Q4 2023 Micron Technology Inc Earnings Call

September 27, 2023

[music].

Okay.

Thank you for standing by what could you my garage fourth quarter 2023 find H O call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.

To remove yourself from the queue simply press star one again.

Today's program is being recorded and now I'd like to introduce your host for today's program.

Samir Patel.

That's your relations. Please go ahead Sir.

Thank you and welcome to Micron technologies fiscal fourth quarter 2023 financial conference call on the call with me today are Sanjay Mehrotra art, President and CEO and Mark Murphy, our CFO today's call is being webcast from our Investor Relations site at investors <unk> Mike.

<unk> dot com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website along with the prepared remarks for this call.

Today's discussion of financial results as presented on a non-GAAP financial basis, unless otherwise specified.

Reconciliation of non-GAAP to GAAP financial measures can be found on our website.

We encourage you to visit our website at micron dot com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending.

You can follow us on X at Micron Tech.

As a reminder, the matters. We're discussing today include forward looking statements regarding market demand and supply are expected results and other matters.

These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

We refer you to the documents, we filed with the SEC, including our most recent Form 10-K and 10-Q for a discussion of risks that may affect our future results.

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

We are under no duty to update any of the forward looking statements to conform. These statements to actual results I will now turn the call over to Sanjay.

Thank you Tim and good afternoon, everyone.

Fiscal Q4, Micron delivered revenue and gross margin above the midpoint of our guidance with EPS above the high end of the range.

It does reflect our strong execution and we are well positioned to drive significant improvements in our financial performance.

We believe pricing has now bottomed.

Ongoing demand growth customer inventory normalization and industry wide supply reductions has set the stage for increased revenue along with improved pricing and profitability throughout fiscal 2024.

We continue to expect record industry Tam in calendar 2025, with more normalized levels of profitability.

Fiscal 2023 was a challenging year for the memory and storage industry.

Revenue Tam leased a multiyear low resulting in a significant impact to financial performance.

Despite this difficult backdrop, the micron team stayed focused on our strategy executed well and accomplished several important milestones.

We achieved record annual automotive revenue record NAND TLC bit shipments for the full fiscal year and these two that could never in calendar Q2 for revenue share and data center and client Ssds.

We were the first in our industry to introduce one beta DDR, five and LP <unk> DRAM products and the first to ship <unk> samples with industry, leading performance and power efficiency.

We were also the first to introduce 232 layer NAND SSD products in data center client and consumer markets.

These accomplishments were underpinned by our leadership technology and continued strong progress in manufacturing execution.

We achieved world class mature yields in record time on our industry, leading one beta DRAM and 232 layer NAND technologies.

In addition, micron to several prudent and timely actions to reduce our capex and supply in order to address the market imbalances through the course of fiscal 2023.

Our industry, leading technology roadmap continues to progress well as.

As we have mentioned before the vast majority of our beds are on leading edge nodes, one alpha and one beta, Indiana, and 176 layer and 232 layer in NAND.

We continue to make good progress on one gamma DRAM development using <unk> and are on track for production in calendar 2025.

Development of our next generation NAND node is also well on track.

Now turning to our end markets.

Customers continue to reduce that excess inventory for memory and storage in fiscal Q4.

Most customer inventories for memory and storage in the PC and smartphone markets.

Now at normal levels consistent with our prior forecast.

Inventory levels are normal across most customers in the automotive market as well.

Data center customer inventory is also improving and will likely normalize in early calendar 2024.

Consequently, we see demand continuing to strengthen which has led to an inflection in pricing.

Some customers have made strategic purchases in DRAM and NAND to take advantage of unsustainably low pricing as the market begins to recovery.

In data center traditional server demand remains lackluster while demand for AI servers has been strong.

Data center, and such and operators have shifted budgets some traditional servers to high enterprise AI servers.

Total server unit shipments are expected to decline in calendar 2023, the first year over year decline since 2016.

We expect total server unit growth will resume in calendar 2024 to help fulfill ever increasing workload demand.

We also expect content growth in both AI and traditional servers.

Compared to traditional servers AI training servers contain significantly higher DRAM and NAND content with greater technology complexity robust product value and higher profitability.

We believe our data center revenue has bottomed and we expect growth in fiscal Q1, and increasing momentum through fiscal years 24, and 25 in our data center business.

Micron has a strengthening portfolio of solutions optimized for bandwidth capacity and power. These.

These include the HBM CE DDR, five and associated high capacity modules.

<unk> Nan and data Center Ssds.

This portfolio of industry, leading products positions us well to capture the opportunities presented by data centric computing architectures and AI.

The introduction of our <unk> product offering has been met with strong customer interest and enthusiasm.

Our <unk> provides superior bandwidth power and capacity for generating AI workloads.

We developed this industry, leading design using our <unk> technology advanced TSV and other innovations that enable a differentiated packaging solution.

We have been working closely with our customers throughout the development process and are becoming a closely integrated partners and data AI roadmap.

Micro <unk> is currently in qualification for Nvidia compute products, which will drive <unk> CE powered AI solutions.

We expect to begin the production ramp of <unk> in early calendar 2024 and to achieve meaningful revenues in fiscal 2024.

Micron also has a strong position in the industry transition to <unk> five.

We expect micron <unk> volume to crossover default in early calendar 2024 ahead of the industry.

We expanded our high capacity <unk> DRAM module portfolio with a monolithic diabetes 128, gigabyte module and have started shipping samples to customers to help support their AI application needs.

We expect revenue from this product in Q2 of calendar 2024.

Last month, we announced the introduction of 128 gigabyte and two six gigabytes EXL to all memory expansion modules.

By leveraging our unique dual channel memory architecture, we are able to deliver higher module capacity and increased bandwidth.

We have shipped samples to several customers and key partners.

In data center Ssds micron's entire portfolio utilizes 176 layer or 232 layer <unk> NAND and production are testaments to our product and technology leadership.

We are well positioned to serve the growing demand for faster outage as data intensive AI applications proliferate.

We saw strong demand for our data center nvme ssds across our AI focused industry, leading 30 terabyte product as well as our mainstream products.

Micron ended the second calendar quarter with a record high revenue share and data center Ssds based on independent industry assessments.

We expect to build on this momentum in fiscal 2024.

Mpc's, we continue to forecast calendar 2023, PC unit volume to decline by a low double digit percentage year over year, and then grow by a low to mid single digit percentage in calendar 2024.

