Micron Technology (MU)

Farhan Ahmad Vice President, Investor Relations
Sanjay Mehrotra President & Chief Executive Officer
Sumit Sadana Chief Business Officer & Interim CFO
C.J. Muse Evercore
Vivek Arya Bank of America Securities
John Pitzer Credit Suisse
Timothy Arcuri UBS
Pierre Ferragu New Street Research
Mehdi Housseini SIG
Chris Danely Citi
Joe Moore Morgan Stanley
Toshiya Hari Goldman Sachs
Ambrish Srivastava BMO
Call transcript
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Thank you for standing by, and welcome to Micron Technology's Fiscal Second Quarter 2022 Financial Conference Call. [Operator Instructions] Please be advised that today's call may be recorded. [Operator Instructions] I would now like to hand the call over to Farhan Ahmad, Head of Investor Relations.

Farhan Ahmad

Thank you and welcome to Micron Technology's Fiscal Second Quarter 2022 Financial Conference Call.

On the call with me today are Sanjay Mehrotra, President and CEO; and Sumit Sadana, our Chief Business Officer and Interim CFO. XX Investor length including Relations slides. approximately webcast is audio is our from site call minutes and in being and Today's at investors.micron.com,

addition, website presented remarks A encourage for results measures call. Today's otherwise on our the financial In on be micron.com specified. financial you for to reconciliation quarter along may our information non-GAAP this the on release results financial of information posted We unless is website non-GAAP to prepared GAAP been a on quarterly the with the discussion that press the our the visit attending. financial found be on at including of has current the throughout detailing conferences website. most will we company, basis,

follow You us @MicronTech. on Twitter, can also

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

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

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

Sanjay Mehrotra

sequentially with delivering favorable record our industry-leading challenges. ramps Thank demand X-alpha and SSD the and in outstanding end products broad-based NAND market We ongoing also all-time XXX-layer strong DRAM was high high. Micron revenue with amid and grew cost our revenue saw node guidance. you, for products an reaching technology We our and Execution fiscal auto our QX chain achieving while an supply mix Good reductions. Farhan. of afternoon, results driving above reductions everyone. margins with delivered cost global performance our excellent revenue

our transformation NVMe the portfolio center momentum gain lead SSDs. industry mix of continues we the on as grow data to Our and transition DDRX

solid first fiscal fiscal DRAM well fiscal XXXX the to on our and of track significant value and QX, our while in record beyond. bit majority robust shipments, a remain Following are Xz represented positioned In combined of represented revenue half, to profitability shareholder and 'XX we bit NAND XXX-layer NAND create in and majority shipments. deliver the DRAM X-alpha

Our with on X-alpha which fiscal revenue. and yields, DRAM cost the strong of a and with ramp nodes up in reductions providing year. meaningful XXX-layer solid for second these half set excellent contributing advanced broad of achieving revenue products the continued additional qualified products front-end NAND us customers, are us We sets

of industry are in the several process We tracking quarters based leading-edge ramping technologies. these on ahead products

the us progress investing not industry technology only next for customers the our the technology also the ranking in of nodes. of quality are technology future leadership in a and leader leader, with also majority maintain good #X. making to development We decade Micron is but

where in differentiator our an excellent. Our data leadership for and scores in markets, automotive are Micron, quality is center particularly important quality fast-growing

We levels Xian challenges lockdown chain have semiconductor our normal impacted with executed late COVID-XX this a Micron December, to by strategic output our past as In China. tenacity to government-mandated to in post our customers commitment a team site to demonstrated ongoing production The continuity also our back lockdown. at back-end the position facility amid supply supply supplier output quarter. strengthened as Xian, return

manufacturing effort, lost quarter we mitigated outstanding Xian network. leveraging delivered our a the of output result on from by and the customer global commitments this As for our

invasion that pressure electronic present critical and of used The a experiencing The global the minerals of due we global semiconductor chain region the gases the situation to Additional source an for supply Russia's supply risk other and semiconductor global supply important COVID-XX-related closely. monitor are is is Ukraine. lockdowns chain, continue noble in of to region in impact the to manufacturing.

maintained We gases. over raw do diversified appropriate expect of as certain We inventories supply at and have Russia-Ukraine of last increase our to the expect but materials the any we near-term currently we our materials be war, strategically volumes risk. that several and noble years not supply our negative an could chain impact secure because costs do of production in

our ensure our with also materials this continuous situation of We are in remain to operations. availability and to vigilant dynamic key support engaged suppliers

the growing the end review storage from outpaced edge for of this trend semiconductor our let's a center expect XG revenue and devices. is of to intelligent to decades, to next X extending the rest we and EV the ongoing over user broad, of industry data to adoption. diversity Now markets. Demand storage memory and last advancement and AI, thanks the has over and decade, continue the Memory

launches team's eclipsing portfolio in and customer memory center proud are with qualifications several mobile market. Last product for execution we our the that achievements fiscal the Our of. year, outstanding data strengthening storage, on and QX, became new very market has product largest been

