Micron Technology (MU)

Farhan Ahmad Head, IR
Sanjay Mehrotra President and CEO
Dave Zinsner CFO
Joe Moore Morgan Stanley
Timothy Arcuri UBS
John Pitzer Credit Suisse
C.J. Muse Evercore
Mehdi Hosseini SIG
Ambrish Srivastava BMO
Aaron Rakers Wells Fargo
Harlan Sur JPMorgan
Mitch Steves RBC Capital Markets
Raji Gill Needham & Company
Chris Danely Citigroup
Call transcript
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Ladies and gentlemen, thank you for standing by. And welcome to Micron Technology's Fiscal Second Quarter 2020 Financial Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. Instructions] [Operator

like Investor conference Farhan Relations please ahead. now host, to Ahmad. hand go of Head at to would over the your Sir, I Micron Technologies,

Farhan Ahmad

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

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

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

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

Today’s non-GAAP discussion non-GAAP on specified. of financial on of found results will to financial A presented be GAAP financial a be website. otherwise measures can basis unless our reconciliation

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

You can follow us MicronTech. on Twitter at

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

afternoon. Farhan. Thank you, Good

today. are delivered calling unprecedented the quarter. COVID-XX your second and you am are as to including halfway In our began even times, home at range, strong revenue high results, Micron’s unfold I and we the end fiscal guided of These crisis safe. our quarter, from through all hope of I families

is evidence free Micron. marked positive the of from of for and new achieved XX a the represents cash improvement quarters. historical This now performance cycles strength flow have We consecutive

macroeconomic signs concerns. the proactive members countries of from has we The the earliest pandemic of team our all more emergence around business employees and has COVID-XX Since XX taken Micron have operational and the the Micron world. have than challenges XX,XXX safeguard created local both China, outbreak measures possible, travel Where working home, and employees. suspended are in globally. we international to in

at screenings all among at We mitigate globally the to locations. schedules. industry to sites blue teams manufacturing community health were red with risk operate the the implemented teams protocols that on first spread, We all Micron implement and physical alternate in our separation of

We have of been observe requiring measures self-declaration or contractors, sea and after their families any days as spread, this has members, team work-from-home air immediate and travel. self-quarantine crisis whereby XX

are At with novel we have contact and As were for who of have two receiving contact quarantine tested positive the either individuals employees yesterday, the where who member. used sites have tracing infected in appropriate we coronavirus medical two attention. close have we team confirmed cases, to

protocols. implemented also distancing, access, social We restrictive have on-site more and of service controls

have not events our far. As a impacted these measures in operations preventative result manufacturing stringent place, of thus

raw measures have our to taken also materials flexibility. increase We chain and supply protect our supply

ongoing continuity gaps. have and identify ensure our to we with in communication been First, suppliers close supply

of raw on-hand sites our materials more begun minimize on logistics increased we Second, to have our of any of store supply inventory impact that and to delays. have the

manufacturing captive and reduce focus have parts redundant contract multi-sourcing on dependence have we to test provide in capacity And at to supplier both of we manufacturing increased regions. fourth, our assembly our sites capability and Third, added risk. multiple

prolonged a shipments impact These orders which quarter. at orders of this with could result may our our spreads, or temporary COVID-XX global sites, we are shutdown complying As in all our sites. government

resulting in added of we semiconductors of Order, Malaysian the XXth, services, able in borders Subsequently, For Malaysian most were March businesses and example, list on the resume essential of the Malaysia. to government issued closure to Movement government and Restriction the a operations.

packaging very were NAND, able have basis, production shut been and compliance Our assembly since primarily briefly in test to and and facilities to Penang, limited local return down used on high-value Muar with regulations. for a in

to We and our global our commitments impact, are supply we using flexibility to and are to production network and mitigate customers. chain try increased this our working keep

in fiscal China quarter, headwinds data lower now reflected to significantly us of and sales. China, COVID-XX sell-through were impacting demand Weaker and consumer sharp In growth quarter. center offset decline the calendar our for to demand is on e-commerce, activity. demand. China’s was COVID-XX smartphone automobile in stronger and due consumer our increased effect in Turning unit customers’ economic in the second remote-work of factory electronics gaming, late shutdowns by first

Looking worldwide, looks quarter, regions and all center to the these as third strong also take leading trends in shape demand to supply data shortages. is

demand to learning commercial notebooks segments in of for educational In parts the work-from-home world. occurring a many seeing in increase and support addition, used and in we the are virtual initiatives recent

of other the fiscal demand returning our demonstrated for in volumes major and activity. for encouraged and as XXXX. and the COVID-XX, Nevertheless, below smartphones, economic have virus’ of automobiles are rebound we Once smartphone with China electronics, see recover. consumer we the We to half U.S. we prior expectations second expect in to see have the the manufacturing production, a containment economies also outbreak spread, our China will recently full of be expect that increasingly manufacturers started world to overall deals

Much on and stimulus containment government depends and the pace, rate, potential effectiveness of efforts.