AI enabled bce's will drive content growth and an improved refresh cycle over the next two years.

In fiscal Q4, we saw strong sequential bit shipment growth at PC Oems driven by demand for LPG them in 10 client notebooks.

We expect to begin revenue shipments of our industry, leading one beta based client defy in fiscal Q1, two PC Oems.

According to third party analysts in calendar Q2, we reached record revenue share in client Ssds for PC Oems as customers adopted our industry leading solutions.

Our 232 layer nvme client SSD is now quantified at large Oems and shipping in volume production.

Our SSD <unk> shipment mix reached a new record for the second consecutive quarter with growth in both client and consumer markets.

We continue to expand our footprint in the high end consumer SSD space with the launch of key new products that extends our reach into professional content creators and enthusiast PC gamers.

In mobile we expect calendar 2023 smartphone unit volume to be down by mid single digit percentage year over year, and then grow by a mid single digit percentage in calendar 2024.

Elasticity, along with the mix shift towards premium phones with greater capacity is contributing to memory content growth.

About a third of smartphones sold today have at least eight gigabyte of DRAM and 256 gigabyte of NAND up more than seven percentage points versus smartphone units a year ago.

Similar to our view on Pcs AI enabled mobile forms could drive content growth and a stronger refresh cycle over time.

Longer term, we see generator applications executing on handsets.

These applications will continue to drive new requirements were highest capacity lower power and increase performance and memory and storage.

Last I'll cover the auto and industrial end markets, which contribute to more stable revenue and profitability.

Fiscal 2023 marked another record revenue year for our automotive business.

Micron continues to lead in automotive market share and quality.

Long term, we expect memory and storage content per vehicle to increase in both Adas and in cabin application and.

In addition, fast growing evs typically contain higher memory and storage content.

Our automotive design win trajectory remains strong.

The industrial market showed signs of recovery in fiscal Q4.

Inventory levels for memory and storage are stabilizing and distribution partners and at the majority of our customers.

We expect the volume recovery that we observed in the second half of fiscal 2023 to continue into 2024.

We see strong growth prospects in this market over time as industrial customers continue to adopt and implement Iot AI and machine learning solution.

Okay.

As previously discussed the CSC or cyber security administration of China.

<unk> earlier this year has impacted our business, particularly in the domestic data center and networking markets in China.

We remain committed to serving our customers in China for those areas of their business not impacted by the Cfd decision.

While there is near term impact to our demand due to these challenges in China, we remain focused on maintaining micron's global market share.

Our team's grit and microns deep relationships with our customers underpinned by our technology leadership, including project momentum excellent product quality and extensive manufacturing and supply chain capabilities position us well towards these goals.

Now turning to our market outlook, starting with demand.

We expect calendar 2023, DRAM bit demand to grow in the mid single digit percentage range.

And then our expectations for demand growth. This calendar year have increased from high single digits to high teens percentage.

These are below the expected long term bit demand growth CAGR of mid teens in DRAM and low 20 percentage range in NAND.

While calendar 2020 see DRAM demand has been in line with expectations.

<unk> growth expectations have increased due to stronger than expected demand in certain parts of the consumer market and the trend of greater elasticity in putting unit content.

While macroeconomic factors remain at risk, we expect robust year over year bit demand growth in calendar 2024 for both DRAM and NAND driven by improving end market demand normalized customer inventory levels.

Rent growth across products and ongoing growth in AI.

Calendar 2020 for better demand growth is expected to exceed the long term CAGR for DRAM and to be near the long term CAGR for NAND.

Turning to supply.

Significant supply and capex reductions across the industry have helped to stabilize the market and enabling the recovery that is now underway.

We see both DRAM and NAND year over year supply growth in calendar 2023 to be negative for the industry.

We expect micron's year on year bit supply growth to be meaningfully negative for DRAM.

We also expect to produce fewer NAND bits in calendar 2023, then in calendar 2022.

In calendar 2024, we expect industry, DRAM and NAND supply growth to be below industry demand growth and meaningfully so for DRAM.

We believe calendar 2020 forward is positioned to be a year of recovery in the memory and storage industry.

A sustained period of supply growth less than demand growth will strengthen the pace of recovery.

HBM production will be a headwind to industry bit supply growth.

Across the industry <unk> di is roughly twice the size of equal length capacity five.

<unk> product includes the logic interfere die and has a substantially more complex packaging stack that impact yields.

As a result, HP EMC and CE demand.

Absorb an outsized portion of industry wafer supply.

The ramp up of <unk> and CE production will reduce overall DRAM bit supply growth industry volumes with particular supply impact on non HBM products as more capacity is devoted to exiting <unk> opportunities.

Micron is experiencing a similar impact of our planned hbm's CE them on our bit supply capability.

Micron bit supply growth in fiscal 2024 is planned to be well below demand growth for both DRAM and NAND and we expect to decrease our days of inventory in fiscal 2024.

We continue to execute to our strategy of maintaining global bit shipment market share for DRAM and NAND, while sustaining tight supply and Capex management discipline.

Micron's fiscal 2020 for Capex is projected to be up slightly compared to fiscal 2023 levels.

<unk> Capex will be down again year over year in fiscal 2024.

We remain focused on carefully managing overall supply growth.

In last quarter's earnings call, we communicated that total wafer start reductions and volatile DRAM and NAND are approaching 30% versus peak 2022 levels.

<unk> intense focus on capital efficiency over the last few quarters, we have redeployed a portion of the underutilized equipment to support production ramp of leading edge nodes in both DRAM and NAND.

Given the highest asset step count of these leading edge nodes transitioning that equipment should result in a significant and structural reduction to our overall wafer capacity in both DRAM and NAND.

Due to the structural reduction in capacity, our DRAM and NAND wafer starts will remain significantly below 2022 levels for the foreseeable future.

Our industry supply projections assume a similar structural reduction in wafer capacity industry wide.

Lead times to increase this wafer capacity will be long and will depend on improving demand pricing and financial performance.

We expect Underutilization to continue and our legacy nodes well into calendar 2024.

We see our demand at leading edge nodes exceeding our supply in fiscal and calendar 2024, particularly in the second half of the year.

Construction capex will be elevated to support our plans to build leading edge memory Fabs in Idaho, and New York for <unk> chips applications in August .

As we have highlighted before the requested level of chips Lance what I'll, let Idaho and New York projects are essential to the viability and global competitiveness of each of these projects.

Our capex plans assume that a certain level of chip grant funds will be made available to us in fiscal year 2024.