outpace SSD of optimized DRAM supported for already increase Looking and this This storage cloud SSDs. server In second number over for XX% workloads. and new fiscal workloads across healthy year-over-year, investment. data IT quarter, displacement drivers portfolio. growth supported center center next ongoing architectures, bond market the data-intensive and more share is servers robust in by heterogenous computing broader HDDs grew and than ahead, by expect enterprise ML by and costs we our revenue higher exceeds the and the data even decade, AI storage and fueled XX%, secular Memory in demand the growth to is by memory of demand

for positioned and targeted new X-alpha in later qualifications to this products are to calendar support DDRX data are DRAM ramping transition the momentum well year broadened the center have begin CPU our and XXXX. We which gain by platforms, driven

center first an enthusiastic XXX-layer is vertically Following drives industry's SSD, data fiscal integrated in our the the the These SSD. introduction generating from of NVMe our introduced XXXX, data are we center response XXXX GenX NVMe customers. QX, which

We of year-over-year. data doubling our contributed robust of customers, these SSD drives QX are revenues data progress which center our to fiscal making a in qualifications with has center

expect strong center year. consumer for by our growth to fiscal we in driven Chromebook fiscal demand. PCs, In recovery which and remainder continue client We QX, revenue enterprise revenues data than in softer strength SSD this of saw of offset more the

We expect in mix by in PC laptops. will sales flattish and driven of last be growth expect increasing that content-rich content solid sales, enterprise but calendar part and 'XX we NAND unit year's DRAM desktops versus

DDRX continues our notebooks. We first also seeing leadership, and are in XXX-layer leading alternatives. NVMe SSD the fiscal XXXX demand to revenue the Micron Building DDRX graphics to world's as multiple QX, on NAND. QLC market. PC we outstrip maintains on SSD, supply, are DDRX industry's price fast-growing DDRX leading premiums transition, built continues launch client over our position and next-generation a meaningful we increase to the our Client QLC in client customers launched

We fiscal gaming have a revenues broad cards. strong partnerships performance driven QX, grew product consoles deep leading portfolio, latest by suppliers. product featuring In and and demand year-over-year with GPU of generation graphics the industry-leading for

XXX shifts mobile of QX, transition smartphones. performance. lead We QX, the GDDRXX continues the generation, Fiscal content to in achieved grow to demand XG memory calendar we we driving more applications an the revenue enabling than improvement XG customers inventory supported in and XX% to improved prudent GDDRXX the DRAM as and our DRAM, QX first some XX% grew and content-hungry sales higher storage take some market 'XX. next-generation smartphone previous revenue experience in fiscal better continues And and fiscal life. our X-alpha approach economy market be more year-over-year to in the over XG is see slightly a the weakness the which in to continues customers Mobile advanced ongoing doubling began to are of management. units share million which qualification China a XG the shipments with XG, solutions. smartphone transition NAND by power year local LPX battery our as content. industry to delivers In offer Our from of slows, expected

market share driven impacted record revenue semiconductor challenges, new content for set Russian QX, including storage. Auto auto auto automotive strong very XXX-layer now bills. a invasion in for Ukraine revenue logic which supply UFS products, ramp leader. expected demand shortages. robust strong The We storage our memory demand XX by industrial and auto are seeing nearly also chain are platforms. and NAND also qualified OEM different a are segments and than next well end remains In positioned has remains and revenue of production constrained as the the by by XX% below exceptionally and our demand are a comes these memory be fiscal the Nevertheless, our growth. storage for and markets, more memory over markets Today, fastest-growing we analog unit decade. driven of component numerous from to The

on this calendar have higher EV New XXX include wheels, in and EVs features expect year These memory infotainment new in-vehicle models center are EVs ADAS becoming and storage alone. that and over we like significantly worldwide requirements. to advanced data launch new

about some fueled XXx approximately than memory and X have autonomous revenue continued and saw security in In which by year-over-year Level factory XX% ramp $XXX IoT, In the higher EVs automation car. content, such in fact, average growth, is these storage of the Industrial applications as we systems.

outlook. the to market Turning

our is call. Our earnings expectation industry demand for calendar largely last from unchanged 'XX

anticipate and smartphones in demand a these reduced a teens Nonmemory the that for equipment industry given we across year. in from demand and the both demand underlying across and XG see expect are strength to lead DRAM NAND calendar industry, issue expect trends, further growth center, to experienced of be led 'XX semiconductor and markets. the automotive We balance We that in calendar continued improvements of DRAM rest improving, at industrial and XX% shortages be bit high supply growth by fab. this and supply-demand we competitors some contamination our of NAND. approximately times adoption demand should memory long storage and ongoing discipline mid- data supply healthy in support component manufacturing for NAND Currently, to 'XX their for memory

pockets year shortages and are where XXXX. as not semiconductor into had have shortages likely some we are there as improved calendar However, continue expected, to fast these

mindful market are of increased of in conditions. uncertainty any We vigilant changes remain macroeconomic and

rest supply Turning experiencing are environment with Consistent of challenging now suppliers. the a material and to the industry, we Micron's expectations equipment for bit for year. the growth

supply bit by be will remains in 'XX unchanged calendar with growth execution operations from our expectations demand. for strong to due year and industry prior NAND However, line and DRAM team, Micron's

revenue continue shipment deliver We we of are on the year. with the second track fiscal half fiscal year 'XX, in bit solid record and to strong in expect profitability to growth

cost by nodes. ramp the industry driven world-class We our reductions to the our XXX-layer that this year of exceptionally NAND and well-executed X-alpha expect outpace of DRAM