a will and economic of trajectory its XXXX. an XXXX, into is few and This learn situation, fluid half months. a and calendar in improvement modeling the very over momentum We later the weeks are we further the impact about with the into its second virus, of rebound next economic economic more activity in spread,

modules as customer service well DRAM been both supply the as moving have to strength smartphone SSDs. markets changes our center Anticipating data demand, for from in we to

it raw inventory uncertain are customers their Just in increasing certain that like is increased our have products. NAND we DRAM materials and possible times, of similarly these inventory

demand with to to understand We customers and their proactive our manage closely and will with latest outlook. business action prudent work continue

CapEx We are the Once adjust trajectory in that COVID-XX, requirements. levels our to teens in by emerge expect a CAGR and demand and industry plans to range. with low-visibility evaluating is the for will impacted the from calendar its environment DRAM growth we production most we this growth the XX% mid-to-high XXXX recent demand long-term NAND resume and

expect line demand to growth we For multiyear both supply the NAND, DRAM be industry’s with and growth our CAGR in CAGR.

to wafer deploy starts NAND at to replacement on gate. through capital Focusing our our as with utilization full the conversion year, operations the of run efficiently we reduced we continue XXXX, operations calendar DRAM beginning and returned to our

levels these on returned environment. the utilization we our demand remain near-term DRAM While full flexible to production, we to depending adjusting

delays COVID-XX. today. coronavirus support. in Node rapidly actions be field situation growth travel supply engineering service to disruptions including is evolving, and impact with and companies operations, indicated restrictions government combat XXXX some we could equipment transitions have calendar could in deliveries be due industry companies’ also of hindering to equipment equipment by impacted much and The to the see Recently, can disruptions than various larger

puts innovation conditions eventually us execution, industry period capitalize balance the and opportunities and combined rock-solid However, long-term on our with on normalize. of this continued once sheet navigate position in uncertainty to driving focus an excellent our our

as spend have us tremendous discussion, a away a few COVID-XX This underlying from of I we excitement products. we progress about strength to the on and contributing our source to minutes want Stepping for progress Micron talking to the of is a made is future. new the the technology and look

leadership product Micron supply and is to chain technology, new The undergoing dramatic combine with transformation excellence. a manufacturing

Our maintain competitive leading process to objective structure. is so have deliver that products we to differentiated customers our cost technology and a can

this good on progress DRAM front are both NAND. making in We and

were bit XY expect half to volume the of introduce XZ we XZ and DRAM, summer the production on in XXXX. production In by our to first of over and be

We high-bandwidth the in are are introduce the calendar to carefully schedule modules on XXXX. managing second in remain calendar DDRX In XZ-based we output track began expansion fiscal on cleanroom of quarter, and our new memory Taiwan for construction and target first sampling XXXX. currently

are also our progress making X-alpha good We on node.

NAND, current production expect begin gate, in In shipments follow quarter. to on progress to or RG, made our fourth revenue volume replacement with we our fiscal significant in quarter, our transition and

replacement meaningful that our expect a to of Micron year. NAND, calendar on total this gate served of helps HDDs. end production segments which and portion by to continues for QLC be target the SSDs NAND We are currently market costs supply lead by lowers us

rose shipments shipping XX% our technology. second a meaningful bit by fiscal our QLC SSDs now of our quarter, consumer QLC in portion sequentially with SSD with

market half in We to the second expect increases. continue of growing adoption QLC fiscal year as the

to over we track of this around we increasing bits, quarter, In figure the of on NAND mix in high-value drive bits significant made remain the progress NAND XXXX. fiscal second XX% and total on to to fiscal XX%

reduces fiscal and increases assembly profitability MCP these we and XX% drove led mobile mix quarter, SSDs. and share quarter the grew revenue record weakness in The experienced also product of growth. combined improvement by showed approximately test This revenue and SSD sequential constraints first the market seasonal than data COVID-XX, gains, center resolution the products strong our lines. in in greater in margins. growth our normal volatility sequentially, Despite had with in XX% strong the growth

turn Now let's to XD XPoint.

the XD XPoint with world is technologies, company marketplace. NAND only positioned a the Micron DRAM, in uniquely the in As of and portfolio

XPoint encouraged the in reception is XPoint portfolio fastest the customer with by the It our world. to start XXXX, the storage differentiated our product, customers. XD are We is in device great XD first which collaboration our of of built products a

market. this delivering data customers mature of to XXXX forward and this we a solution, center set XPoint As value the XD to year broader look we of the engaging

new agreement an a years, a relationship. that close previous continuation Early and in this partner XD entered ensures has agreements. important sale we new wafer Intel Intel replaces our been of March, with XPoint over into agreement the

assisted products In had and record turning NVMe SSD we SSDs, to revenue highlights markets. by consumer Now, by of growth SSDs. our QLC consumer

NVMe to newest bit transition several quarter XX-layer customer We we continue achieved product as SATA-based SSD. growth data center NVMe. SATA, SATA In the fiscal for our strong sequential expect we in third our portfolio qualifications in from

Xiaomi, the using LPX and LPX to customers, in XG-capable quarter, became XX first XGB we smartphones deliver the fiscal our configurations. second In which XXGB company DRAM mobile including is to Mi in its products

first examples world's products DRAM innovating UFS have is LPX customers of we enable and life the recently, to They sampling experience. are MCPs. how begun end-user battery image will processing. LPX These longer for high-performance the our DRAM-based smartphone Micron enhance More great