Assembly and test Capex is projected to double year over year in fiscal 2024, predominantly driven by investments to support <unk> production.

Our planned fiscal 2020 for Capex investments in HBM capacity has substantially increased versus our prior plan in response to strong customer demand for our industry leading product.

Over the course of calendar 2024, we see accelerating AI driven opportunities for memory and storage across multiple market segments from the data center to the edge.

We are encouraged by the improving industry demand and supply fundamentals.

We believe that the capex constraints created by the industry profitability environment, coupled with improved inventories announced supply reductions and the impact of the HBM Lam on DRAM bit supply growth will create conditions that will increasingly tightened the supply demand balance, particularly in the second half of our fiscal year.

Sure.

Our micron team is executing well and are taking prudent and proactive actions to navigate through the near term environment and position the company to emerge stronger from the current downturn.

We look forward to a recovery in our business financials, taking shape in fiscal 2024.

I will now turn it over to Mark for our financial results and outlook.

Thanks, RJ and good afternoon, everyone.

In the fourth quarter of fiscal 2023, Micron delivered revenue and gross margin higher than the midpoint of the guidance range and EPS above the high end of the range.

We are exiting the fiscal year with the business improving due to multiple factors, including higher volumes and then inflection in the pricing environment strong productivity and ongoing capital discipline.

Total fiscal Q4 revenue was approximately $4 billion up 7% sequentially and down 40% year over year.

Fiscal 2023 total revenue was $15 5 billion down 40.

9% year over year.

Fiscal Q4, DRAM revenue was $2 8 billion.

Representing 69% of total revenue.

DRAM revenue increased 3% sequentially.

With bit shipments increasing in the mid teens percentage range and prices declining in the high single digit percentage range.

For the fiscal year DRAM revenue declined 51% year over year to <unk> 11 billion, representing 71% of total revenue.

Fiscal Q4, NAND revenue was $1 2 billion.

Representing around 30% of Micron's total revenue.

NAND revenue increased 19% sequentially with bit shipments, increasing over 40% driven by the timing of shipments including strategic purchases.

And prices declining in the mid teens percentage range.

For the fiscal year NAND revenue declined 46% year over year to $4 2 billion, representing 27% of total revenue.

Now turning to revenue by business unit.

Compute and networking business unit revenue was $1 2 billion down 14% sequentially.

Data center revenue remained weak as customers continued to adjust inventories and as a result of the CIC decision.

In fiscal Q1, we expect sequential growth in data center.

Revenue for the mobile business unit was $1 2 billion.

Up 48% sequentially due to seasonal effects and timing of shipments.

Embedded business unit revenue was 860 million.

Down 6% sequentially.

Embedded consumer revenue increased sequentially helped by seasonality, while automotive and industrial revenue declined modestly.

Revenue for the storage business unit was $739 million up 18% sequentially and driven by increased shipments across most of the product portfolio.

SBU bit shipment set records for fiscal Q4, and the fiscal year.

Our consolidated gross margin for fiscal Q4 was <unk>, 9%, improving seven percentage points sequentially.

Gross margin was impacted by lower pricing and under utilization costs, while the sell through of previously written down inventory provided some uplift.

For the fiscal year consolidated gross margin was negative 8% down 54 percentage points year over year, driven by price effects inventory write downs and the burden of Underutilization.

Approximately six percentage points of the reduction is from net inventory write downs.

Operating expenses in fiscal Q4 were $842 million down $24 million sequentially due to ongoing expense reduction initiatives and the timing of certain R&D program expenditures.

For the fiscal year operating expenses were $3 6 billion down $209 million year over year, driven by expense reduction initiatives.

On Opex for the fourth quarter and year, we ended below the target we communicated starting with our September call a year ago.

As market conditions improve we will remain disciplined and all spending including operating expenses.

Focusing R&D on the most critical programs and leveraging our competitive and more productive overhead structure.

We had an operating loss of roughly $1 2 billion in fiscal Q4.

Resulting in an operating margin of negative 30% improved from negative 39% in the prior quarter.

Fiscal 2023 operating loss was $4 8 billion.

Resulting in an operating margin of negative 31%.

We recorded a tax benefit of $14 million in fiscal Q4, better than expectations and due primarily to lower than expected foreign taxes related to currency effects.

For fiscal 2023 total taxes were $142 million.

The non-GAAP loss per share in fiscal Q4 was $1 seven.

Compared to a loss per share of $1 43 in the prior quarter.

And earnings per share of $1 45.

In the year ago quarter.

non-GAAP EPS was a loss per share of $4 45 for the fiscal year.

Turning to cash flows and capital spending.

Our operating cash flows were approximately $250 million in fiscal Q4.

For the fiscal year, we generated $1 $6 billion of cash from operations, representing 10% of revenue.

Capital expenditures were $1 billion during the quarter and totaled $7 billion for the fiscal year.

This was in line with recent guidance and for the year at the low end of the range of estimates we provided on our December 2022 earnings call.

Free cash flow was negative $758 million in the quarter.

Our fiscal Q4, ending inventory was $8 4 billion or 170 days.

As mentioned last quarter, we are holding approximately $1 billion of strategic inventory stock associated with build ahead of product for cost optimization and risk mitigation.

We see days of inventory improving through the first half.

Of the fiscal year.

And adjusting for this strategic start expect to have only a few weeks of above target inventories as we enter the second half of fiscal 2024.

Inventory levels and profitability will remain principal factors and our decisions around wafer starts and capacity planning.

Continuing with the balance sheet, we maintained historically high levels of liquidity.

At year end, we held $10 5 billion of cash and investments and.

<unk> had $13 billion of liquidity, when including our untapped credit facility.

We ended the year with $13 3 billion in total debt a weighted average maturity of 2030 on that.

And low net leverage.

Now turning to our outlook for the fiscal first quarter.

Demand is improving as customer inventory levels continue to normalize and secular growth drivers remain intact.

We expect record DRAM bit shipments in fiscal Q1.

For NAND, we expect fiscal Q1 bit shipments to decline somewhat from fiscal Q4 levels remained relatively strong.

In China, the Cyberspace administration of China decision continues to impact our revenue opportunity.

And the associated headwinds as reflected in our guidance.

Fiscal Q1 gross margin is projected to improve sequentially on a greater mix of DRAM and more sell through of written down inventories.

We expect approximately 60% of the remaining benefit from lower cost inventories declare in fiscal Q1.