We industry. supply over cost pressures, there confident and long-term industry, to year will the now are ability map the inflationary come. stemming in will this our across limit years drive challenges road to However, reductions which it for Sumit. reductions turn our competitive from remain technology chain cost to for I and cost

Sumit Sadana

bit NAND was XX% single-digit and $X bit NAND fiscal in mix X% X% Micron's QX shipments profitability more Sanjay. flow. than was portfolio and up delivered DRAM in billion, technology products range, up ASPs NAND $X.X Sequentially, cloud the QX flat, particularly SSDs, of transformation. I'm our percentage ramp price over increased revenue $X.X quarter-over-quarter the revenue. of results Thanks, XXX-layer and marked QX revenue year total free range and Fiscal up $X product Sequential declined increased of revenue was revenues DRAM QX by and and up Micron accelerating billion, by XX% quarter-over-quarter Fiscal strong offsetting and strong year-over-year. Revenue in our execution the XX% mid-single-digit excellent over generation the quarter-over-quarter DRAM to was declines. XX% excited stronger increased momentum billion, client high industry-leading particularly representing and percentage year-over-year. Fiscal range. ASPs percentage like-for-like XX% year. representing increased cash revenue was were X% markets. of approximately markets, across while was mid-single-digit due X-alpha and billion shipments revenue. record revenue multiple in of of the total in

transformation and gains reduction despite sequential portfolio ongoing in margin declines price gross front-end most products. NAND a sequential drove in Our solid cost in

record the and performed was Compute also sequentially Now QX for the quarter. up X% XX% Cloud for sequentially Business revenues generated our DRAM X% down was DRAM Mobile and Unit $X.X turning year-over-year. revenue, Networking by Revenue in billion, Business to revenue client fiscal trends and billion, the well Revenue up year-over-year. and Unit unit. business $X.X up X%

Storage with up business all sequentially as year-over-year. Mobile billion, Business on perform Our record for Unit building relationships We up revenues, managed to MCPs SSD in year-over-year. our approximately up smartphone XX% achieved continues NAND which Revenue well, was were leadership the X% strong customers. as our and and XX% well $X.X

Our revenue client ramp as we vertically NAND growing storage from business first the integrated products profitability in center TLC as industry to and is become as data gaining momentum, well QLC XXX-layer SSDs. the SSDs to several

was from Unit revenue up XX% and the Business $X.X billion, X% Embedded Finally, year-over-year. up sequentially

flat manufacturing at our EBITDA ramped per XX%, in sequential Our QX increase $X.X were record. share. XX several XXX% million, billion, Fiscal than up guidance operating an EBITDA QX more year. Embedded from XX% and strong down range. slightly billion, $X.X year. the The fiscal fiscal automotive for midpoint ago with saw cost in $X.XX quarter-over-quarter. up new was $XXX we operating was as near from expenses QX from impacted reductions. QX QX and mix The auto in XX.X%, basis resulting in margin in points Operating fiscal and solutions the of industrial QX in share the demand a of Business up high-value from margin prior QX XX% was and and income an our XX% per in XX%, margins in fiscal strong QX from quarter the of margin year were from benefited tax hitting fiscal earnings revenue the prior quarter-over-quarter Unit up in across quarter. approximately the consolidated resulting $X.XX, gross adjusted Gross portfolio improvements Non-GAAP prior $X.XX $X.XX markets, rate EPS from by in Fiscal up in

and during was the in cash QX, spending flows fiscal $X.X spending. cash operations from XX% $X.X of quarter. to We Turning capital Net generated billion in representing capital billion revenue.

half continue being billion CapEx CapEx range $XX to the the the to We $XX the fiscal between expect second fiscal to even first billion XXXX year. of with of be roughly in and

in approximately in free shares generate in Our XX billion. first share substantially returned $X We per We in $X.X billion the the fiscal have shareholders million shares for year, dividend to around confident higher $XXX towards fiscal cash million quarter. slightly in inception that over we was payment, or flow of half cash remain free From average price the half. second deployed our repurchase of significant QX than repurchases flow strong the in at ability completed our the QX. million fiscal program of share repurchasing at million Including $XXX share. we fiscal X.X $XX the to XXXX, an of

reduced have XX we which million convert diluted $XXX approximately repurchases, by we In to addition, Combining deployed towards dividends, shareholders settling premiums returned and shares. have count premiums, share convert million flow share the our buybacks. remain cash combination We $X.X cash billion free our than cumulative in XX% free cross-cycle committed of flow returning to or time frame. XX% of this the and dividends through more of a