XG We and are important growth. driving accelerates, as smartphone adoption content UFS and LPX reigniting more will become encouraged even unit that sales

short with innovative, industry Micron our in consistent trailing strategy. gone two we our just from to mobile the first-of-a-kind years, the leading new portfolio competition In products, have product with

products measures. from in customers, our cloud In increased to the data by properties part for in and in benefitted use ongoing from enterprise requirements key cloud the strength due surge e-commerce, COVID-XX market, center containment such we as markets, remote-work online demand strong driven and of

In gigabyte to feature new strong market, GDDRX. deploy bit graphics of than increased the growth consoles hard are new place quarter-over-quarter, that gaming expected will SSDs GDDRX anticipate drives and consoles launch with the we shipments for of also the XX% time. more These in XX of first

bit and DRAM demand driven market, continued by declined PC shipments and the slow seasonal CPU sequentially, revenue shortages. In

Our also declined sequentially. sales client SSD

Micron we unit in auto in for market, record highest-quality auto auto now low-power to content the leverage products. continues makes sales, market In remains of revenue with automobile creating industry’s NAND Micron our delivered to approximately an market, the soft our strength DRAM strong half is market. Power growth the automotive the up and opportunity efficiency global revenue. DRAM LPDRAM in important lead DRAM. despite this increasingly as

record AI, and industrial learning and shipments had term, NAND. and importance DRAM both edge. compute the in of the the In IoT expect we market XG bit market, increases rolls longer at we the In as for growth the industrial secular out machine

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

Dave Zinsner

Sanjay. Thanks

despite high quarter, related of and and in We came COVID-XX. the reported financial impacts guidance our executed well our ranges, in fiscal end the to uncertainty second at results largely

our outlined cycle, this the expectation and with of the performance to in FQX those low expectations. has been would consistent advent mark business our financial of trajectory that COVID-XX, had Prior our we point

now we expect need While expectations still in results, the to COVID-XX. evolving impacts improvements of our reflect these financial

make plans As to Sanjay real-time assess situation to remains said, we and operations. changes continue our optimize and and the our adapt fluid,

down DRAM $X.X approximately FQX of the down provided end was the revenue revenue $X.X X% the FQX high we XX% Revenue Total was was guidance for and billion, billion, sequentially quarter. year-over-year. were than representing XX% sequentially XX% flat XX% DRAM of basis. sequentially. declined more year-on-year. total were XX% sequentially on revenue. Bit year-on-year revenue and ASPs up a down and shipments byapproximatelyXX%

sequentially Bit FQX of was range ASPs up was approximately year-on-year. XX% and percentage sequentially range shipments $X.X percentage increased approximately the upper increased NAND Revenue billion, declined low-single-digit X% in the in revenue. X% or single-digit revenue year-on-year. total increased XX% and sequentially.

to our Unit business sequentially for & down and was revenue unit. $X year-over-year. billion, Now, the turning approximately Revenue Compute XX% by Networking trends approximatelyX% down Business

all closely and is We XD have expansion CNBU. XPoint aligned include use in more XD cases now as started reporting, by business CNBU to for are this being XPoint technology memory the managed with revenue

regarding decision seasonality Excluding XD PC walk products, primarily Mobile sequential XPoint, market. away have primarily was $X.X XX% and down to due revenue well pricing. our business concerns in The sales driven billion, weaker XX% by in some year-over-year. as driven sequentially, would decline Business was from down X% certain our as Unit sequentially to been the the down Revenue CNBU for by

Business in XX% up for Unit $XXX year-over-year. XPoint, SBU year-over-year. the Embedded FQX Storage was $XXX sharply was SBU X% XD finally, FQX breakeven levels. down improved at and Business and the sequentially margins sequentially. XX% Operating and And for revenue down revenue was down were million, million, the approximately Unit for down in from Without Revenue profit XX% X% quarter

The of NAND by from driven margin and high for of million consolidated pricing, exceeding mix end was came the we in portfolio NAND quarter. was FQX made $XX improvements benefit XX.X%, change margin life quarter-over-quarter prior guidance The the range. gross the depreciable approximately and improvement the

in or FQX. Lehi The impact approximately points XXX million fab of basis our underutilization was $XXX at

approximately to expect in be $XXX We FQX. million underutilization

expect XXXX. We are we fiscal spending efforts begin fab, to materialize in in continuing our which our will reduce to Lehi

Operating expenses were $XXX million in FQX.

increased the freezing steps back have actions we to OpEx. our hiring include and uncertainty, on Given additional taken control cutting our discretionary near-term significantly These spending.

we to As sequentially result, decline FQX. OpEx in a expect

XX-week For will a quarter. be modeling purposes, FQX our

is with uptick operating in extra that As the quarter. expenses consistent a we expect result, in week an the for FQX