Our gross margin guidance does not contemplate any additional inventory write downs due to pricing.

Period costs associated with Underutilization will weigh on gross margins in the quarter as first quarter period costs are projected to be similar to the prior quarter.

Beyond fiscal Q1, we project gross margin improvement to continue as prices increase and period costs become less of a factor.

We expect the rate of price improvement in the second fiscal half to exceed the first half.

We now forecast gross margins to be positive throughout the second half of fiscal 2024.

As mentioned last quarter, we expect fiscal Q1 operating expenses to increase sequentially.

Driven by an increase in R&D and as temporary reductions to employee compensation come to an end.

For the full fiscal year 2024, we expect operating expenses to be up by a low single digit percentage versus fiscal 2023.

On taxes, we project a material sequential quarterly increase as we move from a credit in Q4.

To a more normal expense.

As discussed previously the overall profitability remains low.

A minimum level of taxes will occur based primarily on local jurisdiction profit.

As we are forecasting a consolidated pre tax loss in fiscal 2020 for these local factors will drive tax expense again this year.

We estimate our full year fiscal 2020 for taxes to be under $200 million.

Our first quarter tax estimate of $80 million reflects our forecasted Q1 results in proportion to full year projected tax expense.

Changes in the distribution of profit within the year May result in changes in the tax expense recognized each quarter.

We project our fiscal 2020 for capital expenditures to increase slightly versus fiscal 2023, as we balance the long term capacity needs of the business with ongoing capital discipline and near term cash flow objectives.

Consistent with our comments last few quarters, we do see Wi Fi capex decreasing from fiscal 2023 to fiscal 2024.

When factoring higher construction spend and expected grants in fiscal 2024, we forecast our capex to be more evenly distributed over fiscal 2024.

A sequential increase in quarterly capex, together with improving but still challenging profitability levels in the near term means.

<unk> free cash flow will remain significantly negative in the first half of the fiscal year.

We forecast improved free cash flow in the back half of the fiscal year.

We project our balance sheet to remain strong and net leverage ratio to peak in the second quarter of fiscal 2024.

To support the long term investment priorities of the business.

We have ample liquidity and ready access to multiple sources of credit.

We will continue to manage our business to maintain financial flexibility and in a manner consistent with our commitment to our investment grade rating.

With all these factors in mind, our non-GAAP guidance for fiscal Q1 is as follows.

We expect revenue to be $4 $4 billion.

Or minus $200 million.

Gross margin to be in the range of negative 4%.

Plus or minus 200 basis points.

And operating expenses to be approximately $900 million plus or minus $15 million.

We expect tax expense of approximately $80 million.

Based on a share count of approximately $1 1 billion shares we expect EPS to be at a loss of $1 seven.

Plus or minus seven.

In closing we achieved many successes in fiscal 2023, despite facing a historic downturn.

We sustained our technology product and manufacturing leadership and achieve mature yields in record time on the industry's most advanced nodes in DRAM and NAND.

Micron's, leading product announcements position us well to address the growing performance requirements of data centric computing.

In response to severe market conditions, we acted quickly and decisively to cut supply and capital spend to reduce operating costs and improve productivity.

And to maintain a solid and flexible balance sheet.

As the business improves in fiscal 2024, we will leverage our strengths in technology product and manufacturing, while maintaining the productivity and capital discipline that we displayed in fiscal 2023.

I will now turn it back over to Sanjay.

Thank you Mark the.

In the past four quarters tested the resilience and agility of our entire industry why.

While the recovery from the downturn has begun micron will emphasize continued supply discipline to drive a return to sustained profitability.

I'm proud of our team's response to adversity sustaining our technology leadership, improving time to mature yield and launching a suite of leading edge products that represent one of the strongest portfolio expansions in microns 45 year history.

As our global investment announcements throughout the year clearly Shaw Micron remains keenly focused on building our business to meet future demand driven by the burden of exploration of AI from the data center to the edge.

Full confidence in our team the position we have built for micron and our collective ability to capitalize on the opportunities ahead.

Thank you for joining us today, we will now open up for questions.

Certainly one moment for our first question.

And as a reminder, if you have a question. Please press star one one.

And our first question for today.

Comes from the line.

Tom O'malley from Barclays. Your question. Please.

Hey, guys. Thanks for taking my question I, just wanted to understand the trajectory here on the NAND business you guys in the quarter kind of took your demand profile from high single digits to high teens.

Wanted to our consumer in particular.

Can you do to give us confidence that that wasn't a pull in from some of your large consumer customers. About later this year there might be a little hole, there and just talk about the trajectory of where you see that business going just given you said that youre going to be down sequentially into November . Thank you.

So with respect to demand.

Yes, I mean compared to what we have said before we saw strong demand, particularly on the consumer including some parts of the channel and the consumer part included likes off.

Smartphones Pcs et cetera.

And again as I pointed out in the channel as well.

And keep in mind that the pricing that has existed for demand elasticity.

Certainly kicked in the content is continuing to increase and the devices.

Today's flagship smartphones have minimum.

Eight gigabyte.

<unk> and 128 gigabyte of NAND, so the overall trend and same thing in Pcs.

Since it is driving increasing average capacities.

And overall certainly.

Strategic buys that have influenced some of the NAND demand.

For the year as well.

And keep in mind that next year in 2024, we see that the demand growth will be.

<unk> much close to CAD.

Long term CAGR for demand and the standby that the strip.

<unk> that I mentioned of course, they help improve the inventory position for NAND as well so overall.

Of course supply cuts have been made in NAND as well and as we look ahead, we do see that the demand and supply fundamentals will continue to improve on the NAND side as well.

And the inflection and the inflection in pricing as well has occurred and particularly in the second half of our fiscal year.

We'll see that continued improvement in the pricing as well.

Helpful. And then just as a follow up obviously you are facing headwinds in the CIC band can you just talk about areas of the market, whereas you guys are targeting to help make up some of those bits is it just conversations with customers in the consumer space or are you looking at content increases in the data Center just give me the puts them.

Where youre, making up that double digit percentage whole and if you're seeing kind of any change to that is it getting worse or is it getting better into February and may of this year. Thank you very much.

So as we have mentioned before this EAC headwinds primarily in the data center and networking markets for us in China.

And the impact the negative impact of revenue as a result of CSC decision is already baked in CQ4 dissolve and is also included in CQ, one FQ1 guidance here.

And keep in mind that the.

The CSC decision.

Continues to remain a risk.

