Micron Technology Inc Post Earnings Analyst Call

September 25, 2024

Operator: Sa.

Sa.

[inaudible] Samir Patodia,

Manish Bhatia: Foreign.

Foreign.

Operator: Thank you for standing by and welcome to Micron's post earnings analyst 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 this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead, sir.

[inaudible]

Speaker Change: Thank you for standing by, and welcome to my crowns post earnings analyst call. At this time, all participants are in listen only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to move yourself from the queue, simply press star 1-1 again.

As a reminder to these program is being recorded and now it's like to reduce your host for today's program Satya Kumar, Investor Relations. Please go ahead, sir.

Mehdi Hosseini: Yeah.

Satya Kumar: Yeah.

Satya Kumar: Thanks Jonathan, and thank you. Welcome to Micron Technology Fiscal Fourth Quarter 2024 Post Earnings Analyst Call. On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy, our CFO. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, and our expected results and guidance, 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 documents that we have filed with the SEC, including our most recent Form 10-Q and upcoming Form 10-K for a discussion of risks that may affect our results.

Thanks Jonathan, and thank you. Welcome to Micron Technology Fiscal Fourth Quarter 2024 Post Earnings Analyst Call. On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy, our CFO. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, and our expected results and guidance, 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 documents that we have filed with the SEC, including our most recent Form 10-Q and upcoming Form 10-K for a discussion of risks that may affect our results.

Speaker Change: Yeah, thanks, Jonathan and thank you and welcome to my current technology's fiscal fourth quarter 2024 post-learning analyst call.

Speaker Change: On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy RCFO.

Speaker Change: As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers and our expected results in guidance in other matters.

Speaker Change: These forward-looking statements are subject to risks and uncertainties that may cause actual results to deformity, relief, and statements made today.

Speaker Change: We refer you to documents that we have filed with the SEC including our most recent form 10Q and upcoming form 10Q for a discussion of risks that may affect our results.

Satya Kumar: Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, and achievements. We are under no duty to update any of the forward-looking statements to conform these statements to actual results. We can now open the call up to Q and A.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, and achievements. We are under no duty to update any of the forward-looking statements to conform these statements to actual results. We can now open the call up to Q and A.

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

Speaker Change: We are under no duty to update any of the forward-looking statements to conform these statements to actual results. We can now open the call up to Q&A.

Operator: Certainly. Our first question comes from the line of Karl Ackerman from BNP. Your question please.

[Analyst]: Yes, thank you.

Karl Ackerman: Yes, thank you. Two questions if I may. First, from a demand perspective, you indicated that server will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near term. I was curious if you could discuss your assumptions for server unit growth in fiscal 2025. And as you address that question, is your high capacity DRAM DIMMs such as 128 gigabyte only used in AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh?

BMP: BMP, your question, please.

Chris Caso: Two questions if I may.

[Analyst]: First, from a demand perspective, you indicated that server will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near term. I was curious if you could discuss your assumptions for server unit growth in fiscal 2025. And as you address that question, is your high capacity DRAM DIMMs such as 128 gigabyte only used in AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh?

BMP: Thank you.

BMP: Two questions of IMAE, first from a demand perspective, you indicate that server will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near-term.

BMP: I was curious if you could discuss your assumptions for Server Unit Growth in fiscal 25.

Speaker Change: and as you address that question, is your high capacity DRAM GIMS such as 128GB, only use an AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh.

Mark Murphy: Yeah.

Sumit Sadana: Yeah. In terms of the server mix, we do expect that the traditional server will continue to improve in terms of the tone of the demand and will grow because the applications that and the software that IT departments across large companies have been running, that software deployment continues. You can see the growth in the application software industry. So general purpose server growth can be compressed only so much. It has been compressed quite a bit over the last couple of years. So we do expect this year there will be some modest unit growth in general purpose servers, and it will continue into next year. And then of course the growth in AI servers is expected to be strong this year, strong next year. We don't see any kind of change in that expectation that we have provided over the last couple of quarters for 2025.

Sumit Sadana: In terms of the server mix, we do expect that the traditional server will continue to improve in terms of the tone of the demand and will grow because the applications that and the software that IT departments across large companies have been running, that software deployment continues. You can see the growth in the application software industry. So general purpose server growth can be compressed only so much. It has been compressed quite a bit over the last couple of years. So we do expect this year there will be some modest unit growth in general purpose servers, and it will continue into next year. And then of course the growth in AI servers is expected to be strong this year, strong next year. We don't see any kind of change in that expectation that we have provided over the last couple of quarters for 2025.

Speaker Change: Yeah, in terms of call, in terms of the servo mix.

Speaker Change: Now we do expect...

Speaker Change: that the...

Speaker Change: Tradition of Souver will continue to improve in terms of the tone of the demand and will grow Because the application that

Speaker Change: and the software that...

Speaker Change: IT departments across large companies have been running. That's all said deployment continues. You can see the growth and the application's all said industry.

Speaker Change: So, General purpose of a growth can be compressed only so much has been compressed quite a bit over the last couple of years. So, we do expect this year that will be...

Speaker Change: from Modest Unit Growth in general for the servers and we'll continue into next year. And then of course the growth in AI servers is expected to be strong. This year's from next year, we don't see...

Speaker Change: Any kind of change in that expectation that we have provided over the last couple of quarters, 4, 20, 25, definitely that momentum in AI continues.

Sumit Sadana: Definitely that momentum in AI continues. Of course we have a lot of improvement in our competitive positioning in the server arena. We have spoken extensively about that. We have HBM growth in AI servers. Of course, we have high cap DIMs that you mentioned. These 128 gigabyte DIMMs do get used in both AI servers as well as traditional servers. But predominantly their uses in AI servers because they are more expensive on a per bit basis than 64 gigabyte DIMMs. Consequently, they tend to get used more in AI servers, both on the training as well as inferencing side. We expect that to continue.

Definitely that momentum in AI continues. Of course we have a lot of improvement in our competitive positioning in the server arena. We have spoken extensively about that. We have HBM growth in AI servers. Of course, we have high cap DIMs that you mentioned. These 128 gigabyte DIMMs do get used in both AI servers as well as traditional servers. But predominantly their uses in AI servers because they are more expensive on a per bit basis than 64 gigabyte DIMMs. Consequently, they tend to get used more in AI servers, both on the training as well as inferencing side. We expect that to continue.

Speaker Change: and of course, we have a lot of improvement in our competitive positioning in the server arena. We have spoken extensively about that. We have...

Speaker Change: HBM growth in AI servers, of course we have high contents that you mentioned. These 128 gigabytes didn't do get used.

Speaker Change: and both AI servers as well as traditional servers, but predominantly, they're used as an AI server because they are more expensive on a per-bit basis than 64GB dims.

Speaker Change: Consequently, they tend to get used more in AI servers, both on the training of relevant in prison side and we expect that to continue.

[Analyst]: Thank you, I appreciate that. If I could sneak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million as you maintain discipline around supply. Are you suggesting that fiscal Q4 remains the peak dollar value of inventory as PC and smartphone demand begins to improve in the first half of the year?

Karl Ackerman: Thank you, I appreciate that. If I could sneak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million as you maintain discipline around supply. Are you suggesting that fiscal Q4 remains the peak dollar value of inventory as PC and smartphone demand begins to improve in the first half of the year?

Speaker Change: Thank you, I appreciate that. If I could speak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million as you maintain discipline around supply.

Speaker Change: Are you suggesting that Fiscal Q4 remains the peak dollar value of inventory as PC and smart friend of band begins to improve in the first half of the year? Thank you.

Mark Murphy: Thank you. Yeah, Karl, it's Mark. You know, we don't typically give dollar estimates because clearly what, you know, what happens with our forecast, we're modulating builds and you know, building, you know, we have raw materials and WIP and so forth. You know, our. So we tend to focus on providing you a DIO number. We did think that on a dollar and DIO basis it would be elevated going into 2025. What we will see, we believe, is inventory days improving through 2025. You know, particularly in the second half of our fiscal year, as our fiscal year is more second half weighted on volumes. Now of course the business is getting larger. So on a dollar basis there won't be the same degree of change. On the DIO, we do see improvement through the year, particularly in the back half of the year.

Dakarol, Mark: Dakarol, Mark

Speaker Change: You know, we don't typically give dollar estimates because clearly what happens with our forecast were...

Speaker Change: Yeah, modulating builds and you know, building, you know, we have raw materials and weapons so forth

Speaker Change: Yeah, we tend to focus on providing you at the IO number, we did think that on a dollar and...

Speaker Change: BIO bases that would be elevated going into 25 and what we will see we believe is inventory, days improving through 25.

Speaker Change: and, you know, particularly in the second half of our fiscal year as our fiscal year is more second half weighted on volumes. Now, of course, the business is getting larger, so on a dollar basis.

Speaker Change: Yeah, there won't be the same degree of change, but on the DiO, we do see improvements through the year, particularly in the back half of the year.

Operator: Thank you. Thank you. And our next question comes from the line of Harlan Sur from J.P. Morgan. Your question please.

Karl Ackerman: Thank you.

Operator: Thank you. And our next question comes from the line of Harlan Sur from J.P. Morgan. Your question please.

Speaker Change: Thank you.

Speaker Change: Thank you, and our next question comes from the line of Harlan Sir from JP Morgan, your question, please.

Harlan Sur: Yeah, hey, good afternoon. Congrats on the strong overall operational execution. You know, on the better DRAM bit shipment outlook in November, up sequentially versus prior view of flat to up slightly. How much of that is better than expected yield improvements in HBM? Because we know your AI customers are supply constrained on HBM3E, so any better yield and resulting supply unlock would be consumed right away.

Harlan Sir: Yeah, hey, good afternoon and congrats on the strong overall operational execution. You know, on the better DRAM bit shipment I'll look in the Vemba Up Sequentially versus prior view of Slata Upslady.

Harlan Sir: How much of that is better?

Speaker Change: Then expected yield improvements in HDR Micas, we know your AI customers are supply constraints.

Speaker Change: on HPM3E, so any better yield than resulting supply on lock would be consumed right away. So as part of the better bidship and outlook, it's quarter due to better HPM supply on lock versus your prior expectations.

Manish Bhatia: Right.

Harlan Sur: So it's part of the better bit shipment outlook this quarter due to better HBM supply unlock versus your prior expectations.

Manish Bhatia: Maybe I'll answer Harlan just on the HBM ramp, and then Sumit, you can answer on some of the other drivers of the guidance for DRAM. But you know our yield ramp is, you know, is continuing to be strong. We feel good about where we are with our yields on HBM. We were able to achieve our goal for fiscal Q4 and, in terms of, shipping several hundred million dollars worth of revenue. And we said that these were, you know, both quarters Q3 and Q4 were at gross margins that were above the rest of the DRAM products. So we feel like we've executed well on this ramp, and we continue to look forward to being able to support this multibillion dollar business opportunity for us in fiscal year 2025. So we feel good about where we are with HBM.

Speaker Change: So, huh?

Speaker Change: We all answered Harlan just on the HPM ramp and then some of the other drivers on them.

Speaker Change: of the guidance for DRAM. But you know, our yield graph is...

Speaker Change: You know, continuing to be strong, we feel good about where we are with our yields on HBM, we were able to achieve our goals for fiscal Q4 and in terms of shipping several hundred million dollars was a revenue and we said that these were both quarters of Q3 and FQ4 were at

Speaker Change: Gross margins that were above our, you know, the rest of the DRM products. So, you know, we feel like we've executed well on this ramp. We continue to look forward to being able to support this multi-billion dollar business opportunity for us in fiscal year 25.

Manish Bhatia: I'll let Sumit talk about some of the other demand drivers and the strengthening since our last public comments at some conferences earlier this year.

I'll let Sumit talk about some of the other demand drivers and the strengthening since our last public comments at some conferences earlier this year.

Speaker Change: and we feel good about where we are with HBM and I'll let some of you talk about some of the other demand drivers of the strength in since our last public comment that some confidence is earlier this show you.

Sumit Sadana: Yeah, thanks Manish. So in terms of demand, definitely the strength in the data center is driving upside to what we had prior communicated on the Q1 trajectory on DRAM shipments. We continue to see really strong demand from the data center. The demand is coming from both the cloud and enterprise AI servers as well as traditional server.

Speaker Change: Yeah, thanks, Manish. So in terms of demand, definitely the strength in the data center is driving upside to what we had prior communicated on the FQ1 projectory on DRAM shipments.

Speaker Change: and we continue to see really strong demand from the data center. The demand is coming from both the cloud and enterprise AI servers as well as traditional server.

Harlan Sur: Okay, perfect. Then maybe just to follow up, you know there's been so much noise in the market around excess supply for more lagging edge DDR4 DRAM. I mean, you know, the Micron team is a part of your CapEx capacity optimization initiatives over the past 12 months has really been focused, right, on converting lagging edge capacity to leading edge capacity. On top of that, the team has been focused on sort of more value added solutions. Right. So I assume that all of this translates to less DDR4 output as well. But can you guys just level set us like what percentage of your DRAM bit shipments are DDR4 today and where do you expect that mix to be exiting this calendar year?

Speaker Change: Harvichan.

Speaker Change: Okay, perfect, and then maybe just to follow up, you know, there's been so much noise in the market around excess supply for more like an edgy DDR4 DRM. I mean, you know, the microphone team is a part of your capex.

Speaker Change: Kapazhavi optimization initiatives over the past 12 months has really been focused right on converting lagging-edge capacity to leading-edge capacity.

Mehdi Hosseini: Right.

Harlan Sur: So I assume that all of this translates to less DDR4 output as well. But can you guys just level set us like what percentage of your DRAM bit shipments are DDR4 today and where do you expect that mix to be exiting this calendar year?

Speaker Change: On top of that, the team has been focused on sort of more value added solutions, right? So, I assume that all of this is translated to...

Speaker Change: Less D.D.R. 4 output as well, but today's level set up, like what percentage of your DRAM bits shipments are D.D.R. 4 today and really expect that mix to be exiting this calendar year?

Sumit Sadana: Yeah, so we don't provide percent of bits that are DDR4 or 5, but I can just provide some color that DDR4 shipments continue to fall as a percent of our overall DRAM bit shipments over the last year, and looking ahead will again fall into next year because more and more of our mix is shifting towards DDR5 over time. It's shifting towards LP5 that we are now shipping to the data center. We had mentioned that Micron is a pioneer in use of low power DRAM in the data center. So LP5 in the data center itself is going to become a very significant product category for us, and we have leadership in the industry. It's a very important product opportunity for us. When we drive more of the shipments there as well, it further reduces the mix of DDR4 and LP4 as part of the overall number.