FQX flat of FQX interest interest was net income compared margin expense prior Since operating the lower increased impact revolver, be for income the was in will Net cut nearly was With a debt full-quarter be interest our revenue. modestly the cash higher $X income our to $XXX on expense Federal the balance net has expect Operating $XX lower rates, FQX, interest of million compared million, representing XX% we to quarter. approximately FQX. million, likely from we drawdown anticipate interest the it in of to short-term $X income. in quarter. prior with and of interest Reserve million

Our FQX effective tax rate was X.X%.

we FYXX, X%. our be tax of remainder the expect For rate to approximately

tax to long-term our be to the expect in We range. rate low-double-digit high-single-digit

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

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

billion, During up the spending approximately quarter, capital $X.X net quarter-over-quarter. slightly was

and $X project to We test assembly some are continuing $X billion, billion the flexibility range Sanjay CapEx for increases mentioned. FYXX in to of that including

prior flow. the $XX Free quarter in free positive million XXth cash of This the million quarter in $XX was cash quarter. the to consecutive compared flow marks

consistently cycle. to profitability, of led made result which $X.X through the cash structural points operating improvements XX of more the the generate than flow flow billion quarter has to the cycle compared prior is trough and cash Micron's Our improvement of operating largely percentage more to ability of the to cash improvement than

fiscal representing our of million $XX We half approximately XXXX, $XX through first the free in repurchased cash In XXX,XXX approximately for million FQX. shares of flow. capital repurchases, of returned we've XX%

experienced the with or gate approach calendar as was was year. weaker in the FQX NAND our FQX and our due more XXX expected holding Ending seasonally strategy days. The inventory $X.X to later increase transition we replacement combined inventory largely in to of billion demand

the materials. We a also levels raw our chain with uncertainty precaution, material given as in increased increased supply have these

which As continue our we had walk prior to added we levels. outlined away on our business, from call, earnings priced near-term to unfavorably inventory also

ending facility. revolving $X.X quarter, the ended of total quarter debt a this total our from cash uncertainty, in billion. FQX period billion total we early was credit preserve drew approximately $X.X liquidity with macroeconomic our of liquidity We ready $X.X access and To $XX.X billion billion. to of

our strong are our on conversations pricing Now, to demand and the favorable. customers, Based turning trends with the for remains products our outlook. our

note currently lagging significantly However, end we is concerns the macro a that in related extent to masking and it in It indicator projections have weakened is unclear important the supply builds inventory demand. near-term. relative are demand, to COVID to also might be which end to weakness

actions, risk continued due material and In logistics disruptions also production shortages, to addition, of and face to restrictions. and government we travel the border labor and

Given ranges these usual. unusual guidance than our are wider uncertainties,

the vary risks, wider these could ranges. the results of and not ranges significantly these all However, do reflect magnitude from

guidance Our include expenses COVID-XX mitigation efforts. ranges for also

factors FQX these guidance is all as for in mind, our With non-GAAP follows.

to operating the approximately of the to XX%, minus $XXX $X.X basis range plus be We in margin $XX plus of million, expenses or $X.X expect be billion minus range in gross revenue XXX million. be billion, to or and to points,

Finally, on $X.XX, count diluted to be minus plus expect approximately shares, EPS a X.XX based or fully we billion of share $X.XX.

we near-term notwithstanding downturn. financial closing, In uncertainty, the execution cyclical pleased this exiting with are Micron's

higher growth in revenue in gross XX this growth trough, industry XXXX. was points occurred XX% semiconductor of FQX the and FQX period. the margins higher overall which approximately prior in outpaced percentage the far revenue This of than

returns our trough, as performance trough invested the the in and revenue to assess CapEx we capital have from of last to XX%; Gross EBITDA margins cross-cycle XXs; than XX%. follows: of exceeding more on we delivered As this return margins average XX%;

remain long-term uncertain, business near-term demand Micron is that environment we believe While the trends robust. for

our driving business. solid strong execution, best on focus secular on balance portfolio and Micron sheet that is to the position in ensure trends product our our the Our capitalize

to closing I’ll the turn now for Sanjay remarks. call over

Sanjay Mehrotra

Dave. you, Thank

the more challenges businesses, have importantly team professionalism our with responded reason and families. and close and extraordinary These the globe. Micron’s this placed want on can we business have our Micron execute on recent thanking period, reported strong the by plan results during but members we our today. weeks people team team around are deliver care I to has unforeseen and

earning To adjusted U.S. XX% special year is assist a team of we and members eligible. offering this are These market $XXX,XXX our team of worldwide onetime than per are period, for rates during less $X,XXX. payment figures

are relief employees fund emergency for we financial addition, In hardship. establishing facing an

assisting difficult also operate we through focused the on communities this are in We time. which

impact already Foundation Micron through and As part additional of of an Italy what China, in donated $XX effort, have top we the the U.S. contributing we that are COVID-XX, the address to on million of

officials also protective in facilities available are We working as through services, if with local as well space support help make and to equipment. supply source operations screening needed for our needed chain providing to emergency our

