DRAM. a you NAND look a lower is will high is NAND we that see And is of a positive, course just of of likely the course, NAND to If the from has negatively. will affect gross that value

the that positive, by life you more And than of offset is then underutilization equipment kind will associated quarter. out, IMFT. expenses change guess in that I be of be two NAND as One pointed but the unusual the of useful with half there's will items in

are those of puts gross all margins. of the kind So takes and

fiscal noise. I in little might that the QX QX a be little it lower than in be we but think a underutilization that of terms expenses, somewhat and little was We might will from million bit higher a fiscal underutilization $XXX expense it's it than be of likely QX, to QX. in higher in


you. Thank

Mitch Steves next Our comes question RBC. from with

Mitchell Steves

my question. taking but again just bigger for about you're pricing margin with one your gross getting down on Thanks wanted that’s about base. question I of talking guys. revenue the kind just question a the going poke better, gross on But to is of commentary margin have is Hey, asked. higher then I

with mean you be does well, margins? sequentially? So that November are bottom for the should that imply guys offset if quarter also February I that you Or be implying that depreciation gross down as could

David Zinsner

Well, NAND clearly inventories getting fundamentals better. the talking we're signs kind early I coming the coming our down. sheet demand is are better, of we getting seeing on think sheets DRAM balance in of and balance back, industry's are about And the

it that be. hasn't course where Of gotten completely to to needs

supply that kind to aligns DRAM. for market or healthy remarks, bit Sanjay things together the all also as of come continues be when And his market prepared with demand so to healthier and in market mentioned see a drive competitive and we'll more those to have


you. Thank

next Our with Harlan question Sur JPM. comes from

Harlan Sur

cost versus your think higher a high-single of that outlook you you profile fiscal drawdown profile there should afternoon. well? your Or given pullback XXXX inventories how fiscal that that's capital own are impacts for some are cost slower intensity for question. complexity Good in taking aligned? down annualized impacting down from your the the we longer-term digits DRAM reductions as utilizations, XZ Thank and/or On my the about maybe XXXX, cost is transition

David Zinsner

fiscal expenses may some expectations that second for the the It quarter. our We quarter. fiscal DRAM. Certainly into into underutilization definitely we last first built have have in

the would goes declines over more challenging. up, an but is complexity cost are certainly of up you I that as time going so capital that And as impact, intensity tell these to become and nodes goes

probably will routinely single-digit high the So can do something year-to-year. not be we

Sanjay Mehrotra

we the NAND the introduce terms is being XZ feature And leadership to good certainly the of the are past high driving narrowing course X,XXX is of gap side on of that node improvements EBITDA solutions that versus compared improvement. point node are the are the first cost well the competition I’ll value in Micron’s one DRAM as that making smallest to on production cost higher overall. our just the add XZ timeframe. And with of in improvement margins DRAM example cost basis a in the plus major result industry. size the as we a mix XXXX


you. Thank

comes Our Mark next with Bernstein. Newman question from

Mark Newman

Hi. question. Thanks for taking my

a about inventory Q-on-Q. bit quite talked You down

gave bit you NAND? DRAM on more Do have versus You that. how compares numbers some a that on breakdown

are obviously can you [indiscernible] in And bit where replacement replacement Can – got gate on then very forward the that you've the there. give transition an you demand to on where Thanks the details XX to difficult to are your quite generation to the timing you to layers it's looking much. update give next-gen or and for current technology, NAND. little timing where the –

Sanjay Mehrotra

your but So Dave me of will question, XX-layers. inventory comment address just on your let on the the question part

had technologies XX-layer us yield has has gone we execution said yield the ramp As XX-layer other of terms the in given the with fastest Company very in well before, NAND ramp. of any technology past.

So proud fiscal course very during year we and the our to are XXXX. of is ramp XX-layer continuing accomplishment of that

year be XX-layer our the of driver fiscal growth major NAND XXXX. bit fact, will In in

yielding to dies. have As now prepared replacement we and in seen gate, remarks, functionality my I mentioned with respect

in year the technology and us We to be have XX-layer XX-layer certainly gate for quite and replacement year well. small will continue on technology mix and development. fiscal will In are by technologies fiscal a XXXX of as to XXXX, encouraged work continue course and that product workhorse our

will select replacement be generation will fiscal rather set be because we'll production deploying node, first a our well year second which us. in us. year-over-year across gate resume fiscal will reductions for give But in of products. – during It's Keep come to the subsequent in have us cost the which will continue of XXXX course XXXX limited node, us position XX-layer strong basically node year our mind, for the that ramp year and small will it fiscal

David Zinsner


down So inventory fourth had days that in the XXX on if came third you quarter. fiscal we XXX inventory of – question, to so in the days quarter the

than inventory absolute I and DRAM has that. DRAM you NAND kind that say break of obviously days, If was of DRAM NAND. between that meaningfully and was below above in out would in more dollars, terms NAND, meaningfully

of building got reasons but inventory for down our would was working building – say as was there customers why that NAND. their were we I was supply, It down to remember are you two inventory. slowed kind

terms made brought supply pretty we've spending and the inventory quarter. reductions we adjustments in our of both adjustments, Now have our this down terms capital meaningfully in to utilization of