discounts to will we larger at shares mentioned the trading be aggressive value. have opportunistic intrinsic before, repurchases we share when As and are more in

a of XX on Our $X.XX XX. be record of shareholders to April Board to dividend of quarterly paid Directors on April approved

ending fiscal average $X.X was and days inventory inventory for quarter XXX QX billion, days. the Our of was

and in sequentially with demand Our and $XX.X of fiscal in cash an to fiscal Finished goods QX total total quarter WIP increased half. the to and raw of materials investments for ended the support DIO DRAM $XX.X due second inventory and We NAND. liquidity. declined both billion quarter-over-quarter increase billion

billion. Our total debt fiscal $X.X QX was

our turning outlook quarter. to Now third fiscal for the

Sanjay regional trends ago, strong Near term overall constructive. demand some our supply most challenges a markets and across earlier. ahead pricing Our is plans are is tracking business of end quarter referenced that with and

expenses, QX. increasing our impact is year costs fiscal improved compensation fiscal our financial which in will Our variable outlook

cost mitigation resulting continuing seeing also supply from actions shortages. chain to inflationary and are from pressures related We industry-wide impacts

a guidance due cost QX. the fiscal consolidated higher as do Additionally, as and QX, cost margins in consolidated increase our DRAM than are NAND gross modest margins on reductions sequential in in DRAM revenue gross our in sequentially A With is gross of NAND will to our pull-in in NAND fiscal margins. QX basis. factors front-end expect gross our all more We expect non-GAAP higher reductions of for mix follows. we affect both mind, substantially total to QX these our margin

minus to be be a will new margin the record plus represent minus range of revenue for gross million, $X.X plus expect which minus and in $XX quarterly revenues; We approximately to billion, or or plus points; $XXX to basis XX%, billion, or operating expenses XXX $X.XX million. be

XX% diluted tax QX. expect significantly growth deliver closing, by has the minus solid averaged outpaced free gross and never EPS will financial now remain be around transformation, excellence. to We plus or the build XXXX. road margins manufacturing flow billion profitability Revenue stronger non-GAAP to our Based and averaged on portfolio to revenue X.XX and and industry, to have on fiscal In performance. broader as have the operating cash for turn cross-cycle rate approximately it share semiconductor fiscal we $X.XX. have fully foundation XX%, strong on and of we be our technology back count record track leadership over Sanjay. created shares, I been expect outlook Micron approximately momentum XX%. to $X.XX, continues deliver We in Micron's map margins

Sanjay Mehrotra

world's pursue Sumit. was most Thank this both ourselves that holding highest to social dedication to team's and named we how in one note our environmental earlier month, operate global companies recognition reflects I'm the Institute. we ethical the how Ethisphere standards proud of you, Micron responsibility. ethical and by the This

strong our fiscal A continued record first and guidance manage that revenues all-time and quarter an a driving improving customer delivering toward strengthening for show record 'XX profitability. technology portfolio our product robust progress ramps, with discipline and half business our our continue is relationships. We industry-leading to our foresight and performance

in the Micron technology excellent now position and in XX our business presentation to on discuss ahead. and questions. an the solutions today, opportunity Micron's and DRAM greater the for value. transform solutions, Thanks into is customer Investor we'll data us behind better for leadership, greater on capitalize joining demand seize to will drivers to forward trends seeing these that broad at Day NAND trends experiences where are driving Given you and look Francisco, our in we San for May that technology detail depth open strategies I


line of comes [Operator the Instructions] Our Evercore. of first question C.J. Muse from

C.J. Muse

would is first And guess of and to the February look second pull-in I to of quarter, margin talk DRAM half how should I gross operational the hear and think how NAND here. performance about like-for-like about be trajectory mix you curious the you're you ahead and a as the into your kind second mix, question, excellent. at thinking of results, as year fiscal from look half, the the costs both in did but we in about

Sumit Sadana

All right.

just our terms for out in X-alpha good the had of -- the And of the point mix. due example, margins of gross NAND actually effects margin for And I'll So exceptionally reductions we mix, we and performance mix in margins to strong ramp that alone. cost had course, and gross NAND and our portfolio gross to FQX, XXX-layer XXX-layer our due improved NAND. in

momentum is continuing. So that

guidance is higher. have look to seen margin So sequentially as midpoint gross FQX, I forward the you at the that

of are we margin want here. on important things forward. are out very our to a trajectory couple point So going positive gross that I

improve spoken have there gross as gross FQX margins that some points. FQX see cost to DRAM dampening that’s that we little on basis and by to bit of factors FQX. a got our XXX going NAND about going effect about expected we But improvements in margin important the of have cost pulled will are are a you both sequentially. into highlighted, are sequentially couple improvements so to affect So And

variable overall expecting from that we is one accrual year than originally. first year for compensation profitability is sequentially fiscal our a forecast quite to FQX were the for FQX bit The the increasing our higher is because --

bonus that in accrual. costs increasing quarter. That impacts is our the So following

for the have OpEx impact but will impact FQX. in already We in that costs taken FQX, it

the FQX our And DRAM impact So will sequentially is grow that that's NAND than aspect FQX. our FQX. gross margin faster business business in in other an on in

a bit that consolidated gross So impact an little has on of the margin.