For our business and the impact in our China demand.

As meaningful however, micron has made strong progress with <unk>.

Back to mitigating the effects as well with our global customers who are not impacted.

By the CSE decision.

And we are.

Mitigating that and effect of the mitigation also is reflected in our Q4 results as well as in FQ1 guidance. So.

The Q4 results and <unk> guidance.

The net effect of the loss of revenue in China as well as the success with some of the mitigation and of course, we are working on mitigating.

The China revenue loss with.

Increases in demand for us across our multiple end markets across all our global end markets and remember that our goal remains to maintain our global.

Sure while there may be some ebbs and flows in the near term but.

<unk> absolutely remains to maintain our global market share here in terms of beds.

Thank you Sanjay.

Thank you one moment for our next question.

And our next question comes from the line of Toshio Harry from Goldman Sachs. Your question. Please.

Hi, guys. Thank you for the question.

Had a gross margin question for you Mark Youre guiding November quarter up five.

Five percentage points sequentially I was hoping you could provide a bridge if you will on a sequential basis, you've talked a little bit about.

Period costs continuing to be a headwind.

You gave a little bit of color for the benefit youll see from selling through written down inventory, but.

What are your thoughts on pricing what are your thoughts on cost downs and if you can give directional guidance for fab and the puts and takes there that'd be helpful. As well. Thank you.

Sure Toshi.

So on the fourth to first quarter Bridge as you mentioned, we are forecasting roughly a 500 basis point improvement we did say over the last few quarters that this would be the profile of our improvement.

I'll say that its gotten incrementally better than that.

Yes, we said before that our profile would be that.

We would be a positive gross margin in the fourth quarter of fiscal 'twenty. Four we now believe will be positive gross margin.

Through fiscal 'twenty four.

And so youll see theres positive margin trend continuing.

As it relates to the first quarter.

We do.

Get a small benefit roughly.

Roughly a point.

Of incremental <unk>.

Low cost inventory pass through from what passes through.

First quarter, which will be around $600 million.

Versus what we had pass through.

In the in the fourth quarter, which is roughly $550 million.

We also will see a <unk>.

<unk> benefited in price.

And need in the first quarter.

As we've mentioned in the last several quarters. We first saw pockets of improvement and then we mentioned that price was bottoming.

We're mentioning on this call that it has bottomed and we are seeing in the first quarter.

Price improvement and we expect that in this transition period to be somewhat muted in.

In the first half and then pick up momentum and strength strengthened considerably in the second half.

So that's the.

Yes general work for for the for the first quarter.

Well because theres a lot of puts and takes maybe just it's been a very difficult.

Several quarters around both utilization write downs and Fortunately, we're on the other side of that.

Which we can cover later in this call or.

After call.

Thank you and then maybe as a quick follow up on HBM for Sanjay three months ago, you guys talked about or at least hinted that in fiscal 'twenty for you might be able to generate several hundred million dollars in revenue.

Is that sort of target still intact have things improved since then and I guess at what point do you expect your presence in HBM to be similar to your presence in DRAM overall, thank you.

We are very excited with the HBM product. It is an industry, leading product with respect to performance power capacity capability.

And as we have mentioned this product is in the qualification stages.

Our customers here and we expect revenue to begin in early 2024, and yes, we are very much still on track.

For meaningful revenue $700 million.

In.

Our fiscal year 2004, so pleased with the progress continuing to make good progress. It is an exciting opportunity for the memory industry and micron will be well positioned to capture the agenda.

Opportunities that require the kind of <unk> that our <unk> memory that brings to the market.

And of course as we proceed through the fiscal year, we expect to be gaining share in this important part of the <unk>.

In this important high growth part of the memory market.

Thanks, so much.

Thank you one moment for our next question.

And our next question comes from the line of Timothy Arcuri from UBS. Your question. Please.

Thanks, a lot Mark I wanted to clarify the statement on gross margin. So you had said in the prepared remarks that.

It would be positive in the back half of the fiscal year, but in response to the question. Just before you said that it will be positive through through fiscal 'twenty four or so since you are guiding negative in fiscal Q1 does that tell us that fiscal Q2 gross margin will be positive.

Great question, Tim I didn't I didn't comment on fiscal Q2.

Yes.

Fiscal Q3, we believe will be positive.

And there'll be a trend.

Improving gross margin fiscal Q1 through fiscal Q3.

Okay. So you don't want to do.

You don't want to state that fiscal Q2 will be positive maybe it will be maybe.

Maybe it depends on of course pricing and we're continuing to drive productivity and we'll just have to see at these profitability levels mix and other things matter I mean, we do have favorable.

Mix of DRAM going into the first half.

<unk>, increasing DRAM relative to NAND in the first half of the year so that helps.

Yes, we are.

Pricing the momentum is definitively positive. It's just a case of yes, we're in a transition period, we did see.

We kind of had to meet the market.

On some special deals here in the fourth quarter and those those effects will continue in the first half but.

We're definitely seeing new deals being struck at higher higher prices and we certainly expect that to strengthen in the second half.

Got it thanks, and then as of.

Follow up just on that comment you just made about.

Special deals.

<unk>.

Q4.

NAND demand you're more positive on NAND demand, but pricing was still as bad if not worse than at least I thought it would have been in.

Side of fiscal Q4, so can.

Can you kind of put that is that maybe you offering some big deals on the NAND side, some customers coming in and being opportunistic in new offerings and big deals to move bits and maybe shore up your NAND share, but at the extensive price can you just can you just walk through that for us. Thanks.

Yes, I would say Ken that.

Really NAND pricing was not was that was basically.

In line with the downs that we saw in the third quarter.

So I would say that prices.

The decrease had slowed and net price.

Market was being to firm up.

Yes.

Customers realize that this is a period thats ending the markets firming up.

<unk>.

And.

And so yes. There is also some mix effects in there.

Yes, we do see price in NAND.

Improving in the first quarter it will be up actually in the first quarter.

And.

And so I think that sets all I would say on price for NAND.

Thanks Mark.

Thank you one moment for our next question.

Our next question comes from the line of Eddie Husseini from Susquehanna Financial Group. Your question. Please.

Yes. So thank you for taking my question two follow ups.

I would like to better understand the dynamics of seasonality you talked about the known this shipment declining.

Q1 fiscal year end.

<unk>.

Most of the growth coming from DRAM, but how should we think about seasonality impacting February quarter on another follow up.