Speaker Change: Yeah, so we don't provide percent of bits that are DDR4 or 5, but I can just provide some color that

Speaker Change: DDR 4 shipments continue to fall as a percent of our overall deal and bit shipment.

Speaker Change: Over the last year and looking ahead with again fall into next year, because modern motor farm makes shifting towards.

Speaker Change: VDR5 over time, it shifting towards LP5 that we are now shipping to the data center. We had mentioned that micron is...

Speaker Change: A pine year and use the low power DRN in the data center. So LP5 in the data center itself is going to become a very significant product category for us. And we are leadership in the industry. It's a very important product opportunity for us when we...

Speaker Change: Drive mode of the shipments there as well, it further reduces the mix of DDR4, the NLP4 as part of the overall number And then of course we have mentioned to you multiple times about

Sumit Sadana: Of course we have mentioned to you multiple times about HBM mix increasing every quarter.

Of course we have mentioned to you multiple times about HBM mix increasing every quarter.

Mehdi Hosseini: Yes.

Harlan Sur: Yes.

Sumit Sadana: Getting to fairly high levels of our mix. When we think about the overall bit mix of HBM, and then the over 3 to 1 trade ratio on the wafer mix, you can imagine that, you know, that also constrains the overall mix of the wafers that are going towards DDR4 and other lagging technology products.

Speaker Change: HPM makes increasing every quarter and getting to fairly high levels.

Speaker Change: Afarniks, and then we think about the overall...

Speaker Change: Bit Mix of HPM, and then the over 3-1 Traveller issue on the Vapor Mix, you can imagine that that also constrains the overall mix of

Speaker Change: The papers that are going towards DDR4 and other lagging technology products.

Mehdi Hosseini: Yeah.

Harlan Sur: Yeah.

Manish Bhatia: And just to your question on the transitions and what we've been doing, we've talked about, I think have mentioned in the past that our 1-beta node is actually optimized for DDR5 and LP5, also has HBM on it as well. So as we've been converting to 1-beta and we said even in the prepared remarks that we're continuing to increase our mix of 1-beta as we move forward here in fiscal 2025. So you can kind of see that that is supportive of the comments Sumit made in terms of those high value applications. DDR5, LP5, HBM, you know, are, you know, moving, you know, growing in our supply capability to serve those markets.

Speaker Change: and how to say, and to see your question on the transitions and what we've been doing.

Speaker Change: You know, we've talked about, you know, I think have mentioned, you know, in the past that our one beta and no is actually optimized for DDR5 and LP5.

Speaker Change: and also has HBM on it as well. So as we've been converting to one beta and we've said even in the prepared remarks that we're continuing to, you know.

Speaker Change: Inclease are mix of one beta as we explore here in Cisco 25, so you can kind of see that that is supportive of the comments. So, with made in terms of those high value applications, DDR5, LP5.

Speaker Change: HBM, you know, moving and our supply capability to serve those markets.

Mark Murphy: You know.

Harlan Sur: Appreciate the color. Thank you.

Mark Murphy: Yeah. And I would, Harlan, maybe just to add, you know, our inventory values, most of that leading edge. So as defined as we've defined it. So you know that through the year we need that inventory to help with that transition that Manish mentioned as we bridge to increasing 1-beta capacity.

Speaker Change: You know, appreciate the color. Thank you. Yeah, not with Harlan, maybe just to add.

Speaker Change: You know, our inventory values, most of that, if leading edge. So, as we've defined it, so...

Speaker Change: You know, that through the year, you know, we need that inventory to help with that transition that Manish mentioned as we bridge to increasing one beta capacity.

Harlan Sur: Appreciate that. Thank you guys.

Speaker Change: I appreciate that, thank you guys.

Manish Bhatia: Thank you.

Operator: Thank you. Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question please.

Operator: Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question please.

Speaker Change: Thank you and our next question comes from line of Aaron Rakers from Wells Fargo, your question please.

[Analyst]: Yeah, thank you for taking the question. Just building on the prior question from Harlan, you know, we've talked a lot about, you know, the industry about the trade ratio, the 3:1. As you guys move to the 12-high stack and you talk about the confidence moving towards HBM4 and HBM4E, I'm curious how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve or is there a propensity to see that maybe even increase as we think about HBM4 and beyond? I'm curious as to how that's evolved.

Aaron Rakers: Yeah, thank you for taking the question. Just building on the prior question from Harlan, you know, we've talked a lot about, you know, the industry about the trade ratio, the 3:1. As you guys move to the 12-high stack and you talk about the confidence moving towards HBM4 and HBM4E, I'm curious how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve or is there a propensity to see that maybe even increase as we think about HBM4 and beyond? I'm curious as to how that's evolved.

Aaron Rakers: Yeah, thank you for taking the question. Just building on the prior question from Carlin, you know, we've talked a lot about, you know, the industry about the trade ratio of the three to one.

Aaron Rakers: As you guys move to the 12 high stack and you talk about the confidence moving toward HBM Tor and for E. I'm curious how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve or or is there a propensity to see that may be even increase?

Aaron Rakers: As we think about HVM for and beyond, I'm curious about how you start about that and have a quick follow-up as well.

Sumit Sadana: How you've thought about that, and I have a quick follow up as well.

How you've thought about that, and I have a quick follow up as well.

Manish Bhatia: Sure, Aaron. So we have talked about how HBM3E will have a 3 to 1 trade ratio, and that is made up of primarily factors of the die size. Gross HBM die size is larger than standard products in the same node. In order to be able to provide the high bandwidth capability and performance capability that HBM that defines HBM and we have, and also based on the yields throughout the process and in particular the assembly process. So you can assume that the 12 high will have maybe a slightly higher trade ratio than 8 high. And we've said also that as we move towards HBM4 we see that trade ratio increasing as well.

Speaker Change: Sure, we have talked about how HBM 3E will have a 3-1 trade ratio, and that is made up of...

Speaker Change: Primarily factors of the die size, growth, HPM die size is larger than standard products in the same node, in order to be able to provide the high bandwidth capability and performance capability that HPM defines HPM.

Speaker Change: and we have, you know, and also based on the yield in the throughout the process and in particular the assembly process.

Speaker Change: So, you can assume that the 12-high will have an amuse finally higher trade ratio than 8-high, and we said also that as we move towards HPM4, we see that trade ratio.

Manish Bhatia: You know, we haven't really commented beyond that, but you can kind of imagine that as the performance gap between the HBM standard at the time and the standard products of LP and DDR. As the performance gap between those widens, then that's what's the biggest driver in terms of the trade ratio. Because more and more of the die size is dedicated to providing high bandwidth capability on the die. That's differentiated in HBM versus standard DDR and LP products.

You know, we haven't really commented beyond that, but you can kind of imagine that as the performance gap between the HBM standard at the time and the standard products of LP and DDR. As the performance gap between those widens, then that's what's the biggest driver in terms of the trade ratio. Because more and more of the die size is dedicated to providing high bandwidth capability on the die. That's differentiated in HBM versus standard DDR and LP products.

Speaker Change: Increased as well. You know, we haven't really commented beyond that, but you can kind of imagine that as the performance gap.

Speaker Change: between the HPM standard at the time and the standard products of LP and DDR at the performance gap between those widens.

Speaker Change: Then, you know, that's what's the biggest driver in terms of the trade ratio, because more and more of the dice-size is dedicated to providing high bandwidth capability on the die that's differentiated in HBM versus standard DDR and LP products.

[Analyst]: Yeah, that's very helpful.

Aaron Rakers: Yeah, that's very helpful.

Satya Kumar: It's just a quick follow up.

It's just a quick follow up.

[Analyst]: I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that make CapEx more, you know, back half weighted relative to past years? Any kind of trajectory of how you're thinking about the CapEx spend, you know, relative to what we've seen the last few years as far as the cadence through the fiscal year.

I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that make CapEx more, you know, back half weighted relative to past years? Any kind of trajectory of how you're thinking about the CapEx spend, you know, relative to what we've seen the last few years as far as the cadence through the fiscal year.

Speaker Change: and this very helpful. And then it's just a quick follow-up. I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious, you know, Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that that makes CapEx more, you know, back half weighted relative to past years.

Speaker Change: and any kind of trajectory of how you're thinking about the Catholics and, you know, relative to what we've seen the last few years as far as a cadence through the fiscal year.

Mark Murphy: Now Aaron, at this time, you know, we've given, you know, quite a bit on CapEx for this fiscal year 2025. We indicated that would be up meaningfully. We, you know, we gave, you know, $3.5 billion for Q1. We've given that, you know, we've given that we expect full year estimate of mid-30s% of revenue. So we'll, you know, we'll provide more through the year. You know, we can provide a bit more color on, you know, the nature of that CapEx. I mean the overwhelming majority in 2025 is to support HBM CapEx as well as facility construction, Back End and R&D, you know, WFE was down in, you know, both 2022 to 2023 then down again in 2024.

Speaker Change: So, Aaron, at this time, we've given...

Aaron Rakers: Yeah, quite a bit on CapEx for this fiscal year 25. We indicate that would be out meaningfully.

Aaron Rakers: We gave 3.5 billion for the first quarter. We've given that we've given that we expect full year estimate of mid-30s percent of revenue.

Speaker Change: So, we'll provide more through the year, we can provide a bit more color on the nature of that capex, I mean the overwhelming majority in.

Speaker Change: 25 as a support HBM, CapEx as well as facility construction back end and R&D. WFE was down and...

Speaker Change: Yeah, both 22 to 23, then down again and 24, are down from 22 to 23, then down again and 24. We do expect WFE to be up a bit, increase in 25.

Mark Murphy: We do expect WFE to be up a bit, increase in 2025, but we'll remain disciplined on WFE and just to manage overall supply growth, maintain stable bit share as we say.

We do expect WFE to be up a bit, increase in 2025, but we'll remain disciplined on WFE and just to manage overall supply growth, maintain stable bit share as we say.

Speaker Change: But we'll remain disciplined on WFE and, you know, and just to manage overall supply growth.

[Analyst]: Thanks Mark.

Aaron Rakers: Thanks Mark.

Speaker Change: Yomain Tain stable bit sure as we say.

Harlan Sur: Thank you.

Operator: Thank you. Our next question comes from the line of Chris Caso from Wolfe Research. Your question please.

Mark Murphy: Yeah, thanks, Mark.

Operator: Our next question comes from the line of Chris Caso from Wolfe Research. Your question please.

Speaker Change: Thank you, and our next question comes from the line of Chris Kato from Wolf Research, your question, please.

Sumit Sadana: Yes, thank you. Good evening.

Chris Caso: Yes, thank you. Good evening.

Chris Caso: The first question is about any potential impact from some of the China capacity that we've had added. We've seen added and naturally that's on the lower end of the market, and you've said that you are, it's becoming a smaller percentage of your business, but is that causing some disruption in what you're seeing now and is that having any meaningful impact for you now, and then, you know, perhaps if you, if that becomes a smaller part of revenue next year, does it become a smaller impact? If there is any impact now?

The first question is about any potential impact from some of the China capacity that we've had added. We've seen added and naturally that's on the lower end of the market, and you've said that you are, it's becoming a smaller percentage of your business, but is that causing some disruption in what you're seeing now and is that having any meaningful impact for you now, and then, you know, perhaps if you, if that becomes a smaller part of revenue next year, does it become a smaller impact? If there is any impact now?

Chris Kato: Yeah, thanks, you good evening.

Chris Kato: First question is about any potential impact from some of the China capacity that we've added. We've seen added. And naturally, that's on the lower end of the market. And you've said, you are, it's becoming a smaller percentage of your business.

Speaker Change: is that causing some disruption or what you're seeing now and is that having any meaningful impact for you now and then perhaps if that becomes a smaller part of revenue next year, it does become a smaller impact if there is any impact now.

Satya Kumar: Yeah. Chris.

Sumit Sadana: Yeah. Chris. So, in terms of China supply, yes, there has been China supply in the market. It's primarily limited to China-oriented, China-exported customers who are using some of that supply or attempting to use it and generally focused on the product categories that have lower performance associated with them. So, you know, DDR4, LP4 on the DRAM side, and some of the lower-end products on the NAND side, especially in mobile and consumer SSD-type product categories. Our focus has been to really have flat share on a global basis for DRAM and NAND, and within that, focus on the higher profit pools of the industry, and we have made significant progress on that strategy, and you can see that in action now because we are in the midst of what is the best product cycle that we have had in the history of Micron.

Sumit Sadana: So, in terms of China supply, yes, there has been China supply in the market. It's primarily limited to China-oriented, China-exported customers who are using some of that supply or attempting to use it and generally focused on the product categories that have lower performance associated with them. So, you know, DDR4, LP4 on the DRAM side, and some of the lower-end products on the NAND side, especially in mobile and consumer SSD-type product categories. Our focus has been to really have flat share on a global basis for DRAM and NAND, and within that, focus on the higher profit pools of the industry, and we have made significant progress on that strategy, and you can see that in action now because we are in the midst of what is the best product cycle that we have had in the history of Micron.

Speaker Change: Yeah, Chris, so in terms of China, supply, yes, there has been China supplying the market, it's primarily limited to China, oriented China for those customers.

Speaker Change: who are using some of that supply or attempting to use it.

Speaker Change: and generally focused on the father categories that have lower performance associated with them. So, you know, BDR4LB4 on the DRM side and...

Speaker Change: and some of the lower-end products on the Nanside, especially in mobile and consumer SSD type of.

Speaker Change: and Prada Categories.

Speaker Change: Our focus has been to really have...

Speaker Change: Slash Share on the Global Basics

Speaker Change: for D-Lam and Nand and within that focus on the higher profit pools of the industry and we have...

Speaker Change: made significant progress on that strategy and you can see that in action now because we are in the midst of what is the...

Sumit Sadana: We are gaining share in all of the big high profit portions of the product portfolio of the industry. We have HBM share gains happening, really robust share in high cap DIMMs, pioneering leaders in LP5 in the data center, data center SSDs at record share levels. So you can see how the portion of the business that's exposed to those kinds of trends in China are really becoming smaller as a percent of our revenue over time.

We are gaining share in all of the big high profit portions of the product portfolio of the industry. We have HBM share gains happening, really robust share in high cap DIMMs, pioneering leaders in LP5 in the data center, data center SSDs at record share levels. So you can see how the portion of the business that's exposed to those kinds of trends in China are really becoming smaller as a percent of our revenue over time.

Speaker Change: Best product cycle that we have had in the history of micron, the gaining share and all of the big.