So grow will improvement, sequential both NAND NAND will and faster. have but DRAM businesses

little it a will So just bit an mathematically, have impact. of

in on of the basis in FQX. in So over a from point FQX. these gross FQX the XXX are going spite bonus of forecasting to to that issues And going just and margin NAND XXX the FQX improvement accrual about point mix impact, between from X margin has we basis impact gross

margin a strong you feel. mix. really asked I overall, question So performance, And about

mentioned that his FQX, revenue our the substantially. prepared remarks revenue our is center SSD center. You improving data year-on-year in that in Sanjay in see data doubled

in the growth the continued as well. quarters couple next expect in of data center We

for positive a that's So our margins. gross

have for also is because us leadership in mix gross have do kind good we of there. We margins good DDRX. That improvement also

positive FQX feel the constructive FQX we as overall, trajectory into very profitability and So about about well.

not Of FQX, for going course, to so are that for guide we we'll at now. it leave


Our of Securities. comes of Bank Arya from next America question Vivek

Vivek Arya

just also see data of those in kind smartphone that oversupply And to are Is you demand. softer you that strength full the strong view to Interesting recent what industry center? have of headwinds? overpowering PC though the doing even make data center sure year you're case the and to deceleration points data and unchanged of this don't some the and been maintaining outlook, there kind

Sanjay Mehrotra

So question. this certainly, let take me

that desktops I have enterprise enterprise are out and because what content known, desktops strong. consumer favorable would desktops but and is that's Chromebooks us mix in and weakness is PCs higher for like some take DRAM NAND. PC, well had Regarding PC, are strong. of enterprise and a And point to both and as

in favorable at us. for data And So flash PC of growth enterprise strong there. we look the content desktop on flattish, be requirements mix center, certainly unit and year-over-year and terms a DRAM basis a while is to market

in center the be launched, 'XX year expected new be to of half greater content of that CPUs Second are strong should servers. because data for which driving will calendar be

investments content talking And about related as data driving about just their well. workloads -- AI/ML data again, data data the CapEx heard all So hyperscalers of greater various just -- in have we are their within aspects PC investments space. that it's to or you discussed. But just center the the center not about and center

Of as smartphones market, and well. mentioned; automotive growth drive NAND to continuing strong and content strong as course, XG DRAM we driver

we on NAND the to as going supply So issue of CapEx contained that And demand, demand the supply too. strong industry of that and exercised in be players. in is big forward well. course, supply, course, And expect impacted the point the the a NAND discipline the the that of side, various of way is is the course, broad-based on has on because aspect the the been a by and aspect contamination impacted of the fab there, in competitor's of

for that environment So of NAND supply and terms and DRAM year. in the healthy demand overall, through balance we see --


comes Pitzer Our John from Credit Suisse. next of question

John Pitzer

of business spent help Congratulations NAND as us the really than on that? May the you I'm of DRAM, sequentially of curious, to growing margin guide time? as you think is can you in portfolio? do to NAND much kind DRAM relative NAND between how the several end gross answer the How continues qualification when some the last Sanjay, this to you the the as impact understand curious, gap strong over optimize the are mix much and what to of more years And you've NAND is think fruits And be you what's higher-value results. gross labors? margins, upside reposition can time of question, and you trying NAND better portfolio driving markets the close I'd about faster products think you do the your really improve? Or the there products. over

Sanjay Mehrotra

XXX-layer done I industry XXX-layer we team it the integrated some leading with great for introduce the in as data including of center center has technology NAND, now several about being ones first remarks NAND technology the introduced various data controllers. solutions, well vertically now in NVMe own deploying and in to talked quarters have prepared by our with SSDs into products. with our think We certainly, job So a NAND our that SSDs

yields, of we Our And well. They that quality. coming production over of putting in manufacturing been ramp really to several has of fruition the in here. course been as executed years in terms absolutely work the our all terms exceptionally are terms ramp, is excellent in of last have

And already side we low have as enjoyed We had grown share single you in high solutions market. both NAND the a that the discrete as how -- in to in teens few solutions from NAND seen side. MCP have on mobile-managed now in contain well years with of we NAND gains have DRAM our on have digits share respect to terms share the the and the ago our

enjoyed So strong absolutely performance already NAND gear on the high here. getting mobile now SSD into the is side of business. And

quite work from well NAND end-market foundation for But to of share as as the the center as QLC, are SSDs and vertically improvements Micron our in significant us earlier been as center applications technology being well. as for Our well. all client outlook for NAND the we just differences in the the And gain space is as well hitting all of revenue some data the course, market for this NAND that margins that to for XXX-layer And SSDs, have we smartphone there the that with client we SSDs, have improving and really our Sumit in all as and built DRAM on well well strong position introduction is point of margins SSD in NAND, markets of was certainly wide this NVMe doing our DRAM momentum SSDs are for and work that time highlighting SSD, range given the terms have integrated NAND. in solutions in accelerating we channel positioned now, as our controllers, cost-effective NAND side. well the outlook of portfolio as the differences of our well in industry our profitability of of to highly data XXX-layer address ability data between client positions leading, center to as our own the on are as