Finally, expertise said life their world. than to that many is vendors manufacturing, our is and new I’ve Micron with core our for delivering the are the and payment leadership products technology, we small in stronger that end-customers that to ever, leveraging terms are drive business differentiated Micron today. liquidity. we solutions accelerating our help to times strength showing around enrich

for opportunities daily and industry near-term the us of expanding. are the are environment strengthening of all our our creates fundamentals uncertainty lives, long-term While in

With these opportunities progress in vision. front tenacity towards to as make with and of demonstrable us, we will we execute continue resilience our

open now questions. for will We


comes Morgan Joe Our line you. Thank Moore the Instructions] first Stanley. [Operator of from question of

open. is line Your

Joe Moore

think It of and lease a are about you. that you lot masking prepared seems thank product talked in to end customers inventory weakness pretty of Great, have strong customers. accumulation anxiety? you conditions inventory. your seem Where you potentially have might specifically Dave, don't like remarks, your

So precautionary your side is is remark or something anxiety? seeing creates a that you're that there that on just

Sanjay Mehrotra

let will then me have expand going I I sorry. say, address was just Dave that. I'm and definitely first on that to

are course, an countries, is shortages, the the given strong. can rate different the and to supply in situation of in demand spread the be markets industry. of that the and shortages impact And different. will There to continue that impose, potentially supply can environment be governments we participating where related it trends upon be the underlying can So, coronavirus regulations depend ultimately, fluid supply there and is pace in various may it rules

disruptions, ourselves to that it are chain also So, control. sure some our don't is be to that supply to inventory we building make customers make just we is accumulating legitimate inventory under sure have like that think some supply their can

this is So, we I mindful that part the of. think just are

and look students, infrastructure. constraints Although, demands in addresses PC bit at certainly when the and study-from-home stress a on work-from-home of – greater for placing that the and quite economy driving is economy you certainly enterprise side

So, infrastructure, enterprise the driving demand as well. increased cloud the is definitely infrastructure

just So, of in but further being that will terms Dave elaborate making this. those backdrop, are I on in I comments, let we think, mindful

Dave Zinsner


I you market. levels and real, I'd center good. is, the thing in covered, Sanjay, add The I think, we think in inventory believe normal is that is strength what the are the only data market


Thank you.

Next of question comes from UBS. Timothy Arcuri

Timothy Arcuri

difficult sequentially, sounds you to that but it's maybe us very down. the through you're I there I help you I guys release a maybe which the know and Thanks Sanjay, takes don't demand. on language fiscal fourth right indicator to going guess, just that puts you're now, it's through that you you but like like walk is want that QX, fact QX? just about the lot. guess into that? I what relative help some was possibly quarter know have it look lagging guide what's the a up. in down parse tell Can like suggesting could talked be maybe can sounds typically it

us So, can you Thanks. that? think just about help

Sanjay Mehrotra

definitely trends the the is I to would what containment demand times of certainl,y terms is country coronavirus. So, unprecedented any healthy. to and here respect say vertical, of with demand And with are you that our not the assessment These think guiding or own here. situation to trends, we in business, continue be fluid. know, as of any anybody But are QX underlying Tim, environment spread of dealing the and course, dealing any I

there's that customers in supply will be what at pandemic, environment there into the to the has of The some coronavirus we who getting chain be from when lag the impacted. we getting know it our to is supply product the the And between customers if are of to we the there on demand some consumer build impacted demand. customers, our consumer demand, any in and macroeconomic look aspects demand building product a their consumer impact weakness,

that's we versus that marketplace. the can on the our mean lag a supplying impact what we what to the be So, in are between there customers sometimes demand

guiding So, quarter. to not fourth are we

important I their depend will may that the spread Different rates. it of countries different is the on the think what's containment of containment at have virus, virus.

is back in China pandemic, example, So, seen countries, has will well, in happens, there in the driving while be will demand thing as and back this quarter, fact, drivers we Similarly, restored consumer back. China. seen, demand different greater happen on The in will side and XG cloud and smartphone demand of have this; eventually come business of other being to consumer containment China long-term well. be there the is smartphone themselves. fiscal trends, Same trends demand world for strong. on and the demand other of When certainly last FQX, And we do the China smartphone. impact our the but production also declined, may be the the will reassert in we coming some our the in that the content continues -- have for in parts demand are demand while demand as contained

be actually the scenario some and is greater mentioned, I demand may memory of that COVID-XX driving demand in that cloud storage. As for accelerating

are this and to FQX fluid guide you not we is prepared is, point. point the really to So, at situation


John from Credit of comes Suisse. Pitzer question Next

John Pitzer

for impact the it given is details, is of also curious, through how May? how sort mind and I'm the And Any more Dave, guide, the range all importantly, for in Sanjay number guidance COVID uncertain of midpoint? helpful. down but that the the May would possible especially is It's environment you're very the be clear, just bringing quarter? it the of February for a uncertainty what is there in increasing to quantify the thinking Thanks is. kind was of

Sanjay Mehrotra

So, I address that. Dave let will

Dave Zinsner

Yes, Okay. sure.