Speaker Change: Hi Profit.

Speaker Change: portions of the product portfolio industry. We have HPM share games happening. We'll use robust share in ICAPDIMs, pioneering leaders in LP-5 in the data center, data center as of these at record share levels.

Speaker Change: So you can see how the portion of the business that's exposed to those kinds of trends in China are really becoming smaller as a percent of our revenue over time.

Chris Caso: That's helpful, thank you. I guess as a follow up, just kind of wrapping up all your CapEx comments and you provided a lot of, a lot of detail obviously, but it is, you know, I guess what you, what you've said in the past is basically that the amount of bit growth or the CapEx that's oriented towards bit growth is actually really small. That this is mainly technology transitions and.

Speaker Change: [inaudible]

Speaker Change: when

Speaker Change: It's helpful. Thank you. I guess it was a follow up just kind of wrapping up all your capex comments.

Speaker Change: You've provided a lot of detail I basically, but...

Speaker Change: It is, you know, I guess what you've said in the past is basically that the amount of bit growth.

Speaker Change: for the CapEx that's oriented towards Bic growth is actually really small that this is mainly technology transitions and, as you, you know, migrate out to the next nodes that your, I guess in, in some cases in the past you've actually been reducing capacity on that.

Mark Murphy: As you.

As you.

Chris Caso: Migrate out to the next nodes that you're, I guess in some cases in the past you've actually been reducing capacity on. That is the view as you go into 2025 that there's no meaningful increase in bit capacity even as you migrate to some of these more advanced nodes in support of HBM.

Migrate out to the next nodes that you're, I guess in some cases in the past you've actually been reducing capacity on. That is the view as you go into 2025 that there's no meaningful increase in bit capacity even as you migrate to some of these more advanced nodes in support of HBM.

Speaker Change: is the view as you go into 25 that there's no meaningful increase in bit capacity even as you migrate to some of these more advanced nodes in support of HVM.

Manish Bhatia: So you know, Chris, we had talked about in the last few calls and throughout fiscal 2024 about this capital efficient approach that we were taking to continuing technology conversions. For example, previous question, trying to convert more towards 1-beta, which was a DDR5 and LP5 optimized node from older nodes in an efficient way where we utilize some of the equipment that was for the prior nodes and reduce wafer capacity structurally. So I think that's sort of what you're referring to. Net we do get bit growth capability still because there is still bit growth capability provided by the new technology. But it's not as much as it would have been if we had maintained the same wafer capacity. Right.

Speaker Change: So Chris, we had talked about in the last few calls and just for 24, about this capital efficient approach that we were taking to continuing technology conversions.

Speaker Change: For example, previous question, trying to convert more towards one beta which was a D5 and LP5 Optimized node.

Speaker Change: from older nodes in an efficient way where we utilize.

Speaker Change: some of the equipment that was for, you know, the prior nodes and reduced wafer capacities structurally. So I think that's, you know, sort of what you're referring to. Net we do get bit growth capability still because there is still bit growth capability provided by the new technology.

Speaker Change: but it's not as much as it would have been.

Speaker Change: If we had maintained the...

Manish Bhatia: So that's sort of the put and take: the wafer capacity comes down the technology, new technology provides more bit growth, and that we still do get some, you know, get bit growth. It's just not as much as it would have been. We believe this is something that's there throughout the industry. Not just us, but both DRAM and NAND have had structural wafer capacity reductions in the industry since peak levels in 2022. We're still going to be growing bit share long term in line with the demand that we see. Taking into account things like the HBM trade ratio, which it makes it more difficult to, you know, sort of a headwind to bit growth because as the mix of wafers moving towards HBM grows, you know, the bit capability for the, you know, for given amount of wafer capacity is lower.

So that's sort of the put and take: the wafer capacity comes down the technology, new technology provides more bit growth, and that we still do get some, you know, get bit growth. It's just not as much as it would have been. We believe this is something that's there throughout the industry. Not just us, but both DRAM and NAND have had structural wafer capacity reductions in the industry since peak levels in 2022. We're still going to be growing bit share long term in line with the demand that we see. Taking into account things like the HBM trade ratio, which it makes it more difficult to, you know, sort of a headwind to bit growth because as the mix of wafers moving towards HBM grows, you know, the bit capability for the, you know, for given amount of wafer capacity is lower.

Speaker Change: Same way for capacity, right? So that's sort of the point of take is the way for capacity comes down, the technology, new technology.

Speaker Change: Provides more big growth and that we still do get, get, get, get big growth, it's just not as much as it would have been.

Speaker Change: And we believe this is something that's there throughout the industry, not just us, but both DRAM and NAND have had structural way for capacity reductions in the industry.

Speaker Change: As soon as peak levels in 2022

Speaker Change: and we're still going to be growing a bit share long term in line with the...

Speaker Change: So demand that we see.

Speaker Change: and taking into account, think like the HBM trade ratio which makes it more difficult to, you know, sort of a headwind a bit gross.

Speaker Change: because hasn't has the mix of way for moving towards HPM grows, you know, the bit capability for the, you know, for given amount of way for capacities is lower.

Chris Caso: All right, thank you.

Operator: Thank you. And our next question comes from the line of Harsh Kumar from Piper Sandler. Your question, please.

Speaker Change: Alright, thank you.

Speaker Change: Thank you, and our next question, come to the line of Harsh Kumar.

Mehdi Hosseini: Yeah.

Harsh Kumar: Yeah.

[Analyst]: Hey guys, first of all, congratulations. Seems like you guys are doing a good job with the turn in the cycle. Maybe a question for Sumit or Mark. I wanted to understand your visibility. We get this question a lot from our investors. Wanted to kind of understand maybe the dynamics of a typical contract, how long it is, whether it's for a particular generation or even beyond.

Hey guys, first of all, congratulations. Seems like you guys are doing a good job with the turn in the cycle. Maybe a question for Sumit or Mark. I wanted to understand your visibility. We get this question a lot from our investors. Wanted to kind of understand maybe the dynamics of a typical contract, how long it is, whether it's for a particular generation or even beyond.

Harsh Kumar: from Pajjuri. Yeah, here you are, question please.

Harsh Kumar: Yeah, hey guys, first of all congratulations seems like you guys are doing a good job of the current in the cycle. Maybe a question for Sumit Sadana, Mark, I wanted to understand your visibility, wanted to just...

Speaker Change: We get this question a lot from our investors, wanting to kind of understand.

Speaker Change: Maybe either the dynamics of a typical contract, how long it is, whether it's for a particular generation, or even beyond, or if you don't want to get that specific, maybe you could talk about your designing engagements with your larger customer, the handful.

Sumit Sadana: Or if you don't want to get.

Or if you don't want to get.

[Analyst]: That specific, maybe you could talk about your design engagements with your larger customer, the handful that make GPUs. What kind of visibility do you have either with the contracts for supply or even your design contracts? And then I have a follow-up.

That specific, maybe you could talk about your design engagements with your larger customer, the handful that make GPUs. What kind of visibility do you have either with the contracts for supply or even your design contracts? And then I have a follow-up.

Speaker Change: That makes GPUs, what kind of is the ability to have either the contracts for supply or even your design contract and then out of follow up?

Sumit Sadana: Yeah, so in terms of the kind of agreements that we do with customers on this front, we have a couple of different types. We obviously, when we do LTAs or long-term agreements, they're focused on the next calendar year typically. So it goes January to December of 2025 in this case. We tend to have visibility to the breakdown of bits, DRAM, and NAND by quarter. Typically we work with our customers to figure out what kind of products they are in advance. We get an understanding of that based on the product type, what kind of node these bits are going to be manufactured in. So we can translate that to our manufacturing operations demand signal. Now when it comes to HBM.

Speaker Change: Yeah, so in terms of...

Speaker Change: the kind of agreements that we do with customers on this front. We have a couple of different types.

Speaker Change: We obviously, when we do LTAs or long-term agreements, they are focused on the next calendar year typically.

Speaker Change: and so it goes January to December of 2025 in this case.

Speaker Change: and we tend to have visibility to the...

Speaker Change: Breakdown of bits in DRAM and NAND by quarter, typically we work with our customers to figure out what kind of products they are in advance and we get an understanding of that based on those.

Speaker Change: Prada type, what kind of node.

Speaker Change: These days are going to be manufactured and so we can translate that to our manufacturing operations, demand signal.

Speaker Change: Now...

Sumit Sadana: So by the way, before we talk about HBM, these tend to be mainly volume agreements that get negotiated for price on a monthly or quarterly basis depending on the customer. And that pricing gets negotiated over time as we go through the fiscal and calendar year. When it comes to HBM, the agreements are different and the terms are different. The visibility is longer, and we tend to have these agreements do have pricing already concluded for all of calendar 2024 and 2025. And the thing that is obviously different for HBM and also for LPDRAM that's going into the data center is we have very deep engagements with our customers on their R and D. The roadmap that they're working on, whether it's GPUs or ASIC accelerators that they're designing, requires multiyear outlook on the roadmap, requires alignment on specs, alignment on features, and functionality.

So by the way, before we talk about HBM, these tend to be mainly volume agreements that get negotiated for price on a monthly or quarterly basis depending on the customer. And that pricing gets negotiated over time as we go through the fiscal and calendar year. When it comes to HBM, the agreements are different and the terms are different. The visibility is longer, and we tend to have these agreements do have pricing already concluded for all of calendar 2024 and 2025. And the thing that is obviously different for HBM and also for LPDRAM that's going into the data center is we have very deep engagements with our customers on their R and D. The roadmap that they're working on, whether it's GPUs or ASIC accelerators that they're designing, requires multiyear outlook on the roadmap, requires alignment on specs, alignment on features, and functionality.

Speaker Change: when it comes to HBM, you know, so by the way before we talk about HBMs, so these tend to be mainly volume agreements that get negotiated for price on, you know, monthly or quarterly basis, depending on, you know, the customer. And, um,

Speaker Change: and that pricing gets negotiated over time as we go through the fiscal and calendar year.

Speaker Change: When it comes to HBM, the agreements are different, and the terms are different, the visibility is...

Speaker Change: is longer.

Speaker Change: and we then to have...

Speaker Change: These agreements do have pricing already concluded for all of Kalin the 24 and 25.

Speaker Change: and the thing that is obviously different for HBM and also for LPD around that's going into the data center risk.

Speaker Change: We have very deep engagement to customers.

Speaker Change: on their R&D, the road map that they're working on, whether it's GPUs or ASIC accelerators that they're designing.

Speaker Change: Requires multi year outlook on the road map.

Speaker Change: Requires alignment on specs, alignment on features and functionality, when it comes to LP, you know, what kind of capability on the...

Sumit Sadana: When it comes to lp, what kind of capability on the RAS side they need? Reliability, availability, and serviceability that we design in and lead the industry on that. So these are like all multi-year engagements on the R&D front. And that is what gives us the confidence when we make the statements that we feel we'll have leadership in HBM4 and HBM4E as well. And as it gets to 4E, then we even talk to them about customization that is going to be happening in 4E where certain kinds of IP a customer may want to embed in our HBM product. And then it becomes very different than a regular standard product. And then it becomes different than a standard product. Then it comes with very different terms in terms of the business arrangement that we have.

When it comes to lp, what kind of capability on the RAS side they need? Reliability, availability, and serviceability that we design in and lead the industry on that. So these are like all multi-year engagements on the R&D front. And that is what gives us the confidence when we make the statements that we feel we'll have leadership in HBM4 and HBM4E as well. And as it gets to 4E, then we even talk to them about customization that is going to be happening in 4E where certain kinds of IP a customer may want to embed in our HBM product. And then it becomes very different than a regular standard product. And then it becomes different than a standard product. Then it comes with very different terms in terms of the business arrangement that we have.

Speaker Change: Rath, Sait, Deneet, Reliability of Reliability and Serviceability that we design in and lead the industry on that. So these are like all multi-year engagements on the R&D front.

Speaker Change: And that is...

Speaker Change: What gives us a confidence when we make the statements that we feel we will have leadership in HPM4 and HPM4E as well. And as it gets to 4E then we even talk to them about...

Speaker Change: Customization that is going to be happening in 4E where certain kinds of IP, a customer may want to embed in our HPM product.

Speaker Change: and then it becomes, you know, very different than a regular sandal product and then it becomes different than a standard product, then it comes with very different terms.

Sumit Sadana: That is part of what we say, that this growth of the data center, ultimately growth of AI, is going to create opportunities to transform the business model of the industry over time as well. That's sort of a window into how those engagements happen.

That is part of what we say, that this growth of the data center, ultimately growth of AI, is going to create opportunities to transform the business model of the industry over time as well. That's sort of a window into how those engagements happen.

Speaker Change: In terms of the business arrangements, as in that is...

Speaker Change: thought of what we say that, you know, this growth of the data center ultimately growth of AR is going to.

Speaker Change: Created opportunities to transform the business model of the industry over time as well, so that's sort of a window into how those engagements happen.

[Analyst]: This is super helpful. Another one is a follow-up. Another one that we get is there's this fear that we hear from some of our clients and investors that the third competitor will suddenly wake up and, you know, just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer would have to get in line, you know, get some share and you would have your own share contracted out. So you're probably not likely to get surprised, or am I mistaken in this assumption?

Harsh Kumar: This is super helpful. Another one is a follow-up. Another one that we get is there's this fear that we hear from some of our clients and investors that the third competitor will suddenly wake up and, you know, just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer would have to get in line, you know, get some share and you would have your own share contracted out. So you're probably not likely to get surprised, or am I mistaken in this assumption?

Speaker Change: This is a super helpful, so another one is a follow, another one that we get is, there's this fear that we hear from some of our clients and investors.

Speaker Change: that the third competitor will suddenly wake up and just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer, have to get in line, get some share in.

Speaker Change: You would have your own share contracted out, so you're probably not likely to get surprised that I'm staying in this assumption.

Sumit Sadana: I mean, we do have an expectation that ultimately, you know, all three of the large DRAM suppliers will be able to supply HBM. Our goal is to have the best HBM on the planet with the best performance, the best functionality, features, and specs. I think it is really remarkable that 12-high product from Micron can have 20% lower power than 8-high product from the nearest competitor. That kind of power savings directly helps with saving of data center power needs because next to the processor, the DRAM is a huge part of what happens to the power consumption in the data center. So it's not just about our share; it's also about how the share can, how Micron's products can actually be leveraged for end-to-end advantage for our customers.

Speaker Change: I mean, we do have an expectation that ultimately...

Speaker Change: All three of the...