Our of next Timothy UBS. question from Arcuri comes

Timothy Arcuri

question I a as just quick cost had well. on

the So year. that talking the industry. slide, the if there look where change for headwinds Sanjay, current verbiage on the at are course, than better cost you're about industry this I costing the And reflect down you're year fact the outlook, basically whether down outpace this to Because longer I that that extend on you the the the will said industry's look with if But last I'm verbiage into wondering quarter, year. ability at you'll slide, industry to cost be the next you over the your think competitive term. of also

wondering you're this just into next that costing be a X-year can thing down Or you sustained is better this -- year? whether industry? is than think this I'm the So where

Sanjay Mehrotra

We the well. good on about industry And nodes X-alpha technology certainly NAND, we just plan generation well, road year will our lead XXX-layer industry have the our as are well to like in with DRAM we And led we feel progress be introduced as good really as nodes with sometime our 'XX map. calendar as future making time and with those. frame those our

technology position is and into ability broad a successfully our our key to range to the in strength products, continuing So really, industry. it our ramp across our it's production cost leadership position of in

versus position cost well. as our about good very our competitors feel we forward going So


from Pierre Research. comes Street Our next New Ferragu question of

Pierre Ferragu

quick simple very like first, mobile on market. one the have, I

that do it's reaching you market? for that temporary? are and have then in guys. kind slowing different like And the kind of I plateau in is in generated you we content more a increase growth Do you visibility a now. Or of something like question sequentially What XG there? kind of So that have -- think broader like

in in in peers say, we to world. memory in hear more I investing much very a would active on, the And the geopolitical footprint market. manufacturing the that investing logic don't create in about balanced Your are Europe U.S., the front,

wondering was could I topic point. there that there, could are there a some be is so conversations if that and Micron And if something at benefit

Sanjay Mehrotra

Chief So it's to have as interim that we here in our as a great Officer. as position today be Business Sumit well CFO

yours, So the of I the Sumit, first and the one. question. let first then take will him ahead actually with question second will go address I

Sumit Sadana

Sanjay. Sure,

that question. thanks for Pierre, So

to of we So a model in capacities anywhere any plateau of the terms see kind. this average close don't node,

transformation in XG The handset continues mobile. the in growth content in industry average on the positive very portfolio. are We

billion XXX So XXXX as an about so of about calendar basis, in approximately being an on if sold you sold annual smartphones or X.X think XG. million were about industry

more million expect handset NAND typically as XX% a And DRAM a XXX XG content, being this to XG growth double more handsets of than sold has We XG content handset. the a XX% year.

hire. a has to the still. applications And capacities trend that even drive of So are ways I and NAND lot that XG do on to expect up that, beyond to take advantage average run we both that going continue come the think for in to DRAM --

sort And room that. So is business, overall. there. there's expect do Yes, volumes for unit volume average volumes, smartphone run on calendar to in a the of low of overall capacity top smartphone the plenty consolidated single-digit this year we of then growth

to handsets growth be business. the when a still in is in the new going introduced mobile for keep going So are robust. overall the And mind, enter to get seasonally period we fall stronger

well. catalyst as another that's to going So be

over it to pass So I with Sanjay. will that,

Sanjay Mehrotra

clean know, question, Thank you, as you our so the well has over Pierre, course, few in Taiwan, as in of U.S., Sumit. your last as rooms course second the investments in made And in of years Singapore Micron regarding Japan.

drive reductions few well to last terms we capacity, our really have which these we demand new -- manufacturing with cost years our over growth is in what footprint, again, cleanroom expansion, well-diversified of in course technology implement are wafer as on but not growth. prudently us In to globally technology positioning in invested us locations, these well to leveraging the cleanroom transitions our as is production. the us expansions cleanroom transitions, line have position the bit in expansions which of deliver positioning added And

year announced would basis. we ahead, over last billion investing at look of $XXX October a looking more than XX we we manufacturing that have leading-edge on be and in R&D global in As years memory

aspects we new for until these credits, Act, future are part And support expansion certainly, credits. that ongoing second in in the course, because to decade manufacturing for we in situation we of making regard, the including course, that FABS with related regarding things demand the decisions are we tax new regard, needing tax gap for of in much engaged continue more diversified And also, highlighted to add we So capacity 'XX-'XX that the U.S. through expansions U.S. today. have with capacity would as increase continue are the investment is related that operations. on footprint of again the about chips bridge global which investment of that upfront various to half about positioned be the and time In help U.S., our half are later XXXX countries, evaluating are well have the as are be with CHIPS this been will investments, these to well course, important frame. to a U.S. in of the this government the of proceeding in in wafer Asia discussions the the order basis. to this will, frame, then, our the that, very our And cleanroom we to of new once we as decade meet time passage and And DRAM monitor.