would third already above throwing number, to mitigation quarter high-end of cost not in were estimate, would fiscal the if have that it's range some we and on clearly us So, expenses in widened and a a quarter, sales hundred not for for relates for it’s unusual somewhat it. to what one higher to happen the but account growth dollars of fiscal has it some difficult more either to of number the couple also We maybe a bit risk course, range a perspective, from both without second likely uncertainty, million if for the because impacted been COVID-XX, by COVID-XX. we from demand not been perspective revenue a of for skewed operating to have as well. And as expenses might us there out a supply only

having Additionally, -- in have side. our redundancy on some that COVID some with of can costs talked fact mitigations already supply that associated also and up and chain higher Sanjay more we cost drive back have I flex built the levels we're we're of the to carrying us. about for of inventory expenses sale raw But, materials.

just that the expense -- amount mitigate also, effort addition, work-from-home the might fair see model to in there's enabling expense in to work we level employees may an all be the with allow do tariff and a associated some an disruptions our their to In they of homes. increased of occur. do supply in And offices, able now

some there's so, expense that. with And associated

So, -- likely been might have our expense would

we've the the particularly expenses, mitigation offset headwind in actions quarter. third would that the with to for reduce have taken or been all more, expenses bit the even this with associated of have a fact not we likely down if


you. Thank

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

Your line is open.

C.J. Muse

Good DRAM. my question regarding for Yes. question. for Thank safe And taking you well. is, the afternoon. great I supply the to guess, side, hear and that you're particularly

installation equipment issues to and related some about availability. talked You part

over of to You've server. mobility also some from talked your about switching capacity

thinking calendar think, in. you. So as does you change X% bit still or I or 'XX? is that number, through, coming either there? we for right kind industry for the of Thank all here X% there like now, think in a were that curious, look what to production you Is the

Sanjay Mehrotra

somewhat DRAM the would the growth that we I in depending be supply, too there we the But, the had demand the output, and of growth, service said tell perhaps wafer look I would less the engineering less growth in year -- supply exists. than the And, the where supply in be the So, storage before year some and the It’s be to supply could demand what in soon is or impact growth. some by the of supply at somewhat scenario tool mid-teens just to technology impact impact in can growth COVID-XX mid-teens course, deliveries for be around for impacted could 'XX, scenario any supply the year think impact but rules the and for calendar could industry memory be various be the there that would supply, as countries industry. the node be as said there transitions or support there some well. in orders the regulations to point those before, to chain upon this. that and as If not the related production, orders transitions,

mindful terms of to of are looks side, there DRAM is due And DRAM to that And well we continue we to we when some to have demand like. we DRAM. shortages Overall, what as supply course, And continue this at shifting keep demand we course, mentioned said, as for year as utilization the evaluate, too action. we the it's side. tell COVID the supply reductions therefore, well. this watch point. have we really shortages supply projections of mobile on we from we of calendar in for production the supply current at look supply take for as certainly But to any as current but or supply the soon any And And specific on we in CapEx manage could occur are of of the will our track the environment. growth, intact, in server, growth cloud. 'XX. Today, making you to -- changes the during give are hard our the But, our aspects to will point It's that. at growth we


from you. question Hosseini Thank And next comes SIG. of Mehdi

Your line is open.

Mehdi Hosseini

is for XG revenues think you please Sanjay, the year? you also in China, how what They're and of remainder or the David the for how earlier. fall back curious question. operation. February tell my China Sanjay revenue just you of providing your to mix the how it adoption. And China see said taking from for Thanks for especially I'm of resuming incentives can accounted going me Yes. trending

Sanjay Mehrotra

So, I will let Dave answer that.

Dave Zinsner

going So, have in Clearly, there's cumulative somewhere comeback I’ll of revenues, is and think said, it in I economic stimulus. China of XX%, phenomenon there China revenue it the the go kind think, but look was exact I a at statistics, work aggregate. as back to and on to was you kind in

course, we're -- the of a customers that will -- And so given the lot and also U.S. mentioned, certainly big and So them Sanjay cloud as of space. But, today, business of that's are to e-commerce move in benefit. in the forth. the are our a driver work-from-home

So, I'm shift project as is to not the we sure significant, likely mix, it that around geographically.


Srivastava Our comes BMO. of from next question Ambrish

Ambrish Srivastava

of you're percent of just -- DRAM? cost And capacity fluid, much and But for versus know appreciate down going per a going what us based last the is told your NAND CapEx tell on quarter for how hard as ballpark, is you expect. very percentage? what you so now as you I then, you both to on I And what and things to What to change cost that had are it's for bit. us a question flexible?