Speaker Change: Large D-Rance Suppliers will be able to supply HPM. Our goal is to have the best HPM on the planet with the best performance, the best functionality and features and specs.

Speaker Change: I think it is really remarkable that 12 high products from micron can have 20% over power than a 8 high product from the nearest competitor.

Speaker Change: That kind of power savings.

Speaker Change: Directly helps with saving of...

Speaker Change: Tata Center Power Needs, because next to the processor, the VLAN is...

Speaker Change: You know, a huge thought of what happens to the power consumption in the data center. So, it's not just about our share, it's also about...

Speaker Change: You know, how the share can, how microns products can actually be leveraged for any to end advantage for our customers.

Sumit Sadana: Consequently, we have seen very high demand for our product, and we feel confident that we'll be able to ramp. I mean all of the ramp that we have for 25 is really limited by the supply, the rate, and pace at which it can be brought to market because we definitely have a lot of demand for this industry product. Now as you look past that, obviously there is always competition, and we are not afraid of competition. So we plan for our supply to ensure that it's in sync with the demand. When we look at the industry model for supply and demand, we are capturing in that model what portion of the demand is HBM, what portion of the demand is non-HBM.

Consequently, we have seen very high demand for our product, and we feel confident that we'll be able to ramp. I mean all of the ramp that we have for 25 is really limited by the supply, the rate, and pace at which it can be brought to market because we definitely have a lot of demand for this industry product. Now as you look past that, obviously there is always competition, and we are not afraid of competition. So we plan for our supply to ensure that it's in sync with the demand. When we look at the industry model for supply and demand, we are capturing in that model what portion of the demand is HBM, what portion of the demand is non-HBM.

Speaker Change: and consequently we have seen very high demand for our products.

Vivek: and Vivek confident.

Vivek: that we'll be able to ramp, I mean all of the ramp.

Vivek: that we have for 25 is...

Vivek: Really limited by the supply and the rate and pace at which it can be brought to market.

Speaker Change: Because we definitely have...

Speaker Change: A lot of demand for this industry in Prada, now as you look past that, obviously.

Speaker Change: You know, there is always competition and we are not afraid of competition and so we plan for our supply to ensure that it's in sync with the demand.

Speaker Change: and when we look at the industry model for supply and demand, we are capturing in that model, what portion of the demand is HPM, what portion of the demand is non HPM?

Sumit Sadana: As we have discussed in the prior call as well today, the non-HBM portion of the industry is being compressed by the growth in HBM. Overall bit growth can be brought online only at a certain rate and pace, especially when HBM is so capital intensive to bring up so much volume so fast for the whole industry. So we do feel that the mix changes will happen. We'll be able to manage them well because the aggregate level of supply demand ought to be in a healthy place based on our outlook for how 2025 fiscal and calendar year is likely to evolve.

As we have discussed in the prior call as well today, the non-HBM portion of the industry is being compressed by the growth in HBM. Overall bit growth can be brought online only at a certain rate and pace, especially when HBM is so capital intensive to bring up so much volume so fast for the whole industry. So we do feel that the mix changes will happen. We'll be able to manage them well because the aggregate level of supply demand ought to be in a healthy place based on our outlook for how 2025 fiscal and calendar year is likely to evolve.

Speaker Change: and as, you know, we have discussed in the prior call as well today that...

Speaker Change: The non-HVN portion of the industry is being compressed by the growth in HVM.

Speaker Change: and overall, you know, BitCode can be brought online only at a certain rate in pace, especially when HBM is so capital intensive to bring up so much volume so fast for the whole industry. And so, we do feel that...

Speaker Change: The next changes will happen, but we'll be able to manage them well because the aggregate level of supply demand ought to be in a healthy place based on our outlook for how 20-25 fiscal and calendar year is likely to evolve.

Mehdi Hosseini: Wonderful.

Harsh Kumar: Wonderful. Thank you guys. Thanks so much.

[Analyst]: Thank you guys. Thanks so much.

Speaker Change: Wonderful. Thank you guys. Thanks so much.

Operator: Thank you. Our next question comes from the line of Mehdi Hosseini.

Operator: Thank you. Our next question comes from the line of Mehdi Hosseini From Sheshkuhana.

Speaker Change: Thank you, and our next question comes from the line.

Sumit Sadana: From Sheshkuhana.

Speaker Change: and

Amahadi: Amahadi, who's saying it?

Mark Murphy: Thank you.

Mehdi Hosseini: Thank you.

Mehdi Hosseini: Yes, thank you, operator. It's actually Mehdi Hosseini. I just have a couple of follow-up questions. All the good questions have been asked. Mark, given your OpEx increase of 15% and the fact that you're sold out for HBM and HBM also accounting for a higher mix of your capacity, what is your confidence level in operating margin expanding throughout 2025? And I have a couple of other follow-ups.

Yes, thank you, operator. It's actually Mehdi Hosseini. I just have a couple of follow-up questions. All the good questions have been asked. Mark, given your OpEx increase of 15% and the fact that you're sold out for HBM and HBM also accounting for a higher mix of your capacity, what is your confidence level in operating margin expanding throughout 2025? And I have a couple of other follow-ups.

from Shaskol. Thank you.

Mary Hotsani: Yes, thank you for the fact that you're actually Mary Hotsani. I just have a couple of them.

Mary Hotsani: Follow-up question, all the good questions have been asked. Mark, sir.

Speaker Change: Given your attacks increase of 15%, and the fact that you are sold out for HBM and HBM also accounting for a higher mix of your capacity.

Speaker Change: Do you? What is your confidence level in operating margin expanding to our 25th and I have a couple of other formats?

Mark Murphy: Yeah, Mehdi, you know, we're guiding, you know, one quarter at a time. We did provide color on the industry or on the year and the, you know, the market environment. You know, we as it relates to the year and maybe to help you with some view on the year. We do see, you know, a healthy supply, demand balance and you know, a constructive environment to help with our financial profitability through the year. Yeah, we've said we expect a significant revenue record and improved profitability. We said today that our volumes in the year would be second half weighted, which is, you know, important for a number of things including our drawdown of inventories and our, you know, timing on node transition and output from that.

Tamiri: Tamiri, the...

Speaker Change: We're guiding one quarter to time, we did provide color on the industry or on the year and the market environment.

Speaker Change: You know, as it relates to the year and maybe that to help you with some view on the year, we do see

Speaker Change: You know, a healthy supply demand balance and, you know, a constructive environment to help with our financial profitability through this year. Yeah, we've said we expect a significant revenue record.

Speaker Change: and improved profitability. We've said today that our volumes in the year would be second half-weighted.

Speaker Change: which is important for a number of things including our draw-down of inventories and our timing on no transition and output from that.

Operator: You.

You.

Mark Murphy: No, maybe one additional comment. You know, keep in mind that in the second quarter it tends to be a seasonally weaker quarter for us. Our second fiscal quarter, which would be the calendar first quarter, tends to be a weaker quarter for the industry. So something to keep in mind. But overall, you know, a year fiscal 2025 with increasing volumes, second half, fiscal year weighted, healthy supply, demand environment.

No, maybe one additional comment. You know, keep in mind that in the second quarter it tends to be a seasonally weaker quarter for us. Our second fiscal quarter, which would be the calendar first quarter, tends to be a weaker quarter for the industry. So something to keep in mind. But overall, you know, a year fiscal 2025 with increasing volumes, second half, fiscal year weighted, healthy supply, demand environment.

Speaker Change: You know, maybe one additional comment, you know, keep in mind that in the second quarter it tends to be a seasonally weaker quarter for us, a second fiscal quarter which would be the calendar first quarter.

Speaker Change: Tens to be a week or a quarter.

Speaker Change: for the industry, so something to keep in mind, but overall, you know, a year fiscal 25 with increasing volumes.

Speaker Change: 2nd half, fiscal year, weighted.

Sumit Sadana: Executing.

Executing.

Speaker Change: Healthy Supply Demand, Environment, executing really well on the product, road maps, and increasing Mix of HBM of Hygabassidim's LP.

Mark Murphy: Really well on the product roadmaps and increasing mix of HBM, high-capacity DIMMs, LP data center SSD, and then a broadening of demand through the year from what has been very strong AI data center to broader traditional and then other markets.

Really well on the product roadmaps and increasing mix of HBM, high-capacity DIMMs, LP data center SSD, and then a broadening of demand through the year from what has been very strong AI data center to broader traditional and then other markets.

Speaker Change: Data Center SSD, and then a broadening of demand through the year, you know, from what has been very strong AI, Data Center to broader traditional and then other markets.

Mehdi Hosseini: So you feel pretty good for at least fiscal year 2025. You just don't want to set a bar and be accountable to that bar. But you feel pretty good. It's a fair way of summarizing everything you said.

Speaker Change: So, you feel pretty good for, for at least fiscal year 25 you just don't want to say the bar and be said, I can't live with that bar, but you feel pretty good. It is a fair way of summarizing everything you said.

Mark Murphy: We've given some positive indications for the year, and we're vigilant at all times about our cost structure, about our cost performance, about the discipline of our capital spend, and maintaining stable bit share, and we think we're doing a good job of executing well and managing the risks in the business.

Speaker Change: We've given some positive indications for the year and we're vigilant at all times about our cost structure, about our cost performance, about the discipline of our capital spend and maintaining stable bit share and we're...

Speaker Change: We think we're doing a good job of executing well and managing the risks in the business.

Mehdi Hosseini: Got it. Thank you. And question from Anisha. Everyone is focused on back-end yield associated with HBM and TSV, but can you help me understand how your front-end yield compares to competitors, and the same thing for the back end of HBM facility. So, kind of, this could help us to better evaluate how well Micron is executing. So if you could just break it up between the front end and back end and how it's compared to the peers, that would be great.

Speaker Change: Thank you. And there are questions from Manish and everyone is focused on back and youth, associated with HBM and KSC. But can you help me understand how your front end?

Speaker Change: Yield company to competitors and the same thing for the backend of HBM facility. So it kind of, this could help us to better evaluate how well my phone is executed, so if you could just break it up between the front end and back end and how it's compared to the peers that will be great.

Manish Bhatia: I won't comment specifically, Mehdi, on competitors, but I will tell you that, and we have made comments on this before. We have made significant investments into what we call smart manufacturing and artificial intelligence for many years now. And we focus those in manufacturing both between technology development and manufacturing, and at that interface as we ramp new nodes so that our yield ramps, and we have given some color on this in the past. Our yield ramps continue node over node to be faster than prior nodes and more predictable and achieve higher mature levels as we move forward.

Speaker Change: Well, you know, we'll comment specifically Medi on competitors but I will tell you that and we have made comments on this before we have made significant investments into what we call smart manufacturing and artificial intelligence for many years now.

Speaker Change: and we focus those in manufacturing, both between technology development and manufacturing and at that interface as we ramp new nodes so that our yield ramps.

Speaker Change: and we have given some color on this in the past. Our yield ramps continue not over note to be faster than...

Speaker Change: and then prior notes and more predictable and achieve higher.

Manish Bhatia: So I think you can rest assured that all of those structural capabilities, we feel Micron is very, very well positioned, and we are utilizing, you know, all the latest techniques, and in fact many of the equipment vendors that we talk to tell us that we are leading in smart manufacturing, you know, utilization of these techniques to be able to improve efficiency in the fab as well as yield performance, and quality performance. So I think, you know, feel good about that. And you know, I already on the, you know, previously on the call. You know, I think it was.

So I think you can rest assured that all of those structural capabilities, we feel Micron is very, very well positioned, and we are utilizing, you know, all the latest techniques, and in fact many of the equipment vendors that we talk to tell us that we are leading in smart manufacturing, you know, utilization of these techniques to be able to improve efficiency in the fab as well as yield performance, and quality performance. So I think, you know, feel good about that. And you know, I already on the, you know, previously on the call. You know, I think it was.

Speaker Change: Material Levels as we move forward, so I think.

Speaker Change: You can rest assured that all of those structural capabilities we feel micron is very, very well positioned.

Speaker Change: and we are utilizing all the latest techniques and in fact many of the equipment vendors that we talk to.

Speaker Change: Tell us that we are leading in smart manufacturing, you know, utilization of these techniques to be able to...

Speaker Change: Improve efficiency in the Fab as well as yield performance and quality performance.

Speaker Change: and I think you know feel good about that and you know I already on the you know previously on the call you know I think it was

Sumit Sadana: Was.

Was.

Manish Bhatia: It's Harlan who asked about yields on HBM, and you know, just continue to reiterate. We feel good about where they are, we feel good about where they're going, and being able to support the HBM opportunities we have ahead.

It's Harlan who asked about yields on HBM, and you know, just continue to reiterate. We feel good about where they are, we feel good about where they're going, and being able to support the HBM opportunities we have ahead.

Harlan Sir: I was at Harlan who asked about yields on HBM and continues to reiterate how we feel good about where they are, we feel good about where they're going and being able to support the HBM.

Mehdi Hosseini: But I guess I was asking specifically for any kind of qualitative color comparing Front End and the Back End, not overall Yield.

Speaker Change: and our opportunity to have a head. But I guess I was asking specifically for any kind of qualitative column and comparing front and a back end, not for all years.

Manish Bhatia: Yeah, I think that we.

Speaker Change: Yeah, you know, I think that we are...

Mehdi Hosseini: You know.

You know.

Manish Bhatia: I'm not going to sort of comment specifically about, you know, our peers, but I think we have very good yields. Right. And I think I feel good about about where they are for both the front end and the back end. And you know, you're kind of asking about back end. I'll say across our, you know, back end product lines, across the board, I feel like we have very, very good manufacturing capability, both from assembly but also test capability. A lot of the yield capability that we have comes from our customized development of our own tester equipment and tester hardware which allows us to be able to have lower cost test equipment as well as equipment solutions and testing solutions that are specifically tuned to our products.

I'm not going to sort of comment specifically about, you know, our peers, but I think we have very good yields. Right. And I think I feel good about about where they are for both the front end and the back end. And you know, you're kind of asking about back end. I'll say across our, you know, back end product lines, across the board, I feel like we have very, very good manufacturing capability, both from assembly but also test capability. A lot of the yield capability that we have comes from our customized development of our own tester equipment and tester hardware which allows us to be able to have lower cost test equipment as well as equipment solutions and testing solutions that are specifically tuned to our products.

Speaker Change: Deep.

Speaker Change: He knows, I'm not going to have a solution.

Speaker Change: Comment specifically about, you know, our peers, but I think we have very good yields, right? And I think I feel good about whether they are for both the front end and the back end. And you're kind of asking about back end, I'll say across our, you know, back end product lines across the board. I feel like we have very, very good.