We meaningfully expect down bring again to it next quarter.

transition On have not in support side, do RG we built inventory, of a to in trying can bit up growth. that replacement gate lot drive NAND we fiscal more have some the we're levels to strategic. inventory the elevated but because use fiscal What that's of will transition XXXX XXXX the is,

the increased year, so order utilize next inventory demand have in And that support for purpose. to we will to this


Thank you.

comes with next Evercore. from C.J. Our question Muse

C.J. Muse

are competitors – calendar your into Thank to question. then on taking DRAM in in share? industry I in your for driven change aggressive XXXX, Thanks Within afternoon. want that that. the market ongoing just the and for vis-à-vis I calendar Good love expectations And perhaps more what thoughts XXXX. move Yes. hit is market certain around to as largely commentary your on we you. your by mix? markets, that, Huawei, the hear on

Sanjay Mehrotra

terms revenue, overall in in customer the in impacted with it were bits, been industry, last terms year by shipments overall, up this regard. half. overall for our has of that inventories with mean line respect the of built So primarily the first DRAM in growth And DRAM to are I

industry have think mid-teens to what the underutilization as of growth a demand result said I the we some And below is of supply that that the be the taken. we and calendar our industry XXXX during course overall actions slightly of

are diversify Huawei very does And much our customer. our impact of focused base. in the shipments continuing lower. anticipated shipments an levels have to our Listing some on before placement overall mean, that mean, the effect Entity on But yes, of revenue Huawei's our to before there to business. I in the terms Huawei I the an We Listing, is some overall our we of And compared on that the of course, said we had of is market. course, Entity revenue of


you. Thank

with Gill comes Needham Our from next & question Raji Co.

Rajvindra Gill

taking my for questions. Thanks Yes.

could that comment. lower did had elaborate if I on elevated inventory particular you wondering process in You some you was mentioned levels that kind nodes. of see the

Sanjay Mehrotra

primarily where compared mix if demand our production therefore really of have to This to the the some lower is underutilization and total running older are of nodes we supply that's side. overall and some on related our available, DRAM and

So demand good it get time. consumed will over is this and about really overall is the overall that inventory


you. Thank

Our next question comes from Aaron Rakers with Wells Fargo.

Aaron Rakers

Yes. billion for last of on cleanroom Thanks I parse kind to know did bit case? relative kind quarter roughly facility that, Was I the spend the guidance of is the billion guidance? about what that I talked wondering full-year, XXXX think for of was out the of kind detail. that you questions. fiscal $X taking specifically if little basis And you could embedded $X.X for a your CapEx. you more into me the the help CapEx in CapEx and

David Zinsner

could Yes. out a Sanjay our of meaningful the was And lower a than $X certainly probably It bit number, what little but spend. parse from billion you part said.

in expect the versus XXXX decrease in opposite equipment spend We that fiscal fiscal increase XXXX. and the fiscal to XXXX, number is front-end expect we to

We also back-end to fiscal to obviously in we're similar in what spent roughly – we'll the investment expecting XXXX. spending that be be would we're and another make what and


you. Thank

question next Our from with Mizuho. Rakesh Vijay comes

Vijay Rakesh

Yes. Hi, guys.

guys line, for talked the to fiscal down know CapEx XX%, being about equipment $X close like wondering Just I billion XXXX. it on you same looks so CapEx

on wondering Just could NAND the spit what DRAM? Thanks. be and

David Zinsner

NAND is reduce just break We DRAM our tell plan But both you next I don't guess tend to that that year. would equipment to and out. in spend front-end I


from question you. with SIG. Mehdi Thank And comes Hosseini next our

Mehdi Hosseini

do Yes. are get want is of positive, data in centers. some how Thank to talked taking trends industry has the you conversation better my a I for but assessment seasonal. follow-ups. that been demand center about you Two question. There data We demand see

than Some argue seasonal. is it that better

view, trend into bit Sanjay, NAND trend this do is a want And how and year. do with demand What a tracking. that your you attribute next below trend surprised data is demand get well opinion I to historical the line? DRAM I'm in near context, is both below XX%. And demand of for for your projection This well you center NAND see XXXX, which my in SSDs