So certainly the typical seasonality will be in place, but just keep in mind that FQ4 we had a very strong sequential bit growth in the NAND business and.

I mean coming off that big sequential growth.

We are just guiding to.

Normalized level of overall shipments as part of FQ, one and.

Overall.

And again.

The content continues to increase.

Across the end market applications and that will continue to drive increased demand growth for us as well.

But would there be seasonality in February quarter.

We had a typical seasonality trends that exist in the consumer market would be there, but keep in mind that generate all it depends on the mix of the business as well for us in terms of NAND.

Maybe you have already guided to the trends, but overall when we look at the full year basis, we would look at the calendar year 'twenty four.

NAND will be growing.

In line with the long term CAGR at or near the long term CAGR and DRAM will be going in terms of demand much ahead of the long term CAGR as well and all of that will of course take into account the typical seasonality that.

That occurs in the industry.

Great. Thanks with diesel and second question has to do with the puts and takes.

Reducing wasteful.

And I understand the emphasis is on the treadmill.

But remember you like.

There is no trigger niche and in that context.

You think about.

Bringing utilization rate.

To the normal level.

Some of the trading units converted to the leading edge cadet cope with a bigger step up in gross margin improvement.

How should we think about it.

Assuming that the trailing edge will be phased out.

Well good question and I think I would like to take the opportunity to provide some context here and overall background as.

As you know that in 2023, the industry has experienced extreme oversupply and extreme negative effect on the profitability as well and you see now that capex cuts and under utilization in the fab.

Have been implemented across the industry given the capex constraints that we have is we'll have given the poorer profitable certainly micron has done that but this is happening across the industry as well and at the same time the demand for the new products is increasing that required.

As you were pointing out leading edge technology as well.

In order to maintain our supply discipline.

And to meet the demand for these new products, such as <unk>, such as <unk> five.

We are shifting some of our equipment from older nodes into the new era.

Technology to ramp up those newer technologies into production.

In the past we would have done this with more capex, but we are being extremely mindful of capex spend extremely disciplined about supply. So as a result, when we move the equipment from older nodes to support the ramp up of leading edge nodes. It results in a net reduction in overall.

In a net reduction in the structure the reduction in the VA put capacity as well and that overall bodes well for the industry demand supply fundamentals. So keep in mind that as we go through the year.

<unk>.

And as we hit more of the equipment the word ramp up of leading edge nodes.

This will result in overall.

The capacity reduction and.

Loading underutilization as well of course.

Legacy nodes will continue to have underutilization.

Through the course of the year.

And these are all helpful factors in terms of the demand supply balance in the industry.

Some of the phenomenon that we have described regarding structural wafer capacity reduction this is.

Not unique to micron. We believe this is happening with other suppliers as well as the example, with the same supply profitability and Capex considerations as we are addressing.

So the reduction in wafer capacity is actually the headwind in supply growth.

And this you know that increasing wafer capacity has a high bar for auto for Capex investments. It is a high bar in terms of <unk>.

And.

Of course, it would require longer lead time as well.

Given the new equipment that would be required so reduction structural reduction in wafer capacities overall good copper at Baird.

The underutilization in the legacy nodes and as we pointed out the new products in the leading edge nodes also do require.

More wafer capacity for the same gigabit soft production given the nature of like HBM that where the die size is twice as big. So these new products also actually have a favorable impact on the industry supply growth capability and these trends of supply growth with respect.

Two structural wafer capacity reduction and the new products.

That end up requiring more new wafer capacity is extremely important.

Factors in terms of really understanding.

The improving strengthening demand supply fundamentals as we look at our.

Year 2014 in calendar year 2024.

Thank you.

Thank you. This does conclude the question answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.

[music].

Thank you for standing by Walker <unk> <unk> fourth quarter 2020, 380 call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone to remove yourself from the queue simply press star one again.

As a reminder, today's program is being recorded and now I'd like to introduce your host for today's program.

Samir <unk> Investor Relations. Please go ahead Sir.

Thank you and welcome to Micron technologies fiscal fourth quarter 2023 financial conference call on the call with me today are Sanjay Mehrotra, President and CEO and Mark Murphy, our CFO today's call is being webcast from our Investor Relations site at investors <unk>, Mike Grondahl.

Com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website along with the prepared remarks for this call.

Today's discussion of financial results as presented on a non-GAAP financial basis, unless otherwise specified.

Reconciliation of non-GAAP to GAAP financial measures can be found on our website.

You can follow us on X at Micron Tech.

As a reminder, the matters. We're discussing today include forward looking statements regarding market demand and supply are expected results and other matters.

These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

We refer you to the documents, we file with the SEC, including our most recent Form 10-K and 10-Q for a discussion of risks that may affect our future results.

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

We are under no duty to update any of the forward looking statements to conform. These statements to actual results I will now turn the call over to Sanjay.

Thank you Sam and good afternoon, everyone and fiscal Q4, Micron delivered revenue and gross margin above the midpoint of our guidance with EPS above the high end of the range.

Reflect a strong execution and we are well positioned to drive significant improvements in our financial performance.

We believe pricing has now bottomed.

Ongoing demand growth, that's why inventory normalization and industry wide supply reductions has set the stage for increased revenue along with improved pricing and profitability throughout fiscal 2024.

We continue to expect record industry Tam in calendar 2025, with more normalized levels of profitability.

Fiscal 2023 was a challenging year for the memory and storage industry as the revenue Tam the east a multiyear low resulting in a significant impact to financial performance.

Despite this difficult backdrop, the micron team stayed focused on our strategy executed well and accomplished several important milestones.

We achieved record annual automotive revenue record NAND TLC bit shipments for the full fiscal year and these two that could lever in calendar Q2 for revenue share and data center and client Ssds.

We were the first in our industry to introduce one beta DDR, five and LP <unk> DRAM products and the first to ship <unk> samples with industry, leading performance and power efficiency.

We were also the first to introduce 232 layer NAND SSD products in data center client and consumer markets.

These accomplishments were underpinned by our leadership technology and continued strong progress in manufacturing execution.

We achieved world class mature yields in record time on our industry, leading one beta DRAM and 232 layer <unk> NAND technologies.

In addition, micron to several prudent and timely actions to reduce our capex and supply in order to address the market imbalances through the course of fiscal 2023.

Our industry, leading technology roadmap continues to progress well.

As we have mentioned before the vast majority of our beds are on leading edge nodes, one alpha and one beta in DRAM and 176 layer and 232 layer in NAND.