question Mehdi Our next comes of SIG from Housseini

Mehdi Hosseini

application Sanjay. especially think up. follow-up which where profit -- DDRX the me mostly the should market about next server for to How PC versus the year by operating driven picks this contribution, seems One year, to it end I

Sanjay Mehrotra

well. in of supply So mentioned die terms the space because I we DDRX the the bit specs and, as data in as moderating is in in of that well to in in course, growth ramp DDRX. the DDRX, effect center it our bigger client continues of industry an has as remarks of prepared way, the think the a By future, that

premium capability of the remarks, has Micron well. terms in pricing industry in we a well. supply leading today DDRX, actually DDRX So industry And noted the in as in that is our as

begin positive So with premium DDRX. rapidly And that see get pricing our DRAM processors the year, DDRX, industry. new contribution continuing to is DDRX you can will for make getting widely margins the use ramp it we in as as of deployed to well. overall this expected later a in data which DDRX And to certainly, are space are center during calendar 'XX year

We well for road positioned market. as map client well with data are DDRX center our for as

Mehdi Hosseini

a for desktop, server pricing correct? be application premium will there versus But

Sanjay Mehrotra

yes. DDRX, premium, pricing as we noted, has


Danely from Our Chris of Citi. comes next question

Chris Danely

relative So X the relative about or the guidance, to then specifically to DRAM, end -- how and how did to center as just them you as to server, how do the far your talk they expect can data mobile? PC, did on markets expectations they're expectations? just And main -- you

Sumit Sadana

All right.

take So can that. I Chris, yes,

When as end our good pricing PCs, performed came we driven a about gross a of lot in were but be margin was definitely both FQX fact, markets, improvements and NAND, think to Mobile well. performed out strong. our in terms really So DRAM the upside versus center in PCs quarter. of DRAM Data of from well. that experienced continues that actually we well FQX expectations. in And

mostly have markets FQX we ahead sequential storage of been in is out then DRAM; those FQX. growth NAND. is in compute market, mostly So is as look our driven the and strong FQX, most market, in which of being And the which

Unit, FQX. are our grow exceptional Compute to Unit but Business units and these to X growth. are business going Networking be of be likely Business X and these well, X going in growth Storage drivers our to All primary are So units drivers sequentially the business

PC. continued expect strength in do we So

from As the in PCs to corporate mix Sanjay towards mentioned, increasing the the PCs and consumer. average improvements due shift of because capacities lower-end are laptops away

be Data there. to helping center robust. that's So continues

calendar is big because 'XX are And these mobile growth allocating FQX for to in continued pick our continues customers FQX, capacities. do be in center not sequentially of be because XG and it significant shift sequentially even of We a trends. demand though we expect of positive mobile growth going a be driver expect the to up average lot to seasonality data increase. And to there CapEx who the of robust at rest for


Our question Morgan from Stanley. next Joe of Moore comes

Joe Moore

You about of that? contamination impact expect a NAND that beyond may to because think And you talk of the that tight you touched on you in NAND the issue at be change competitor. of was, the impact much that durable do current be your -- market the Can the of how how period?

Sanjay Mehrotra

some increase. it of down industry, brought demand year-over-year certainly again, the points -- on estimates growth. in growth demand-supply had the of by there in favorable of the that the percentage down the based the terms supply or industry in the NAND the for demand dynamic on have continues we couple that NAND brought in even we And that's certainly, are with demand-supply a the discussed, data reasons fully for It out center the the that's of, year-over-year expect healthy phones terms ahead. And industry. supply just we It a all because look it's mobile for as whether markets, automotive for for in in or demand client or applications the to balance along DRAM industry the


Toshiya Hari Goldman Sachs. question next Our from comes of

Toshiya Hari

had about NAND evolution question on I forward. and think a ASPs going to how the

that actions. the relatively some from February and expansion the around Sanjay, and making? And ASPs perspective. pressures of year? industry quarter, headwinds your fair your sequentially outperform separately, chain to data despite Sumit, the center ASP being just digits were be should in then given your supply a Is mitigation environment think still pricing about in those it your winning I designs, the SSDs comments up success soft mid-single is assume the to throughout sequential going forward industry with the a that inflationary associated talked fair assumption you important

basis what should XXX know we that those Or but eventually? to that's could said point couple headwinds persist reverse? turn could you hard points. headwinds I for quarters? question tailwinds to a into think At expect of I a those answer,

Sanjay Mehrotra

go don't why ahead? Sumit, you

Sumit Sadana


industry-wide terms there, look the out In overall continuing if challenging. environment to is are be things you an at of cost statement. certainly, our this And pressures,

these oil are noble And prices. pricing that gases, inflation purchase, materials services. at look the things, course, the electricity, the price seeing and subcon even and a of even you commodities of of other that natural to we of important price and whether OSAT lot lot raw commodities you're even foundry logic of impact that gas So a the external of

vectors. of And wage of there inflation are So course, are lots happening. then, also seeing we

our containing inflationary job So of there. I of really these the extraordinary But And lots which inflation through we are, believe, doing pressures vectors a business. costs. there are of of are getting course, course, into is transmitted