Sanjay Mehrotra

XXXX, that, or or the year year to then range in XXXX I XXXX. keep a CAGR, definitely, of low-XXs terms so, industry grew you to approximately multiyear to mean, at low-XXs that to look year the year XX%, when high-XXs that mean, NAND XXXX in in XX%. in approximately again, by I mind kind I trend just respect with And XXXX, low to range, So calendar be think, of in calendar in by lead XX% calendar about it XXs calendar calendar does in demand

think pricing has I timeframe, you NAND that as actually XXXX occurred over has and definitely what such And we decline is pricing XXXX improving have and aggressive said, in in NAND. substantially, kicked had environment realize in with to that started elasticity

the And market average to as usage the capacities driven as of capacity continuing you terms aggressive well of has next into would that seen, that increasing year been declines result these of capacities price of in smartphone average attach year have higher actually have in as average a the some of the some growth as SSDs, and drive pulled increasing this in perhaps have faster occurred higher SSDs, capacities of rate well. of

assess that and that. our are will trend, next in that high-XXs our overall will of but continue So on calendar few some year is XXXX in latest factors Again, an the to the these mind projection absolutely still for keep growth important we, playing we of year that course, of are role months terms from industry range. low-XXs be assessment this year-over-year are bit to the demand calendar away

time-to-time definitely lumpy. be Your on nicely and the for DRAM yes, let somewhat cloud in cloud, side first can grew Strong the point And increases. just question was us me out cloud that, demand around FQX. demand from demand

on However, be trends side growth to continue solid. cloud demand overall the

see for as DRAM SSDs cloud higher than demand both consumption In respective be the average the as DRAM continue the for we and of well to industries. fact, NAND

again, density cloud. overall, well is architectures, channels, spoke of new the of enabling as as that all earlier, this higher again, as storage CPU and of usage as well memory driving new cloud DRAMs, I of really usage as in trend more So AI platforms are applications greater of

and trends aspects perhaps Cloud strong. talked customers are customers. China, see as absolutely normal in overall to element we the inventories normalized it's I have some cloud, inventory of cloud Other solid. strategic back than demand But of maybe by build as So certain any about, levels.


Thank you.

Ambrish next with Our question BMO. Srivastava will come from

Ambrish Srivastava

also sure wanted limited made, to then XXXX, have just down. very make built I to comments and NAND already you low you. for Thank wanted takeaway, I'm right away you've also And reconcile that you're just talked the wanted back the get is you selling with Hi. inventory. walking to fiscal from about to margin and cost then and I gross

tradeoff So in as what's these factors XXXX? profitability versus I competition the compare NAND between all your fiscal in

Sanjay Mehrotra

on think value I in the us XXXX to high fiscal So solutions. will continue increase main the to focus for be of NAND mix

on year mobile in NAND continue have of we solutions made I gains is part substantially. reported progress tremendous the that of that managed my I’ve in and increase managed the share our plan with And fiscal us have business, prepared seen to progress in increase you the we the on to XXXX. by and most business of NAND side in it think remarks mobile, terms driven

in for year actually NVMe about certainly solutions first of now introduced fiscal terms headwind spoke fiscal we And opportunities SSDs, also as XXXX. XXXX. us of a expanded I NVMe in have our have our during was solutions year SSD share portfolio

opportunities to can fiscal in certainly we expand Now to and those gaining forward XXXX solutions gaining on share SSD fiscal look year share XXXX. leverage our and in we year assuming

Packages, are cost XXXX. as those revenue comes to test mix of course, focused products et like drive non-memory And well cetera. our Multichip when fiscal it on are important assembly, are of extremely to healthier So and we reductions pieces of on strategy or of continuing particularly think important which NAND year [bound] factors in SSDs I

making progress reductions on well. as on the we’re good [bound] And of cost non-memory part

reduction RG But for levels, earlier. all opportunities due that talked So that be capabilities reductions our die in terms about we transition these the are XXXX. year fiscal of no at will us in the cost overall cost limited to questions the


Mr. Stanley. Moore, with question Morgan final from Moore come will our line Joe your is And you. Thank open.

Joseph Moore

hear you can Hi, Yes. me?

Sanjay Mehrotra


Joseph Moore

you if for per content kind what's content wonder between could your side, units about will DRAM next accelerate break your you of generally, that forecasted on down and next expectation and just smartphones DRAM I talk year Yes. service the and can demand year?

Sanjay Mehrotra

in think I it this side, XX%, three the average you calendar at was look content capacity above the by smartphone if X. DRAM nearly the last on XXXX year was around gigabyte slightly to increased average year, year, it be X average expected the –

Mobile and Congress, at in XX And there gains double-digit similar phones. that were look if phones DRAM gigabyte gigabyte continuing. you density introduced World XG, X pretty were those

this parts phones start already selling of momentum DRAM. some market those today will in world are XG require marketplace, phones the in during some will the beyond. phones and as of the years also continue Those introduced build year in So calendar XXXX more and to

intelligence more behind and again all phones and into they more capability more being are imaging the lot smartphones require well. more applications as those becoming video And built are rich feature-rich, AI today more the and and DRAM applications,

will year year, So looking seeing at as capacity next certainly average be we increases next well. continuing

another projections, next going something per gigabyte you is at smartphone. capacity XX% to year In X to fact, XXXX, to industry closer expected average if calendar increase look year in

as But driving as to average well increase is increase, not PCs DRAM. more as for well said the higher well before, gaming, DRAM average to need other the about smartphone, content such the its related the as to in continues only continues applications server I with applications as where as content


participating. Thank you concludes today's you. conference for Ladies and Thank gentlemen, this call.

You may disconnect. now all