We continue to make good progress on one gamma DRAM development using iOS and.

And are on track for production in calendar 2025.

Development of our next generation NAND node is also well on track.

Now turning to our end markets.

Customers continue to reduce that excess inventory for memory and storage in fiscal Q4.

Most customer inventories for memory and storage in the PC and smartphone markets are now at normal levels consistent with our prior forecast.

Inventory levels are normal across most customers in the automotive market as well.

Data center customer inventory is also improving and will likely normalize in early calendar 2024.

Consequently, we see demand continuing to strengthen which has led to an inflection in pricing.

Some customers have made strategic purchases in DRAM and NAND to take advantage of unsustainably low pricing as the market begins since the recovery.

In data center traditional server demand remains lackluster while demand for <unk> has been strong.

Data center infrastructure operators have shifted budgets, some traditional servers to high enterprise AI servers.

Total server unit shipments are expected to decline in calendar 2023.

First year over year decline since 2016.

We expect total server unit growth will resume in calendar 2024 to help fulfill evidenced using workload demand.

We also expect content growth in both AI and traditional servers.

Compared to traditional servers AI training servers contains significantly higher DRAM and NAND content with greater technology complexity robust product value and higher profitability.

We believe our data center revenue has bottomed and we expect growth in fiscal Q1, and increasing momentum through fiscal years 24, and 25 in our data center business.

Micron has a strengthening portfolio of solutions optimized for bandwidth capacity and power.

These include the HBM CE DDR, five and associated high capacity modules, LCD, then and data Center Ssds.

This portfolio of industry, leading products positions us well to capture the opportunities presented by data centric computing architectures NDA.

The introduction of our <unk> product offering has been met with strong customer interest and enthusiasm.

<unk> provides superior bandwidth power and capacity for generating AI workloads.

We developed this industry, leading design using our <unk> technology advanced TSV and other innovations that enable a differentiated packaging solution.

We have been working closely with our customers throughout the development process and is becoming a closely integrated partners and data AI roadmaps.

Mike on the <unk> is currently in qualification for Nvidia compute products, which will drive <unk> CE powered AI solutions.

We expect to begin the production ramp up <unk> in early calendar 2024 and to achieve meaningful revenues in fiscal 2024.

Micron also has a strong position in the industry transition to <unk> five.

We expect micron <unk> volume to crossover default in early calendar 2024 ahead of the industry.

We expanded our high capacity <unk> DRAM module portfolio with a monolithic diabetes 128, gigabyte module and have started shipping samples to customers to help support their AI application needs.

We expect revenue from this product in Q2 of calendar 2024.

Last month, we announced the introduction of 128 gigabyte and two six gigabytes EXL to all memory expansion modules.

By leveraging our unique dual channel memory architecture, we are able to deliver higher module capacity and increased bandwidth.

We have shipped samples to several customers and key partners.

In data center Ssds micron's entire portfolio utilizes 176 layer or 232 layer <unk> NAND and production are testaments to our product and technology leadership we.

We are well positioned to serve the growing demand for fast footage as data intensive AI applications proliferate.

We saw strong demand for our data center nvme ssds across our AI focused industry, leading 30 terabyte product as well as our mainstream products.

Micron ended the second calendar quarter with a record high revenue share and data center Ssds based on independent industry assessments.

We expect to build on this momentum in fiscal 2024.

Mpc's, we continue to forecast calendar 2023, PC unit volume to decline by a low double digit percentage year over year, and then grow by a low to mid single digit percentage in calendar 2024.

AI enabled bce's will drive content growth and an improved refresh cycle over the next two years.

In fiscal Q4, we saw strong sequential bit shipment growth at PC Oems driven by demand for LPG them in 10 client notebooks.

We expect to begin revenue shipments of our industry, leading <unk> client <unk> in fiscal Q1, two PC Oems.

According to third party analysts in calendar Q2, we reached record revenue share in client Ssds for PC Oems as customers adopted our industry leading solutions.

Our 232 layer nvme client SSD is now quantified at large Oems and shipping in volume production.

Our SSD <unk> shipment mix reached a new record for the second consecutive quarter with growth in both client and consumer markets.

We continue to expand our footprint in the high end consumer SSD space with the launch of key new products that extends our reach into professional content creators and enthusiast to PC gamers.

In mobile we expect calendar 2023 smartphone unit volume to be down by mid single digit percentage year over year, and then grow by a mid single digit percentage in calendar 2024.

Elasticity, along with the mix shift towards premium phones with greater capacity is contributing to memory content growth.

About a third of smartphones sold today have at least eight gigabyte of DRAM and 256 gigabyte of NAND up more than seven percentage points versus smartphone units a year ago.

Similar to our view on Pcs AI enabled mobile forms could drive content growth and a stronger refresh cycle over time.

Longer term, we see generator applications executing on handsets.

These applications will continue to drive new requirements were highest capacity lower power and increase performance and memory and storage.

Now I'll cover the auto and industrial end markets, which contribute to more stable revenue and profitability.

Fiscal 2023 marked another record revenue year for our automotive business.

Micron continues to lead in automotive market share and quality.

Long term, we expect memory and storage content per vehicle to increase in both Adas and in cabin application.

In addition, fast growing evs typically contain higher memory and storage content.

Our automotive design win trajectory remains strong.

The industrial market showed signs of recovery in fiscal Q4.

Inventory levels for memory and storage are stabilizing and distribution partners and at the majority of our customers.

We expect the volume recovery that we observed in the second half of fiscal 2023 to continue into 2024.

We see strong growth prospects in this market over time as industrial customers continue to adopt and implement Iot AI and machine learning solution.

As previously discussed the CSC or cyber security administration of China decision earlier. This year has impacted our business, particularly in the domestic data center and networking markets in China.

We remain committed to serving our customers in China for those areas of their business not impacted by the CSE decision.

While there is near term impact to our demand due to these challenges in China, we remain focused on maintaining micron's global market share.

Our team's grit and Mike Jones deep relationships with our customers underpinned by our technology leadership, including project momentum excellent product quality and extensive manufacturing and supply chain capabilities position us well towards these goals.

Now turning to our market outlook, starting with demand.

We expect calendar 2023, DRAM bit demand to grow in the mid single digit percentage range.

And then our expectations for demand growth. This calendar year have increased from high single digits to high teens percentage.

These are below the expected long term bit demand growth CAGR of mid teens in DRAM and low 20 percentage range in NAND.