Speaker Change: Manufacturing Capability, both from assembly, but also test capability, a lot of the yield capability that we have is our comes from our customized development of our own test.

Speaker Change: Testar Equipment and Testar Hardware, which allows us to be able to have lower cost test equipment, as well as equipment solutions and testing solutions that are specifically tuned to our products.

Manish Bhatia: In many ways we design our tester hardware in line with our product design so that we're able to test more efficiently and with better fidelity such that we can improve yields while improving outgoing quality as well. So, you know, I feel like we have very, very strong capabilities in both front end yields as well as back end yields, and on back end both in assembly as well as in test.

In many ways we design our tester hardware in line with our product design so that we're able to test more efficiently and with better fidelity such that we can improve yields while improving outgoing quality as well. So, you know, I feel like we have very, very strong capabilities in both front end yields as well as back end yields, and on back end both in assembly as well as in test.

Speaker Change: In many ways, we design our test for hardware, in line with our product design so that we're able to...

Speaker Change: the test more efficiently and with better fidelity such that we can improve yields while improving outgoing quality as well. So, you know, I feel like we have very, very strong capabilities in both front end yields as well as back end yields and on back end both in assembly as well as in test.

Mehdi Hosseini: Thank you.

Operator: Thank you. And our next question comes from the line of Brian Chin from Stifel. Your question please.

Speaker Change: Okay, thank you.

Speaker Change: Thank you and our next question comes from the line of Brian Chin from Feeful, your question please.

[Analyst]: Hi there.

Brian Chin: Hi there.

Brian Chin: Good afternoon and congratulations on the results and execution. Maybe related to something that was just discussed a moment ago.

Good afternoon and congratulations on the results and execution. Maybe related to something that was just discussed a moment ago.

Brian Chin: And other good afternoon and congratulations on the results and that's your execution.

Speaker Change: They were related to something that was just discussed a moment ago. This is our modeling. We modeled the February quarter revenue kind of sideways relative to November. For some of the reasons that were stated around seasonality and kind of this, some of the stories that have built up in consumer.

Sumit Sadana: We had.

We had.

Brian Chin: Yeah, this is our modeling. We'd modeled the February quarter revenue kind of sideways relative to November for some of the reasons that were stated around seasonality and kind of this, you know, some inventories maybe that built up in consumer, maybe just to deconstruct that a little bit. When you think about seasonality, Mark, can you define what that looks like in a February quarter from a bit shipment standpoint, and then in terms of the portfolio mix which kind of works in the company's favor in the November quarter driving some of that sequential growth, why would it not be, why would that mix effect not be similar in the February quarter relative to November?

Yeah, this is our modeling. We'd modeled the February quarter revenue kind of sideways relative to November for some of the reasons that were stated around seasonality and kind of this, you know, some inventories maybe that built up in consumer, maybe just to deconstruct that a little bit. When you think about seasonality, Mark, can you define what that looks like in a February quarter from a bit shipment standpoint, and then in terms of the portfolio mix which kind of works in the company's favor in the November quarter driving some of that sequential growth, why would it not be, why would that mix effect not be similar in the February quarter relative to November?

Mark Murphy: and maybe just deconstruct that a little bit. When you think about seasonality, Mark, can you define what that looks like in a February quarter from a bit ship and standpoint? And then in terms of the...

Mark Murphy: Porfolio mix, which kind of works in the company's favor in the November quarter, driving some of that sequential growth. Why would that mix, the fact not be similar in the February quarter relative to the November?

Mark Murphy: Yeah, let me start, and then maybe Sumit can add on this. You know, Brian, we're not going to guide to the second quarter, and I understand that the interest in learning about our view on that quarter, but right now, just the contours of the year: we see strong data center demand through this first half of the year fiscal year, and then through the year that AI-related server demand continuing to be strong, and then it broadening out. We're seeing traditional server volumes increase now, and then other markets see that broadening out, and, and as I mentioned earlier, the our volumes we see being heavier weighted in the second half of the fiscal year, and you know there will be some favorable, as you say, because some of these high performance markets here that are strong.

Mark Murphy: i

Speaker Change: Yeah, let me start and then maybe Simit can add on this. Brian, we're not going to guide to this second quarter and I understand that the interest in learning about our view on that quarter, but right now, just the contours of the year, we see.

Speaker Change: Strong Data Center, Demand, through this first half of the year, fiscal year, and then through the year, that...

Simit: AI related server, the man continuing to be strong and then it's broadening out, we're seeing traditional server volumes increase now and then in other markets see that broadening out.

Speaker Change #100: and as I mentioned earlier, the...

Speaker Change #100: Our volumes we see being...

Speaker Change #100: and heavier weighted in the second half of the fiscal year. And there will be some favorable, as you say, because some of these high-performance markets here that are strong.

Mark Murphy: There is continued favorable mix growth through the year as we ramp HBM. We've given enough markers on that profile, but also high capacity DIMMs, LP, and data center SSD we see continuing to grow. So I think, Sumit, anything to add?

There is continued favorable mix growth through the year as we ramp HBM. We've given enough markers on that profile, but also high capacity DIMMs, LP, and data center SSD we see continuing to grow. So I think, Sumit, anything to add?

Speaker Change #100: Yeah, there.

Speaker Change #100: There is continued.

Speaker Change #101: favorable mix growth through the year as we ramp HBM, we've given it off.

Speaker Change #101: Markers on that profile, but also high capacity dim cell P and data center, SSD we continue to grow.

Sumit Sadana: Yeah, I think Mark provided the important relevant color. The only thing I'll mention is the second quarter like Mark said, we're not providing any guidance, but just in terms of you know how you think about it, definitely the ramp of our higher margin data center products will continue throughout the year. So the second quarter will get benefit from that. But it is also, as Mark said, a quarter where there is seasonality of Q1 that is part of Q2. And also, you know, we mentioned this point in our prepared remarks about the PC OEMs and to a lesser extent.

Speaker Change #101: I think Sumit, anything that adds.

Sumit Sadana: Yeah, I think Mark provided the important relevant color. The only thing I mentioned is the second quarter, like Mark said, we're not providing any guidance but just in terms of how you think about it, definitely be.

Sumit Sadana: Ram of our...

Sumit Sadana: Higher margin, data center products will continue throughout the years, so the second quarter will get benefit from that, but it is also, as Mark said, a quarter where there is a seasonality of CQ1 that is part of RFQ2.

Speaker Change #103: and also, you know, we mentioned this point in a prepared remarks about the PC OEMs and to a lesser extent smartphone OEMs.

Mark Murphy: Smartphone OEMs.

Smartphone OEMs.

Sumit Sadana: Working to get their inventory to a healthier place by spring of 2025, which again encapsulates the FQ2 time frame. So those are some of the things to keep in mind, which is what leads us to that second half of fiscal year 2025. Second half of calendar 2025 should be strong broadening of demand drivers, AI, PCI, and smartphone mix improvements helping on top of the full year fiscal and calendar 2025 data center robust demand continuing.

Working to get their inventory to a healthier place by spring of 2025, which again encapsulates the FQ2 time frame. So those are some of the things to keep in mind, which is what leads us to that second half of fiscal year 2025. Second half of calendar 2025 should be strong broadening of demand drivers, AI, PCI, and smartphone mix improvements helping on top of the full year fiscal and calendar 2025 data center robust demand continuing.

Speaker Change #104: Working to get there in Mintori to help the place by spring of 2025, which again encapsulates the F.U.2.

Speaker Change #105: Time Frame. So, those are some of the things to keep in mind, which is what leads us to that second half of a fiscal year 25, second half of calendar 25 should be strong, broadening of demand drivers.

Speaker Change #106: AIPCS, Mark from Mix Improvement Helping on top of the full year fiscal and calendar 25 data center robust demand continuing.

Manish Bhatia: Okay, great.

Brian Chin: Okay, great.

Brian Chin: That's actually super helpful. Maybe just a very quick follow-up. From a timing standpoint, when roughly does your 12-high HBM3E product need to be qualified by in order to be on track with your HBM production and shipment schedule that you've communicated?

That's actually super helpful. Maybe just a very quick follow-up. From a timing standpoint, when roughly does your 12-high HBM3E product need to be qualified by in order to be on track with your HBM production and shipment schedule that you've communicated?

Speaker Change #107: Okay, that's actually super helpful and maybe just a very quick follow-up from a timing standpoint.

Speaker Change #108: What roughly does your 12-high 3E product need to be qualified by in order to be on track with your HPM production and shipment schedule that you've communicated?

Sumit Sadana: Yeah, so our HBM 8-high continues to ship in volume and we are working very closely with our customers to figure out what their plans for switching to 12-high are based on, of course, the qualifications, but more importantly the readiness of their products to leverage 12-high and the readiness of the ecosystem to ramp 12-high. Because 12-high obviously more complex product than 8-high. So it'll go through its own yield ramp. And our expectation is that we are going to be in, we are going to be selling this product in volume starting in early part of calendar 2025 and then throughout 2025, every quarter, the mix of 12-high will keep increasing and the second half of calendar 2025 you'll have a very large mix of 12-high.

Speaker Change #109: So, our HBM, HI continues to ship in volume and we are working very closely with our customers too.

Speaker Change #110: Figure out what their plans for...

Speaker Change #110: Switching to 12th high R based on

Speaker Change #111: Of course, the qualifications, but more importantly, the readiness of their...

Speaker Change #111: products to leverage 12-high and the readiness of the ecosystem to ramp 12-high because 12-high obviously more complex products than 8-high, so we'll go through its own yield ramp.

Speaker Change #111: and our expectation is that we are going to be in...

Speaker Change #111: Um...

Speaker Change #111: So we are going to be selling the products in Bolton starting in early part of Kalin the 25 and then 12, 20, 25.

Speaker Change #111: every quarter of the mix of 12 high will keep increasing and the second half of calendar 25.

Sumit Sadana: In order to support that, obviously, you know, we provide samples to customers ahead of time. We go through a qual process, and we have mentioned that production-ready 12-high samples have been provided to our customers, and we provided you some of the expectations we have of our industry-leading 12-high product with the 20% lower power consumption versus other 8-high products. So we feel really good about our 12-high, and it should constitute the majority of our sales in the second half of calendar 2025, assuming our customers make the transitions on the timelines that they're currently expecting.

In order to support that, obviously, you know, we provide samples to customers ahead of time. We go through a qual process, and we have mentioned that production-ready 12-high samples have been provided to our customers, and we provided you some of the expectations we have of our industry-leading 12-high product with the 20% lower power consumption versus other 8-high products. So we feel really good about our 12-high, and it should constitute the majority of our sales in the second half of calendar 2025, assuming our customers make the transitions on the timelines that they're currently expecting.

Speaker Change #111: and you have a very large mix of 12 high.

Speaker Change #111: and in order to support that obviously, [inaudible]

Speaker Change #111: You know, we provide samples to customers ahead of time, we go through a call process.

Speaker Change #111: and we have mentioned that production ready 12 high samples have been provided to our customers and we provided you some of the...

Speaker Change #111: Expectations, we have a foreign industry, the initiative of that well-high product with the 20% lower power consumption versus other's eight high products. So, we feel really good about at well-high and...

Speaker Change #111: It should constitute the majority of our sales in the second half of Canon 25, assuming our customers make the transitions on the timeline side, and they're currently expecting.

Manish Bhatia: Great, thank you very much. Yeah, I'll just add we feel good about where we are with the 12-high Sumit mentioned. We've started sampling with customers who are getting feedback and learning to be able to prepare for that ramp that Sumit mentioned that'll start in early calendar year 2025.

Brian Chin: Great, thank you very much.

Manish Bhatia: Yeah, I'll just add we feel good about where we are with the 12-high Sumit mentioned. We've started sampling with customers who are getting feedback and learning to be able to prepare for that ramp that Sumit mentioned that'll start in early calendar year 2025.

Speaker Change #112: Great, thank you very much. Yeah, not as sad. We feel good about where we are with the 12-high summit mentioned. We've started sampling with customers who are getting feedback and learning to be able to prepare for that. That ramped at Sumit mentioned that will start in early calendar year 25.

Mehdi Hosseini: Thanks.

Brian Chin: Thanks.

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

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

Speaker Change #112: Thanks.

Speaker Change #113: Thank you, and this does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation. You may now disconnect. Good day.

Sam.

Samir Patodia: [inaudible] Patodia, Samir Patodia,

Mark Murphy: Sa.

Sa.

Samir Patodia: [inaudible]

Samir Patodia: [inaudible] Samir Patodia,

Manish Bhatia: Sa.

Sa.

Operator: Thank you for standing by, and welcome to Micron's post-earnings analyst call. At this time, all participants are in listen-only mode. After this presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead, sir.

Speaker Change #115: Thank you for standing by and welcome to my crown's post earnings analyst 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 this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to move yourself from the queue, simply press star 1-1 again.

Speaker Change #115: As a reminder, today's program is being recorded and now it's like to reduce your host for today's program Satya Kumar, Investor Relations. Please go ahead, sir.

Satya Kumar: Yeah. Thanks Jonathan, and thank you. Welcome to Micron Technology's fiscal fourth quarter 2024 post-earnings analyst call. On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy, our CFO. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, and our expected results, guidance, 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 documents that we have filed with the SEC, including our most recent Form 10-Q and upcoming Form 10-Q and 10-K, for a discussion of risks that may affect our results.

Satya Kumar: Yeah, thanks, Jonathan. And thank you and welcome to my current technology's fiscal fourth quarter 2020 for post-learning analyst call.

Speaker Change #117: On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations and Mark Murphy R.C.A.F.O.

Speaker Change #118: As a reminder, the matters we are discussing today include forward-looking statements, regarding market demand and supply, market trends and drivers and our expected results in guidance and other matters.

Speaker Change #118: These forward-looking statements are subject to risks and uncertainties that may cause actual results to deformity relief and statements made today. We refer you to documents that we have filed with the SEC, including our most recent form 10Q, an upcoming form 10Q for a discursion of risks that may affect our results.

Speaker Change #118: Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance and achievements.

Speaker Change #118: We are under no duty to update any of the forward-looking statements to conform these statements to actual results. We can now open the call up to Q&A.

Operator: Certainly. Our first question comes from the line of Karl Ackerman from BNP Paribas. Your question please.

Speaker Change #118: Certainly, and our first question comes from the line of Carl Ackerman from...

[Analyst]: Thank you.

Thank you.

Speaker Change #119: BMP, your question please.

Chris Caso: Two questions if I may.