Sanjay Mehrotra

terms quarter, the of we our for fiscal third In third impacting quarter. -- CapEx, these won’t fiscal for CapEx be

be, certainly we course, 'XX, our we working the stays as with that Demand said year with line laid of our expectations, out, However, expectations. CapEx, utilization closely before, make for sure supply I to rest customers. production well our demand in as calendar our the as our evaluating of will

like rapidly we in fairly to we as well XXXX, made just changes managed So, we and CapEx fast, our production. as reacted

same We will be the here. thing of course doing

Just keep to escalation has the couple really the evolved with respect over weeks. of just in situation rapidly across course coronavirus mind that globe last the of

and expectations, make we close sure will with will customers’ CapEx, So, keep we to make of that course we tabs our demand if any needed, accordingly. adjustments our

that. at continuing We to are absolutely look

in function are of the fabs. cost of of course, being terms that reductions made reductions, And are technology cost in a transitions

guidance our 'XX. we respect year you for are have plan the provided we so far, And to on fiscal to that with cost

Dave Zinsner

gotten 'XX. fair of I would on the benefit as add fiscal the the a amount we've in front, seen, first depreciation that in half from you NAND of change

of So that, essence, in kind ahead. pulled

pulling gate, cost that FYXX the fiscal of probably, and is that change, reality replacement the As improvement see happening 'XX. minimal show what's we you we into remember, really decline we're transition it. some of we would mentioned the ahead as FYXX kind would was where depreciation of But with

at So, we in when telegraphed, it's you percentages, good maybe as FYXX, as kind not of FYXX. originally in better and the look

continue the high we is what generally They addition, costs. we solutions. higher hope drive carry to value continue to in that. And mix And to

XX%. to to Our goal is get

through right sales. a yield, over inventory if So, in you impact multiyear cost declining the generation NAND actually good, arc step is we're But, be period and as and a see good side running period look very at on well. that an in very over will then that multiyear we the period, do improvement, up that you momentum, over of very it’s gate the certainly we're running up to replacement how terms costs of a cost competitive. also multiyear and on back you'll really second And once healthy, showing the see

Sanjay Mehrotra

there subcontractors we give on I that just our enabling greater And supply regulations countries to in rules the that flexibility resiliency our to as add by would in in various and adding due case supply the COVID-XX, we impact well capacity of are chain part and as as production. network, that opportunity capacity captive are our us adding in said

and targets have year well. I do cost point are cost our are headwinds certainly but aspects fiscal track. this on overall, at managed side, 'XX for by those being think of large, on some And the So, those


Fargo. comes of question Wells next Rakers from Aaron Our

Aaron Rakers

I lines to kind understand or any managing potential you exactly cloud seeing implemented of you to about appreciate customer plan want help those on into think go Can customers? the anything of at buildup you've customers? understand trying some differently how you have us How back to dynamics visibility the of and or different inventory. that of inventory whether inventory particularly build, or

Sanjay Mehrotra

certainly with we those mean, closely customers. I work

with deepened Our only time those relationships customers. have over

product them, expanded partner more We our well become offering. have as have valuable we as to

the getting are SSDs. For side, have we Those on center. brought SSD NVMe data example, qualified out in

side, we for quality innings of with all growth DRAM partner And side, a very and highest with the been the and those and memory cloud still, have storage cloud. customers. on strong On in very, early the the

the our with customers compared expanded, So, only deepened. have relationships last cycle, have those to

with And their to terms that working customers of in this closely those who requirement. continue understanding is work do requirements. can We with what the understand demand best of terms them in we closely the

trajectory, a once in out And requirements. are I even CapEx an on would we in point before and again growth investments lot memory the moving toward of CapEx storage that cloud COVID-XX that that like environment strong to were infrastructure a for

as access, SSDs. Of as memory course, more new greater well faster CPU with course, and of memory in that compute architectures for driving attachment cores as you more more for intensive them, for DRAM workloads more channels demanding and memory giving as storage well the application, are

of on that with structure those economy if demand have and is demand demand. already were driving is accelerating that we So, And digital some trends seen work-from-home COVID that pre-COVID strong. anything greater

other continue in the the own the to coming these continuing how with judgment to that demand work And smartphone manage work applying just China. and we -- we our to mindful customers, as terms work we in shortages, continue demand monitor back maybe for through customers. is are and the it down, while in And we parts. with remaining example, closely will requires in of supply. So, understanding we requirements, in trends closely the our all course of somewhat China And but memory our FQX,

managing of growth expectation. it's and demand supply, the So, understanding our really customer relationship in terms


you. Thank

ahead. Sur next JPMorgan. from of Harlan Please go Our comes question

Harlan Sur

taking game Good thank afternoon. in pointed new the my demand this year, out, as you driver memory half question. you of the refresh. And for second is Strong console

XX% HDD. I XXX% and storage to generations the memory versus GDDR move more think prior SSD to platforms there's DRAM versus

client Given also your either or here be your in the your know that leadership in SSD products? is we your console given the band participating with NVMe positioning, SSD on new Micron consoles. these the But graphics good team participating refresh team DRAM, will

Sanjay Mehrotra

Certainly had just as expand we SATA. we just portfolio of our maybe yes, SSDs,

revenue growth Now, NVMe as well have market we we SSDS. and But of to and is Certainly, into applications also you end realize the our the product but able DRAM qualifications growth SSDs reach market as not it we're areas. NVMe SSDs the those in a then as the with opportunity these in with and as in are for know, only customers. those take customers sales well broadening benefit us,

here as in on bringing as expanded well packages, for multichip That SSD side portfolio, products enabled, highlight share that in and in out opportunity as I to have our us to product really has as as marketplace. the want UFS I well. we mentioned for the mobile mobile script, on the discrete applications gain both

both our choppy gain us we related NAND, that's gained these FQX, in share portfolio look consoles, us to to to we in NAND waters results on remain the about enabling gaming future solutions and SSDs healthy the talked COVID-XX. the as well broaden in expand requirements We in deliver NAND that for continuing and you positions have portfolio And those navigate forward managed relationships kind product by as share customers. in share have and of also through and secular demand applications expanding in to just well, very-focused addressing mobile, customer we product gained in our long-term our to trends and DRAM


you. Thank

Our Steves Markets open. comes next question of line Mitch Your from Capital RBC is

Mitch Steves

for my Yes. taking Thanks question.