While calendar 2020 see DRAM demand has been in line with expectations NAND growth expectations have increased due to stronger than expected demand in certain parts of the consumer market and the trend of greater elasticity in putting unit content.

Calendar 2024 bit demand growth is expected to exceed the long term CAGR for DRAM and to be near the long term CAGR for NAND.

Turning to supply.

Significant supply and capex reductions across the industry have helped to stabilize the market and enabling the recovery that is now underway.

We see both DRAM and NAND year over year supply growth in calendar 2023 to be negative for the industry.

We expect <unk> year on year bit supply growth to be meaningfully negative for DRAM.

We also expect to produce fewer NAND bits in calendar 2023, then in calendar 2022.

In calendar 2024, we expect industry, DRAM and NAND supply growth to be below industry demand growth and meaningfully so for DRAM.

We believe calendar 2020 forward is positioned to be a year of recovery in the memory and storage industry.

A sustained period of supply growth less than demand growth will strengthen the pace of recovery.

HBM production will be a headwind to industry bit supply growth.

Across the industry <unk> di is roughly twice the size of equal length capacity <unk> five.

The HBM product includes the logic interfere die and has a substantially more complex packaging stack that impacts us.

As a result, each BMC and CE demand.

Zarb, an outsized portion of industry wafer supply.

The ramp up each BMC and CE production will reduce overall DRAM bit supply growth industry volumes.

Particular supply impact on non HBM products as more capacity is devoted to exiting <unk> opportunities.

Micron is experiencing a similar impact of our planned hbm's CE them on our bit supply capability.

Micron bit supply growth in fiscal 2024 is planned to be well below demand growth for both DRAM and NAND and we expect to decrease our days of inventory in fiscal 2024.

We continue to execute to our strategy of maintaining global bit shipment market share for DRAM and NAND, while sustaining tight supply and Capex management discipline.

Micron's fiscal 2020 for Capex is projected to be up slightly compared to fiscal 2023 levels.

<unk> Capex will be down again year over year in fiscal 2024.

We remain focused on carefully managing overall supply growth.

In last quarter's earnings call, we communicated that total wafer start reductions and bullet to DRAM and NAND are approaching 30% versus peak 2022 levels.

Given the highest office desk count of these leading edge nodes transitioning this equipments and of those in a significant and structural reduction to our overall wafer capacity in both DRAM and NAND.

Due to the structural reduction in capacity, our DRAM and NAND wafer starts will remain significantly below 2022 levels for the foreseeable future.

Our industry supply projections assume a similar structural reduction in refund capacity industry wide.

Lead times to increase this wafer capacity will be long and will depend on improving demand pricing and financial performance.

We expect Underutilization to continue and our legacy nodes well into calendar 2024.

We see our demand at leading edge nodes exceeding our supply in fiscal and calendar 2024, particularly in the second half of the year.

Construction capex will be elevated to support our plans to build leading edge memory Fabs in Idaho, and New York for <unk> chips applications in August .

As we have highlighted before the requested level of chips Lance what I'll, let Idaho and EUR projects are essential to the viability and global competitiveness of each of these projects.

Our capex plans assume that a certain level of chip grant funds will be made available to us in fiscal year 2024.

Assembly and test Capex is projected to double year over year in fiscal 2024, predominantly driven by investments to support <unk> production.

Our planned fiscal 2020 for Capex investments in HBM capacity has substantially increased versus our prior plan in response to strong customer demand for our industry leading product.

Over the course of calendar 2024, we see accelerating AI driven opportunities for memory and storage across multiple market segments from the data center to the edge.

We are encouraged by the improving industry demand and supply fundamentals.

We believe that the capex constraints created by the industry profitability environment, coupled with improved inventories announced supplier reductions and the impact of the HBM ramp on DRAM bit supply growth will create conditions that will increasingly tightened the supply demand balance, particularly in the second half of our fiscal year.

Yes.

Our micron team is executing well and are taking prudent and proactive actions to navigate through the near term environment and position the company to emerge stronger from the current downturn.

We look forward to a recovery in our business financials, taking shape in fiscal 2024.

I will now turn it over to Mark for our financial results and outlook.

Thanks, RJ and good afternoon, everyone.

In the fourth quarter of fiscal 2023, Micron delivered revenue and gross margin higher than the midpoint of the guidance range and EPS above the high end of the range.

We are exiting the fiscal year with the business improving due to multiple factors, including higher volumes and inflection in the pricing environment strong productivity and ongoing capital discipline.

Total fiscal Q4 revenue was approximately $4 billion up 7% sequentially and down 40% year over year.

Fiscal 2023 total revenue was $15 5 billion down 49% year over year.

Fiscal Q4, DRAM revenue was $2 8 billion rep.

Representing 69% of total revenue.

DRAM revenue increased 3% sequentially.

With bit shipments increasing in the mid teens percentage range and prices declining in the high single digit percentage range.

For the fiscal year DRAM revenue declined 51% year over year to <unk> 11 billion, representing 71% of total revenue.

Fiscal Q4, NAND revenue was $1 2 billion rep.

Representing around 30% of Micron's total revenue.

NAND revenue increased 19% sequentially with bit shipments, increasing over 40% driven by the timing of shipments including strategic purchases.

And prices declining in the mid teens percentage range.

For the fiscal year NAND revenue declined 46% year over year to $4 2 billion, representing 27% of total revenue.

Now turning to revenue by business unit.

Compute and networking business unit revenue was $1 2 billion down 14% sequentially.

Data center revenue remained weak as customers continued to adjust inventories and as a result of the CIC decision.

In fiscal Q1, we expect sequential growth in data center.

Revenue for the mobile business unit was $1 2 billion.

Up 48% sequentially due to seasonal effects and timing of shipments.

Embedded business unit revenue was $860 million down six.

Percent sequentially.

Embedded consumer revenue increased sequentially helped by seasonality, while automotive and industrial revenue declined modestly.

Revenue for the storage business unit was $739 million.

Up 18% sequentially and driven by increased shipments across most of the product portfolio.

SBU bit shipment set records for fiscal Q4, and the fiscal year.

The consolidated gross margin for fiscal Q4 was <unk>, 9%, improving seven percentage points sequentially.

Gross margin was impacted by lower pricing and other utilization costs, while the sell through of previously written down inventory provided some uplift.

For the fiscal year consolidated gross margin was negative 8%.

Down 54 percentage points year over year, driven by price effects inventory write downs and the burden of Underutilization.