[Analyst]: First, from a demand perspective, you indicated that servers will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near term. I was curious if you could discuss your assumptions for server unit growth in fiscal 2025. As you address that question, is your high-capacity DRAM DIMMs such as 128-gigabyte only used in AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh?

First, from a demand perspective, you indicated that servers will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near term. I was curious if you could discuss your assumptions for server unit growth in fiscal 2025. As you address that question, is your high-capacity DRAM DIMMs such as 128-gigabyte only used in AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh?

Carl Ackerman: Thank you.

Carl Ackerman: Two questions of IMAE, first from a demand perspective, you indicated that server will continue to become a growing area of revenue growth as PC and smartphone demand remains mixed near-term.

Carl Ackerman: I was curious if you could discuss your assumptions for server-unit growth in fiscal 25.

Speaker Change #121: And as you address that question, is your high capacity DRAM dims, such as 128 gigabyte, only use an AI servers or is it balanced across traditional servers that you've indicated are going through a product cycle refresh.

Sumit Sadana: Yeah.

Satya Kumar: In terms of.

Sumit Sadana: In terms of the server mix, we do expect that the traditional server will continue to improve in terms of the tone of the demand and will grow because the applications and the software that IT departments across large companies have been running, that software deployment continues. You can see the growth in the application software industry. So general purpose server growth can be compressed only so much has been compressed quite a bit over the last couple of years. So we do expect this year there will be some modest unit growth in general purpose servers and it will continue into next year. And then of course the growth in AI servers is expected to be strong this year. Strong next year. We don't see any kind of change in that expectation that we have provided over the last couple of quarters for 2025.

Speaker Change #122: Yeah, in terms of call, in terms of the servo mix.

Speaker Change #123: Now we do expect

Speaker Change #123: that the...

Speaker Change #124: Traditions of the world will continue to improve in terms of the tone of the demand and will grow Because the application that

Speaker Change #125: and the software dead.

Speaker Change #126: IT departments across large companies have been running, that's all said deployment continues, you can see the growth in the application software industry. So general purpose of a growth can be compressed only so much has been compressed quite a bit over the last couple of years.

Speaker Change #126: So, we do expect this year, that will be...

Speaker Change #126: Some modest unit growth in general of the servers and will continue into next year. And then of course the growth in AI servers is expected to be strong.

Speaker Change #126: This year's from next year, we don't see...

Speaker Change #126: Any kind of change in that expectation that we have provided over the last couple of quarters, 4, 20, 25, definitely that momentum in AI continues.

Sumit Sadana: Definitely that momentum in AI continues. Of course we have a lot of improvement in our competitive positioning in the server arena. We have spoken extensively about that. We have HBM growth in AI servers. Of course, we have high cap DIMMs that you mentioned. These 128 Gigabyte DIMMs do get used in both AI servers as well as traditional servers. Predominantly their uses in AI servers because they are more expensive on a per bit basis than 64 gigabyte DIMMs. Consequently, they tend to get used more in AI servers, both on the training as well as inferencing side. We expect that to continue.

Speaker Change #126: and of course, we have a lot of...

Speaker Change #126: Improvement in our competitive positioning in the server arena. We have spoken extensively about that.

Speaker Change #127: Um, we have...

Speaker Change #127: HPM growth in AI servers, of course we have high contents that you mentioned. These 128 gigabytes didn't do get used.

Speaker Change #127: and both AI servers as well as traditional servers, but predominantly, they're used as an AI servers, because they are more expensive on a per-bit basis than 64GB dims.

Speaker Change #127: Consequently, they tend to get used more in AI servers, both on the training of relevant systems, and we expect that to continue.

[Analyst]: Thank you, I appreciate that. If I could sneak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million. As you maintain discipline around supply, are you suggesting that fiscal Q4 remains the peak dollar value of inventory as PC and smartphone demand begins to improve in the first half of the year?

Thank you, I appreciate that. If I could sneak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million. As you maintain discipline around supply, are you suggesting that fiscal Q4 remains the peak dollar value of inventory as PC and smartphone demand begins to improve in the first half of the year?

Speaker Change #128: Thank you, I appreciate that. If I could sneak in one more, I would just hope you could clarify your comments on inventory. Obviously, inventory rose $300 million as you maintain discipline around supply.

Speaker Change #129: Are you suggesting that Fiscal Q4 remains the peak dollar value of inventory as PC and smart friend of band begins to improve in the first half of the year? Thank you.

Operator: Thank you.

Mark Murphy: Yeah, Karl, it's Mark. You know, we don't typically give dollar estimates because clearly what, you know, what happens with our forecast, we're modulating builds and you know, building, you know, we have raw materials and WIP and so forth. You know. So we tend to focus on providing you a DIO number. We did think that on a dollar and DIO basis it would be elevated going into 2025. And what we will see, we believe is inventory days improving through 2025. And you know, particularly in the second half of our fiscal year, as our fiscal year is more second half weighted on volumes. Now of course the business is getting larger. So on a dollar basis there won't be the same degree of change. But on the DIO we do see improvement through the year, particularly in the back half of the year.

Mark Murphy: That Carl's Mark.

Speaker Change #130: You know, we don't typically give dollar estimates because clearly what happens with our forecast were...

Speaker Change #131: Yeah, modulating builds and you know, building, you know, we have raw materials and weapons so forth

Speaker Change #132: R. So we tend to focus on providing you as the I.O. number. We did think that on a dollar and...

Speaker Change #132: DiO basis that would be elevated going into 25 and what we will see we believe is inventory days improving through 25.

Speaker Change #132: and, you know, particularly in the second half of our fiscal year as our fiscal year is more second half weighted on volumes. Now, of course, the business is getting larger, so on a dollar basis.

Speaker Change #133: Yeah, there won't be the same degree of change, but on the DIO we do see improvements through the year, particularly in the back half of the year.

Operator: Thank you. Thank you. And our next question comes from the line of Harlan Sur, from J.P. Morgan. Your question please.

Speaker Change #134: Thank you.

Speaker Change #134: Thank you, and our next question comes from the line of Harlan Sir from JP Morgan, your question please.

Harlan Sur: Yeah, hey, good afternoon. And congrats on the strong overall operational execution. You know, on the better DRAM bit shipment outlook in November, up sequentially versus prior view of flat to up slightly. How much of that is better than expected yield improvements in HBM? Right, because we know your AI customers are supply constrained on HBM3E, so any better yield and resulting supply unlock would be consumed right away. Right, so it's part of the better bit shipment outlook this quarter due to better HBM supply unlock versus your prior expectations.

Yeah, hey, good afternoon. And congrats on the strong overall operational execution. You know, on the better DRAM bit shipment outlook in November, up sequentially versus prior view of flat to up slightly. How much of that is better than expected yield improvements in HBM? Right, because we know your AI customers are supply constrained on HBM3E, so any better yield and resulting supply unlock would be consumed right away. Right, so it's part of the better bit shipment outlook this quarter due to better HBM supply unlock versus your prior expectations.

Harlan Sir: Yeah, hey, good afternoon and congrats on the strong overall operational execution. You know, on the better DRAM bit shipment, I'll look in the Vemba up sequentially versus prior view of Slata Upslavi. How much of that is better than expected yield improvements in?

Speaker Change #135: Each DMR, because we know your AI customers are supply constraints.

Speaker Change #136: on HPM3E, so any better yield and resulting supply on lock would be consumed right away, right? So as part of the better bishop and outlook, this quarter due to better HPM supply on lock versus your prior expectations.

Manish Bhatia: Maybe I'll answer Harlan just on the HBM ramp, and then Sumit, you can answer on some of the other drivers on, you know, of the guidance for DRAM, but you know, our yield ramp is, you know, continuing to be strong. We feel good about where we are with our yields on HBM. We were able to achieve our goal for fiscal Q4, and, in terms of shipping several hundred million dollars' worth of revenue. And we said that these were, you know, both quarters Q3 and Q4 were at gross margins that were above the rest of the DRAM products. So we feel like we've executed well on this ramp, and we continue to look forward to being able to support this multibillion-dollar business opportunity for us in fiscal year 2025. So we feel good about where we are with HBM.

Speaker Change #137: So, huh?

Meryol Ansehar: Meryol Ansehar, and just on the HPM ramp, and some of the other drivers on them.

Speaker Change #139: of the guidance for DRAM. But, you know, our yield graph is...

Speaker Change #140: Continuing to be strong, we feel good about where we are, with our yields on HPM, we were able to achieve our goals for fiscal Q4. And in terms of shipping several hundred million dollars was a revenue and we said that these were both quarters of Q3 and FQ4 were at most margins that were above our...

Speaker Change #140: You know, the rest of the DRM products, so you know, we feel like we've executed well on this ramp, we continue to look forward to being able to support the multibillion dollar business opportunity for us in fiscal year 25.

Manish Bhatia: And I'll let Sumit talk about some of the other demand drivers and the strengthening since our last public comments at some conferences earlier this year.

Speaker Change #141: and we feel good about where we are with HBM and I'll let some of you talk about some of the other demand drivers of the strength in since our last public comment that some content is earlier this year.

Speaker Change #142: Yeah, thanks, Manish. So in terms of demand, definitely the strength in the data center is driving upside to what we had prior communicated on the FQ1 projectory on DRAM shipments.

Speaker Change #143: and we continue to see, really strong demand from the data center, the demand of selling from both the cloud and enterprise AI servers as well as traditional server.

Harlan Sur: Okay, perfect. And then maybe just to follow up, you know, there's been so much noise in the market around excess supply for more lagging edge DDR4 DRAM. I mean, you know the Micron team is a part of your CapEx capacity optimization initiatives over the past 12 months has really been focused right on converting lagging edge capacity to leading edge capacity. On top of that, the team has been focused on sort of more value added solutions.

Okay, perfect. And then maybe just to follow up, you know, there's been so much noise in the market around excess supply for more lagging edge DDR4 DRAM. I mean, you know the Micron team is a part of your CapEx capacity optimization initiatives over the past 12 months has really been focused right on converting lagging edge capacity to leading edge capacity. On top of that, the team has been focused on sort of more value added solutions.

Richard: Oh, Richard.

Richard: Okay, perfect. And then maybe just to follow up, you know, there's been so much noise in the market around excess supplies for more lagging energy, DDR4 DRM. I mean, you know, the microphone team is a part of your cutbacks.

Speaker Change #145: Kapazhavi optimization initiatives over the past 12 months has really been focused right on converting lagging edge capacity to leading edge capacity.

Mehdi Hosseini: Right.

Harlan Sur: I assume that all of this translates to less DDR4 output as well. But can you guys just level set us like what percentage of your DRAM bit shipments are DDR4 today? And where do you expect that mix to be exiting this calendar year?

I assume that all of this translates to less DDR4 output as well. But can you guys just level set us like what percentage of your DRAM bit shipments are DDR4 today? And where do you expect that mix to be exiting this calendar year?

Speaker Change #146: On top of that, the team has been focused on sort of more value added solutions, right? So I assume that all of this is translated to...

Speaker Change #147: Less D.D. are four output as well, but innovations level set up like what percentage of your DRAM bit shipments are D.D. are for today and really expect that mixed to be exiting this calendar year.

Sumit Sadana: Yeah, so we don't provide percent of bits that are DDR4 or 5, but I can just provide some color that DDR4 shipments continue to fall as a percent of our overall DRAM bit shipments over the last year, and looking ahead will again fall into next year because more and more of our mix is shifting towards DDR5 over time. It's shifting towards LP5 that we are now shipping to the data center. We had mentioned that Micron is a pioneer in use of low power DRAM in the data center. So LP5 in the data center itself is going to become a very significant product category for us. And we have leadership in the industry. It's a very important product opportunity for us. When we drive more of the shipments there as well, it further reduces the mix of DDR4 and LP4 as part of the overall number.

Speaker Change #148: Yeah, so we don't provide percent of bits that are DDR4 or 5 but I can just provide some color that

Speaker Change #148: DDR 4 shipments continue to fall as the percent of our overall DRAM bit shipments.

Speaker Change #148: Over the last year and looking ahead with Login Fall.

Speaker Change #149: in the next year because modern motor farm makes shifting towards.

Speaker Change #149: DDR5 over time, it shifting towards LP5 that we are now shipping to the data center. We had mentioned that micron is...

Speaker Change #149: A pioneer in using the low power DRM in the data center, so LP5 in the data center itself is going to become a very significant product category for us. And we are leadership in the industry. It's a very important product opportunity for us, Wendy.

Speaker Change #149: Drive mode of the shipments there as well, it further reduces the mix of DDR4 and LP4 as part of the overall number. And then of course we have mentioned to you multiple times about...

Sumit Sadana: Of course, we have mentioned to you multiple times about HBM mix increasing every quarter.

Harlan Sur: Yes.

Yes.

Sumit Sadana: Getting to fairly high levels of our mix. When we think about the overall bit mix of HBM and then the over 3-to-1 trade ratio on the wafer mix, you can imagine that, you know, that also constrains the overall mix of the wafers that are going towards DDR4 and other lagging technology products.

Speaker Change #149: HBM makes increasing every quarter and getting to fairly high levels.

Speaker Change #149: of our mix, and then we think about the overall bit mix of HPM and then the over 3-1

Speaker Change #149: You know that also constrains the overall mix of the vapors that are going towards DDR4 and other lagging technology products.

Mehdi Hosseini: Yeah.

Manish Bhatia: Just to your question on the transitions and what we've been doing, what we've talked about, I think have mentioned in the past that our 1-beta node is actually optimized for DDR5 and LP5, also has HBM on it as well. As we've been converting to 1-beta, and we said even in the prepared remarks that we're continuing to increase our mix of 1-beta as we move forward here in fiscal 2025. You can kind of see that that is supportive of the comments Sumit made in terms of those high value applications. DDR5, LP5, HBM are growing in our supply capability to serve those markets.

Halishy: and Halishy.

Speaker Change #151: and to see your question on the transitions and what we've been doing.

Speaker Change #151: You know, we've talked about, you know, I think have mentioned, you know, in the past that our one beta and no is actually optimized for DDR5 and LP5.

Speaker Change #151: also has HPM on it as well. So as we've been converting to one beta and we set even.

Speaker Change #151: and the prepared remarks that we're continuing to, you know...

Speaker Change #152: Inclease our mix of one beta as we forward to here in Cisco 25, so you can kind of see that that is supportive of the comments. So, with made in terms of those high-value applications, DDR5, LP5.

Speaker Change #152: HBM, you know, moving and our supply capability to serve those markets.

Harlan Sur: Appreciate the color. Thank you.

Appreciate the color. Thank you.