So, impressive guidance there.

of did demand. home, by kind PCs and smartphone the back the from unit have just One of of commercial the offset I questions coming though, are kind more people offset of working

expected So, from track in people do kind guys the upgrades handset you rest sales but PC Obviously, probably year? the prices commercial lower for just how of how guys work-from-home. are you there of about versus a the that is thinking calendar moving of the parts, lot side

Sanjay Mehrotra

yes, that's correct. So,

work-from-home and is to to terms if there demand of at near-term those provide commercial them PCs. look notebook implemented bought we’ve X,XXX think, you I computers really like mean, respect in members Micron I team in to to very, itself really very fast. with our enabling it just a something Micron itself, surge

How as surge home from yes, students it virtual we long this But, nature. I also But yes, and have for how of is learning SSDs, global does see. related as We that that noted DRAM. drives also respect So in to enterprise as demand course, to will in And see overall, and long do well that. notebooks. to last? learning bodes lasts, trend well with in demand and PCs for we mean, both it

China, for I China data of said, may world is smartphone there smartphone, and be demand tailwind recovering front. along data center PCs outside in is learning enterprise us. virtual other PCs a with the for as weakness the the while While Certainly, some on


of next Needham & comes Company. question Gill from And Raji

Raji Gill

another Just question on conditions. the demand

NAND and so mobile of weaknesses percentage just could coming moving the XX% last DRAM David strengths his be? is sense think, weeks. of the of of mentioned and is of about What is we in about in revenue, DRAM your we try the some you conditions weakened on a And I remarks NAND that to can the PCs, If XX%. that. quantify of potential pieces of from prepared couple the had that, impact, macro the where hyperscalers, get side, likewise talked kind

Sanjay Mehrotra

we So, way PC markets in such to some break supplier. all have data diversified requirements. well side smartphone, in And specifically we DRAM. And and of some Micron it market to down well-positioned end center important the as very shortages seeing for of is these the today, broad on these networking data I we but applications DRAM portfolio are a percentage, certainly as center, what's from And terms diversified markets. think is don't are that are a well well of

underlying our And as I to I'm And deep and other don't confident do important side, we related for to while just on very the it broad portfolio come demand the the COVID-XX, monitor demand that and we engagement technology through when and capabilities, he But think customer But, vectors we out. overall spend. product fine. we out are break will the overall uncertainties thing continuing are good. that is others, goes

our similar industry By overall is and the mix of mix. in to fairly large, terms

I XX%, think range, the XX% the at I XX% look in PC some, tends If or then is includes can call take is others, you give you'll and to And around the includes put mobile industry, see specialty, be of to the XX%. around course which automotive, that all XX% down in that server and industrials think like you applications. which can we is other

you So, these can I roughly of And speaking, well mix. think, market think I diversified as across kind it’s see, that’s end the segments. various


Our Danely Citigroup. of from comes next question Chris

Chris Danely

a on just other questions. follow-up guess, I folks’ some

your seen like, things of is we or changing or is shaving forecast see down demand internal this or of last weakness, you're you of what what more the And for in -- what kind some the forward us you about just whether it’s talked last what a us, in sense we you forecasting, Can also is couple you've So, internal anticipation your have? weeks? the what giving are your of then, forecast sort in of give couple weeks? of

Sanjay Mehrotra

mid-January from second China, infrastructure mentioned known we So, that his but well the also in see China. is quarter, the while timeframe, had demand prepared Dave timeframe demand kind China, that during it as I and around COVID-XX aligned our impacted in China, starting spread grew in of of price we with structure in remarks it favorable demand could think, smartphone that as trends, seeing are strong fiscal in in the the

weeks, too to various demand, some consumer countries it is the coronavirus, of now you quantify the will expect in to that that. being impact globe spread as actions So, contain spread on over across of the the but of various coronavirus soon be and we really last do taken there couple see

having that, from cloud again, we increasing as said as applications. coming And, side, the also well from PC demand enterprise see

acceleration we front. So of are demand that on seeing

continue escalating increases all to in example, the their continuing well to weeks. with accordingly. as as closely And So, over manage their devices then that. we in really for manage of And are work and our couple to demand understand this business will, our is outlook, course, customers consumer we demand, of last the

Dave Zinsner

to trends were until degree way did. only but the I leading is up The included we of prepared kind pricing why And thing uncertainty range to that's there that and did today, up a course, demand I'd all and higher the add remarks, got that the is, say in it, we of favorable. of


gentlemen, concludes That this does today's conference session. participating. for our Ladies Thank you call. end and

may disconnect. You now