So we quarters. persist for these are planning pressures for to several

let anytime will not are soon. up We thinking these that

continuing doing been And we an continuing on find work so in our new technology way. as to ramp is focused excellent efficiencies, have our fast as to

rest the our So we course, have mix on as ASP, better have that DDRX. about of happening think we in but positive from, DRAM side And not is NAND stronger like get with and mix higher benefit the happening products of gross that of of so good our course, side. also of the these high-value products costs improvement can examples margin driving also products, how portfolio. ASPs, mix price it comes only considering we It's on

it over So I'll to turn with Sanjay. that,

Sanjay Mehrotra

of And his an next So well a pricing new business away aspect, which continuing Sumit our solutions overall the us remarks went improve your even was the had our though there mobile-managed for FQX. I I decline, question. mix, of greater playing and greater the touched into highlighted again, think as was for profitability in on that the launching first positions high-value important prepared this mix with and shifting components are SSDs highlighting like-for-like just from in part that we -- of due up think And products here. price is that Sumit to well to The NAND, how as our NAND solutions is as mix role. the


next Srivastava comes of BMO. Ambrish from Our question

Ambrish Srivastava

and the for costs quarters. on, the the with that that is bps which mainly had Is do confused. the out, thought bit headwind you just case, a sure -- continue comp I -- I was mitigation called variable in next understood that nothing the prior all I the XXX should the make wanted are going the the I'm that to Sumit, from several headwind, question. to cost bps XXX

Sumit Sadana

variable revenue to in your well increase going the Yes. understanding gross to Yes, the to just and mathematically. is as FQX impact that's FQX mentioned going points The increase impact impact is I as Yes, is in that margin that FQX an basis the that correct. consolidated to margin is FQX stemmed NAND mix correct. gross caused from comp your XXX understanding -- sequential versus

-- and of the So XXX points the X basis sum over is

Sanjay Mehrotra

On the margin. gross

Sumit Sadana

margin gross the side, On that's right.

Ambrish Srivastava

Got it. Got it.

it unpack understand We the you We're you business, -- So then as about also is then look availability to back-end the that at I'm homes. inflationary component and is improving, of costs. just all trying to well that the headwind you been as the in our this that. some talked because costs. But has feeling own question a said

comments. So I'm just trying to these unpack

-- also So raw on and that. to part secure you assuming hand, have one having then I'm the you're of neon is materials.

right the my just that us quarters? So So next several kind first to was what's the costs help way you could sustain about can of understand think question. that these for

We seasonal? down The quarter-over-quarter second there on that helpful. DRAM the something very system? question is The one was on was finished That inventory. for Or finished had is, goods thanks Q. going wait for is, goods the is providing to being helpful. that for The very That commentary and that both NAND.

Sumit Sadana


this of components about prepared the it's last improving of to that shortages over improving. gone several is situation we question quite the in overall significantly The that been And year. have that the is improve all quarters. those remarks, we terms be not of expect will So the issues extent availability experiencing costs, to going in the said an Sanjay first as yes, do

because memory hands short. now components are that customers of improvements and can order We the our get through the of that those more on be can We products. expect to our get can They in build sets we of 'XX. continuous components all our in hands on the their products. of match calendar because availability, improvement of course experienced expect terms And will demand full storage

even through some further the -- some to year, will into calendar going some but And improvement. 'XX when so will shortages. expect in that components still be in be There of cost of the of availability across we shift supply are And these though is we the cost terms chain. is of coming is calendar And range there that improving that the in range level we back-end in input our these fabs costs commodities is operate pressures way buy, a across improving, a components there of of a pressure facilities.

of continue question range of And a to some it's about switching will an issues, they pressure components. your the improvements despite of across industry-wide So availability inventory. and now

have managing our been inventory We tightly.

goods finished our inventory down quarter-on-quarter So is by design.

levels sequentially. FQX have We robust that mainly in staging growth see pretty our guidance. you higher for in can of a And WIP,

are FQX We very in growing compared to robustly FQX.

do the FQX. up down have to expect end we FQX come at much year for in the range pretty end we normal in of the So inventory that and to

inventory build as still have do expectation last we FQX. as inventory in FQX would we we would ending mentioned that we quarter FQX, reduce then -- that and had So well,

numbers to So and you that's see. the set that the plan, that is continuing of be

of point right? last mean one the is a is Just the ensure all I of increase hands I terms supply our we just on to been getting has challenge continuity, last point need. in components inventory part this

So we of it as have adequate hand part supply just is on ramp we that to meet ensuring customer demand revenue. our

Ambrish Srivastava

a X WIP And that of been so result has going up in the consistently last X, rate? quarters as

Sumit Sadana

Exactly. Yes.


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

You may disconnect.