Mark Murphy: Yeah. And I would, Harlan, maybe just to add our inventory values most of that leading edge. So as defined as we've defined it. So you know that through the year we need that inventory to help with that transition that Manish mentioned as we bridge to increasing 1-beta capacity.

Speaker Change #153: You know, appreciate the color. Thank you. Yeah, not with Harlan, maybe just to add

Speaker Change #154: You know, our inventory values most of that if leading edge, so as we've defined it.

Harlan Sir: You know, that through the year, you know, we need that inventory to help with that transition that Manish mentioned as we bridge to increasing one beta capacity.

Harlan Sur: Appreciate that. Thank you guys. Thank you.

Appreciate that. Thank you guys. Thank you.

Speaker Change #155: I appreciate that, thank you guys.

Operator: Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question please.

Speaker Change #156: Thank you and our next question comes from line of Aaron Rakers from Wells Fargo. Your question, please.

[Analyst]: Yeah, thank you for taking the question. Just building on the prior question from Harlan. You know, we've talked a lot about, you know, the industry, about the trade ratio, the 3 to 1, as you guys move to the 12-high stack and you talk about the confidence moving towards HBM4 and 4E. I'm curious how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve, or is there a propensity to see that maybe even increase as we think about HBM4 and beyond? I'm curious as to how that's evolved.

Yeah, thank you for taking the question. Just building on the prior question from Harlan. You know, we've talked a lot about, you know, the industry, about the trade ratio, the 3 to 1, as you guys move to the 12-high stack and you talk about the confidence moving towards HBM4 and 4E. I'm curious how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve, or is there a propensity to see that maybe even increase as we think about HBM4 and beyond? I'm curious as to how that's evolved.

Aaron Rakers: As you guys move to the 12 high stack and you talk about the confidence moving towards HBM-4 and 4E, I'm curious about how you see the evolution of that trade ratio. Do you think it actually does it ever go down because yields improve or is there a propensity to see that made even increase?

Sumit Sadana: How you thought about that and I.

Speaker Change #157: As we think about HBM4 and beyond, I'm curious about how that's evolved, how you thought about that, and I have a quick follow-up as well.

Mark Murphy: Have a quick follow up as well.

Manish Bhatia: Sure, Aaron. So we have talked about how HBM3E will have a 3 to 1 trade ratio and that is made up of primarily factors of the die size. Gross HBM die size is larger than standard products in the same node in order to be able to provide the high bandwidth capability and performance capability that HBM that defines HBM and we have. And also based on the yields throughout the process and in particular the assembly process. So you can assume that the 12-high will have maybe a slightly higher trade ratio than 8-high. And we've said also that as we move towards HBM4 we see that trade ratio increasing as well.

Speaker Change #158: Sure, we have talked about how HBM 3E will have a 3-1 trade ratio, and that is made up of...

Speaker Change #159: Primarily factors of the die size growth, HPM die size is larger than standard products in the same node. In order to be able to provide the high bandwidth capability and performance capability that HPM defines HPM.

Speaker Change #159: and we have, you know, and also based on the yields in the, you know, throughout the process and and because of the assembly process. So you can assume that the 12-high will have maybe a slightly higher trade ratio than a high and we've said also that as we move towards HP and 4 we see that trade ratio.

Manish Bhatia: You know, we haven't really commented beyond that, but you can kind of imagine that as the performance gap between the HBM standard at the time and the standard products of LP and DDR, as the performance gap between those widens, then that's what's the biggest driver in terms of the trade ratio? Because more and more of the die size is dedicated to providing high bandwidth capability on the die that's differentiated in HBM versus standard DDR and LP products.

Speaker Change #159: Increased as well. You know, we have really commented beyond that, but you can kind of imagine that as the performance gap.

Speaker Change #159: between the HVM standard.

Speaker Change #159: At the time, and the standard products of LP and DDR, as the performance gap between those widens.

Speaker Change #159: and then, you know, that's what's the biggest driver in terms of the trade ratio, because the more and more of the dice size is dedicated to providing high bandwidth capability on the die that's differentiated in HBM versus standard DDR and LP products.

[Analyst]: Yep, that's very helpful.

Yep, that's very helpful.

Satya Kumar: Then it's just a quick follow up.

[Analyst]: I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious, you know Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that make CapEx more, you know, back half weighted relative to past years. Any kind of trajectory of how you're thinking about the CapEx spend, you know, relative to what we've seen the last few years as far as the cadence through the fiscal year.

I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious, you know Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that make CapEx more, you know, back half weighted relative to past years. Any kind of trajectory of how you're thinking about the CapEx spend, you know, relative to what we've seen the last few years as far as the cadence through the fiscal year.

Speaker Change #159: and then it's just a quick follow-up, I know you've given some framework around CapEx and the guidance for the first fiscal quarter. I'm just curious, you know, Mark, as we think about, you know, the CapEx trajectory, is there, is there things with, you know, as you look forward that may CapEx more, you know, back half weighted relative to past years.

Speaker Change #159: and any kind of trajectory of how you're thinking about the Catholics and, you know, relative to what we've seen the last few years as far as a cadence through the fiscal year.

Mark Murphy: Now Aaron, at this time, you know we, we've given, you know, quite a bit on CapEx for this fiscal year 2025. We indicated that would be up meaningfully. We, you know we, we gave you know, $3.5 billion for the first quarter. We've given that, you know we given that we expect full year estimate of mid-30s% of revenue. So we'll we'll, you know, we'll provide more through the year. You know, we can provide a bit more color on, you know, the nature of that CapEx. I mean the overwhelming majority in 2025 is a support HBM CapEx as well as facility construction, back end, and R&D. You know, WFE was down in, you know, both 2022 to 2023, then down again in 2024 or down from 2022 to 2023, then down again in 2024.

Speaker Change #159: So, Aaron, at this time, we've given...

Aaron Rakers: Yeah, quite a bit on CapEx for this fiscal year 25. We indicate that would be out meaningfully.

Aaron Rakers: We gave 3.5 billion for the first quarter, we've given that we've given that we expect [inaudible]

So, we'll provide more through the year, we can provide a bit more color on the nature of that apex, I mean, the overwhelming majority in.

Aaron Rakers: 25, as a support HBM, CapEx as well as facility construction back end and R&D. WFE was down and...

Speaker Change #160: Yeah, both 22-23s and down again in 24, are down from 22-23s and down again in 24. We do expect WFE to be up a bit, increase in 25.

Mark Murphy: We do expect WFE to be up a bit in 2025, but we'll remain disciplined on WFE and just to manage overall supply growth, maintain stable bit share, as we say.

Speaker Change #160: But we'll remain disciplined on WFE and, you know, and just to manage overall supply growth.

Mehdi Hosseini: Yep.

[Analyst]: Thanks Mark.

Thanks Mark.

Speaker Change #161: Yeah, maintains stable bit share as we say.

Operator: Thank you. And our next question comes from the line of Chris Caso from Wolfe Research. Your question please.

Mark Murphy: Yeah, thanks, Mark.

Speaker Change #162: Thank you, and our next question comes from the line of Chris K. O. From Wolf Research, your question, please.

Sumit Sadana: Yes, thank you. Good evening.

Chris Caso: The first question is about any potential impact from some of the China capacity that we've had added, we've seen added, and naturally that's on the lower end of the market, and you've said that it's becoming a smaller percentage of your business, but is that causing some disruption in what you're seeing now, and is that having any meaningful impact for you now? And then, you know, perhaps if that becomes a smaller part of revenue next year, does it become a smaller impact if there is any impact now?

Speaker Change #163: Yeah, thanks, you're good evening.

Speaker Change #164: First question is about any potential impact from some of the China capacity that we've added. We've seen added, and naturally, that's on the lower end of the market, and you've said to you that it's becoming a smaller percentage of your business.

Speaker Change #165: is that causing some disruption and what you're seeing now and is that having?

Speaker Change #166: and any meaningful impact for you now, and then perhaps if that becomes a smaller part of revenue next year, that does become a smaller impact if there is any impact now.

Satya Kumar: Yeah. Chris.

Sumit Sadana: So in terms of China supply, yes, there has been China supply in the market. It's primarily limited to China-oriented, China-exported customers who are using some of that supply or attempting to use it, and generally focused on the product categories that have lower performance associated with them. So you know, DDR4, LP4 on the DRAM side, and some of the lower-end products on the NAND side, especially in mobile and consumer SSD-type of product categories. Our focus has been to really have flat share on a global basis for DRAM and NAND, and within that focus on the higher profit pools of the industry. And we have made significant progress on that strategy, and you can see that in action now because we are in the midst of what is the best product cycle that we have had in the history of Micron.

Speaker Change #167: Yeah, Chris, so in terms of China, supply, yes, so has been China's supply and the market is primarily limited to China oriented China for those customers.

Chris Kato: who are using some of that supplier attempting to use it.

Speaker Change #168: and Jandali focused on the father categories that have lower performance associated with them. So, you know, DDR4LP4 on the DRAM side and...

Speaker Change #168: and some of the lower-end products on the man's side, especially in mobile and consumer SSD type of.

Speaker Change #168: and Prada Categories.

Speaker Change #168: Our focus has been to really have...

Speaker Change #168: Flash air on a global basis.

Speaker Change #168: for Diram and Nand, and within that focus on the higher profit pools of the industry, and we have made significant progress on that strategy, and you can see that in action now, because we are in the midst of what is...

Sumit Sadana: We are gaining share in all of the big high profit portions of the product portfolio of the industry. We have HBM share gains happening, really robust share in ICAP, DIMMs, pioneering leaders in LP5 in the data center, data center SSDs at record share levels. So you can see how the portion of the business that's exposed to those kinds of trends in China are really becoming smaller as a percent of our revenue over time. Right, that's helpful, thank you. I guess as a follow up, just.

Speaker Change #168: Best product cycle that we have had in the history of micron. We are gaining share in all of the big high profit.

Speaker Change #168: portions of the product portfolio industry. We have HPM shareings happening, Willi's robust share in ICAPDIMS, Pioneer and Leaders in LP Fighting the Data Center, Data Center as these at record share levels.

Speaker Change #168: So you can see how the portion of the business that's exposed to those kinds of trends in China are really becoming smaller as a percent of our revenue over time.

Manish Bhatia: Manish Bhatia,

Chris Caso: Kind of wrapping up all your CapEx comments and you provided a lot of, a lot of detail obviously. But it is, you know, I guess.

Manish Bhatia: It's helpful. Thank you. I guess it's a follow-up just kind of wrapping up all your capex comments.

Manish Bhatia: You've provided a lot of detail I've been asleep, but it is, you know, I guess what you've said in the past is basically that the amount of big growth.

Sumit Sadana: What you've said in the.

Chris Caso: past is basically that the amount of bit growth or the CapEx that's oriented towards bit growth is actually really small. That this is mainly technology transitions and as you migrate out to the next nodes that you're, I guess in some cases in the past you've actually been reducing capacity on. That is the view as you go into 2025 that there's no meaningful increase in bit capacity even as you migrate to some of these more advanced nodes in support of HBM.

Speaker Change #170: for the CapEx that's oriented towards Bicrof is actually really small, that this is mainly technology transitions, and as you, you know, migrate out to the next nodes that your, I guess in, in some cases in the, in the past you've actually been reducing capacity on that.

Speaker Change #171: is the view as you go into 25 that there's no meaningful increase in bit capacity even as you migrate to some of these more advanced nodes in support of HVM.

Manish Bhatia: So, you know, Chris, we had talked about in the last few calls and throughout fiscal 2024 about this capital efficient approach that we were taking to continuing technology conversions. For example, previous question, trying to convert more towards 1-beta, which was a D5 and LP5 optimized node from older nodes in an efficient way where we utilize some of the equipment that was for the prior nodes and reduce wafer capacity structurally. So I think that's sort of what you're referring to. Net we do get bit growth capability still because there is still bit growth capability provided by the new technology. But it's not as much as it would have been if we had maintained the same wafer capacity. Right.

Speaker Change #172: So, Chris, we had talked about in the last few calls in Drought, just with 24, about this capital decision approach that we were taking to continuing technology conversions.

Speaker Change #173: For example, previous question, trying to convert more towards one beta, which was a D5 and LP5 optimized node from older nodes in an efficient way where we utilize some of the equipment that was for, you know, the

Speaker Change #174: So I think that's sort of what you're referring to, and that we do get bit gross capability still because there is still bit gross capability provided by the new technology.

Speaker Change #174: but it's not as much as it would have been.

Manish Bhatia: So that's sort of the put and take is the wafer capacity comes down, the technology, new technology provides more bit growth, and that we still do get some, you know, get bit growth. It's just not as much as it would have been. We believe this is something that's there throughout the industry. Not just us, but both DRAM and NAND have had structural wafer capacity reductions in the industry since peak levels in 2022. You know, we're still going to be growing bit share long term in line with the demand that we see.

Speaker Change #174: If we had maintained the...

Speaker Change #174: Same way for capacity, right? So, that sort of the putntake is the way for capacity comes down, the technology, new technology.

Speaker Change #174: you know provides more big growth and that we still do get.

Speaker Change #174: or get some, you know, get big growth, it's just not as much as it would have been.

Speaker Change #174: And we believe this is something that's there throughout the industry, not just us but both DRAM and NAND have had structural way for capacity reductions in the industry.

Speaker Change #174: As since peak levels in 2022.

Speaker Change #174: and we're still going to be growing a bit share long-term in line with them.

Manish Bhatia: Taking into account things like the HBM trade ratio, which it makes it more difficult to, you know, sort of a headwind to bit growth, because as the mix of wafers moving towards HBM grows, you know, the bit capability for the, you know, for given amount of wafer capacity is lower.

Speaker Change #174: So demand that we see.

Speaker Change #174: and taking into account, think like the HBM Trade Ratio, which makes it more difficult to, you know, sort of a headwind a bit gross.

Speaker Change #174: because that's the mix of way for moving towards HVM grows, you know, the bit capability for the, you know, for given amount of way for capacities is lower.

Sumit Sadana: All right, thank you.

Operator: Thank you. Our next question comes from the line of Harsh Kumar from Piper Sandler. For your question, please.

Speaker Change #175: All right, thank you.

Speaker Change #175: Thank you, and our next question, come to the line of Harsh Kumar.

Mehdi Hosseini: Yeah.

Harsh Kumar: from Pajjuri. Yeah, here you are, question please.

Harsh Kumar: Yeah, hey guys, first of all congratulations seems like you guys are doing a good job of the current in the cycle. Maybe a question for Sumit Sadana, Mark, I want to understand your visibility, wanted to just...

Speaker Change #176: We get this question a lot from our investors, wanting to kind of understand.

Sumit Sadana: It is, whether it's for a particular.

Speaker Change #177: Maybe either the dynamics of a typical contract, how long it is, whether it's for a particular generation, or even beyond, or if you don't want to get that specific, maybe you could talk about your designing engagements with your larger customer, the handful.

[Analyst]: Generation or even beyond.

Generation or even beyond.

Sumit Sadana: Or if you don't want to get.

Speaker Change #177: that makes GPUs. What kind of is the ability to have either the contracts for supply or even your design contracts and then how to follow up?

Sumit Sadana: And then I had a follow up. Yeah, so in terms of the kind of agreements that we do with customers on this front, we have a couple of different types. We obviously, when we do LTAs or long term agreements, they are focused on the next calendar year typically. And so it goes January to December of 2025 in this case. And we tend to have visibility to the breakdown of bits, DRAM, and NAND by quarter. Typically we work with our customers to figure out what kind of products they are in advance. And we get an understanding of that, you know, based on the product type, what kind of node these bits are going to be manufactured in. So we can translate that to our manufacturing operations demand signal.

Speaker Change #178: Yeah, so in terms of...

Speaker Change #179: The kind of agreements that we do with customers on this front.

Speaker Change #180: We have a couple of different types.

Speaker Change #180: We obviously, when we do LTAs or long-term agreements, they are focused on the next calendar year typically.

Speaker Change #180: and so it goes January to December of 2025 in this case.

Speaker Change #180: and we tend to have, you know, visibility to the...

Speaker Change #181: Breakdown of bits in DRAM and NAND by quarter

Speaker Change #181: Typically, we work with our customers to figure out what kind of products they are in advance and we get a understanding of that based on the product type, what kind of node.

Speaker Change #181: These bits are going to be manufactured and so we can translate that to our manufacturing operations, demand signal.

Sumit Sadana: Now when it comes to HBM, you know, so by the way, before we talk about HBM, so these tend to be mainly volume agreements that get negotiated for price on a monthly or quarterly basis depending on the customer. And that pricing gets negotiated over time as we go through the fiscal and calendar year. When it comes to HBM, the agreements are different, and the terms are different, the visibility is longer. And we tend to have these agreements do have pricing already concluded for all of calendar 2024 and 2025. And the thing that is obviously different for HBM and also for LPDRAM that's going into the data center is we have very deep engagements with our customers on their R&D.

Speaker Change #181: Now...

Speaker Change #181: when it comes to HBM, you know, so by the way before we talk about HBM, so these.

Speaker Change #181: Thank to be mainly volume agreements that get negotiated for prize.

Speaker Change #181: on monthly accordingly basis depending on the customer.

Speaker Change #181: and that pricing gets negotiated over time as we go through the fiscal and calendar year. When it comes to HBM, the agreements are different and the terms are different, the visibility is...

Speaker Change #181: is longer.

Speaker Change #181: and we tend to have these agreements to have pricing already contributed for all of Kalin the 24 and 25.

Speaker Change #181: and the thing that is obviously different for HPM and also for LPD around that's going into the data center.

Speaker Change #181: We have very deep engagement to our customers.

Sumit Sadana: The roadmap that they're working on, whether it's GPUs or ASIC accelerators that they're designing, requires multi-year outlook on the roadmap, requires alignment on specs, alignment on features and functionality. When it comes to LP, you know what kind of capability on the RAS side they need. Reliability, availability, and serviceability that we design in and lead the industry on that. So these are like all multi-year engagements on the R and D front. That is what gives us the confidence when we make the statements that we feel we'll have leadership in HBM4 and HBM4E as well. As it gets to 4E, then we even talk to them about customization that is going to be happening in 4E where certain kinds of IP a customer may want to embed in our HBM product and then it becomes very different than a regular standard product.

Speaker Change #181: on their R&D, the road map that they're working on, whether it's GPUs or ASIC accelerators that they're designing, requires multi-year outlook on the road map.

Speaker Change #181: Requires alignment on specs, alignment on features and functionality when it comes to LP, you know, what kind of capability on the...

Speaker Change #181: Rath, Saitanid, Reliability of Reliability and Surveysability that we design in and leave the industry on that. So these are like all multi-year engagements on the R&D front.

Speaker Change #181: And that is...

Speaker Change #181: What gives us a confidence when we make the statements that we feel we will have leadership in HBM4 and HBM4E as well. And as it gets to 4th, then we even talk to them about...

Speaker Change #181: Customization that is going to be happening in 4E where certain kinds of IP, a customer may want to embed in our HPM product.

Sumit Sadana: And then it becomes different than a standard product. Then it comes with very different terms in terms of the business arrangement that we have. And that is part of what we say, that this growth of the data center, ultimately growth of AI, is going to create opportunities to transform the business model of the industry over time as well. So that's sort of a window into how those engagements happen.

Speaker Change #182: and then it becomes very different than a regular sandal product and then it becomes different than a sandal product, then it comes with very different terms.

Speaker Change #182: In terms of the business arrangement, we have, and that is...

Speaker Change #182: Part of what we say that, you know, this growth of the data center ultimately growth of AI is going to...

Speaker Change #182: Create Opportunities to transform the business model of the industry over time as well, so that's sort of a window into how those engagements happen.

[Analyst]: This is super helpful. So another one is a follow-up. Another one that we get is there's this fear that we hear from some of our clients and investors that the third competitor will suddenly wake up and, you know, just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer, would have to get in line, you know, get some share, and you would have your own share contracted out. So you're probably not likely to get surprised, or am I mistaken in this assumption?

This is super helpful. So another one is a follow-up. Another one that we get is there's this fear that we hear from some of our clients and investors that the third competitor will suddenly wake up and, you know, just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer, would have to get in line, you know, get some share, and you would have your own share contracted out. So you're probably not likely to get surprised, or am I mistaken in this assumption?

Speaker Change #183: This is a super helpful, so another one is a follow. Another one that we get is there's this fear that we hear from some of our clients and investors.

Speaker Change #184: that the third competitor will suddenly wake up and just get into the game. I suspect from what you're saying, it's not that easy that this customer, the third customer, have to get in line, get some share in.

Speaker Change #185: You would have your own share, contract it out, so you're probably not likely to get surprised that am I mistaken in this assumption.

Sumit Sadana: I mean, we do have an expectation that ultimately, you know, all three of the large DRAM suppliers will be able to supply HBM. Our goal is to have the best HBM on the planet with the best performance, the best functionality, and features and specs. I think it is really remarkable that 12-high product from Micron can have 20% lower power than 8-high product from the nearest competitor. That kind of power savings directly helps with saving of data center power needs because next to the processor, the DRAM is a huge part of what happens to the power consumption in the data center. So it's not just about our share, it's also about how the share can, how Micron's products can actually be leveraged for end-to-end advantage for our customers.

Speaker Change #185: You know, all three of the...

Speaker Change #186: Large D-Rance Suppliers will be able to supply HPM. Our goal is to have the best HPM on the planet with the best performance, the best functionality and features and specs.

Speaker Change #187: I think it is really remarkable that 12 high products from micron can have 20% lower power than 8 high products from the nearest competitor.

Speaker Change #187: That kind of power savings.

Speaker Change #187: Directly helps with saving of data center power needs, because next to the processor, the B-ram is...

Speaker Change #188: You know, you just thought of what happened to the power consumption in the data center. So, it's not just about our share, it's also about...

Speaker Change #188: You know, how the share can, how my crowd's thought it can actually be leveraged for any to end advantage for our customers.

Sumit Sadana: Consequently we have seen very high demand for our product and we feel confident that we'll be able to ramp. I mean all of the ramp that we have for 2025 is really limited by the supply and the rate and pace at which it can be brought to market because we definitely have a lot of demand for this industry product. Now as you look past that, obviously there is always competition and we are not afraid of competition. So we plan for our supply to ensure that it's in sync with the demand. When we look at the industry model for supply and demand, we are capturing in that model what portion of the demand is HBM, what portion of the demand is non-HBM.

Speaker Change #188: and consequently we have seen very high demand for our product.

Vivek: and Vivek confident.

Vivek: that we'll be able to ramp, I mean all of the ramp.

Vivek: That we have for 25 is...

Vivek: Really limited by the supply and the rate and pace at which it can be brought to market.

Speaker Change #189: Because we definitely have...

Speaker Change #189: A lot of demand for this industry in Sada. Now, as you look past that, obviously.

Speaker Change #189: You know, there is always competition and we are not afraid of competition and so we plan for our supply to ensure that it's in sync with the demand.

Speaker Change #189: And when we look at the industry model for supply and demand, we are capturing in that model, what portion of the demand is HPM, what portion of the demand is non HPM?

Sumit Sadana: As we have discussed in the prior call, as well today, that the non-HBM portion of the industry is being compressed by the growth in HBM, and overall bit growth can be brought online only at a certain rate and pace, especially when HBM is so capital-intensive to bring up so much volume so fast for the whole industry. So we do feel that the mix changes will happen, but we'll be able to manage them well because the aggregate level of supply demand ought to be in a healthy place based on our outlook for how 2025 fiscal and calendar year is likely to evolve.

Speaker Change #189: and as, you know, we have discussed in the prior call as well today that...

Speaker Change #189: The non-HVN portion of the industry

Speaker Change #189: is being compressed by the growth in HVM.

Speaker Change #189: and overall, you know, bitcrow can be brought online only at a certain rate in pace.

Speaker Change #189: especially when HBM is so capital intensive, to bring up so much volume so fast for the whole industry. And so we do feel that...

Speaker Change #189: You know, the next changes will happen, but we'll be able to manage them well because the aggregate level of supply demand ought to be in a healthy place based on our outlook for how 20, 25 fiscal and calendar year is likely to evolve.

Mehdi Hosseini: Wonderful.

[Analyst]: Thank you guys. Thanks so much.

Thank you guys. Thanks so much.

Speaker Change #190: Wonderful. Thank you guys. Thanks so much.

Operator: Thank you. Our next question comes from the.

Speaker Change #191: Thank you and our next question comes from the line.

Manish Bhatia: Line.

Operator: Mehdi Hosseini.

Sumit Sadana: From Sheska.

Amahadi: Amahadi, who's saying it?

Manish Bhatia: Thank you.

Mehdi Hosseini: Yes, thank you, operator. It's actually Mehdi Hosseini. I just have a couple of follow-up questions. All the good questions have been asked. Mark, given your OpEx increase of 15% and the fact that you are sold out for HBM and HBM also accounting for a higher mix of your capacity, what is your confidence level in operating margin expanding throughout 2025? And I have a couple of other follow-ups.

Sheskuya: from Sheskuya. Thank you.

Sheskuya: Thank you for your time, thank you for your time, actually, Mary Hoseini, I just have a couple of them.

Sheskuya: Follow up question, all the good questions that we have. Mark, sir.

Speaker Change #193: Given your attacks, increase of 15%, and the fact that you are sold out for HBM and HBM, also accounting for a higher mix of capacity.

Speaker Change #194: Do you? What is your confidence level in operating margin expanding throughout 25 and I have a couple of other formats?

Mark Murphy: Yeah, Mehdi, you know, we're guiding, you know, one quarter at a time. We did provide color on the industry or on the year and the market environment as it relates to the year. And maybe to help you with some view on the year, we do see a healthy supply-demand balance and a constructive environment to help with our financial profitability through the year. Yeah, we said we expect a significant revenue record and improved profitability. We said today that our volumes in the year would be H2 weighted, which is, you know, important for a number of things including our drawdown of inventories and our, you know, timing on node transition and output from that, you know, maybe one additional comment. You know, keep in mind that in the second quarter it tends to be a seasonally weaker quarter for us.

Samiri V.: Samiri V.

Speaker Change #196: We're guiding one quarter to time. We did provide color on the industry or on the feet of the year and the market environment.

Speaker Change #197: You know, as it relates to the year and maybe that to help you with some view on the year we do see.

Speaker Change #198: Yeah, a healthy, supply, demand balance and, you know, a constructive environment to help with our financial profitability through this year. Yeah, we've said we expect a significant revenue record.

Speaker Change #198: and improve profitability.

Speaker Change #198: We've said today that our volumes in the year would be second half-weighted, which is important for a number of things, including our draw-down of inventories and our, you know, timing on no transition and output from that.

Speaker Change #198: You know, maybe one additional comment, you know, keep in mind that in the second quarter it tends to be a seasonally weaker quarter for us, a second fiscal quarter which would be the calendar first quarter.

Mark Murphy: Our second fiscal quarter, which would be the calendar first quarter, tends to be a weaker quarter for the industry. So something to keep in mind. But overall, you know, a fiscal year 2025 with increasing volumes, second-half fiscal year-weighted healthy supply-demand environment.

Speaker Change #198: Tens to be a week or a quarter.

Speaker Change #198: for the industry, so something to keep in mind, but overall, you know, a year fiscal 25 with increasing volumes.

Speaker Change #198: 2nd half, fiscal year, weighted.

Sumit Sadana: Executing.

Speaker Change #198: Healthy Supply Demand Environment, executing really well on the product road maps and increasing Mix of HBM of Hygabassidim's LP.

Mark Murphy: Really well on the product roadmaps and.

Sumit Sadana: Increasing mix of HBM, of high capacity.

Mark Murphy: DIMMs, LP data center, SSD, and then a broadening of demand through the year from what has been very strong AI data center to broader traditional, and then other markets.

Speaker Change #198: Data Center SSD, and then a broadening of demand through the year, you know, from what has been very strong AI, Data Center to broader traditional and then other markets.

Mehdi Hosseini: So you feel pretty good for at least fiscal year 25. You just don't want to set a bar and be accountable to that bar. But you feel pretty good. Is that a fair way of summarizing everything you said?

Speaker Change #199: So, you feel pretty good for Ali's fiscal year, 25, you just don't want to say the bar and be so accountable to that bar, but you feel pretty good. It is a fair way of summarizing everything you said.

Mark Murphy: We've given some positive indications for the year and we're vigilant at all times about our cost structure, about our cost performance, about the discipline of our capital spend, and maintaining stable bit share. We think we're doing a good job of executing well and managing the.

Speaker Change #200: We've given some positive indications for the year and we're vigilant at all times about our cost structure, about our cost performance, about the discipline of our capital spend and maintaining stable bit share and we're...

Sumit Sadana: Risks in the business.

Speaker Change #200: We think we're doing a good job of executing well and managing the risks in the business.

Mehdi Hosseini: Got it. Thank you. Question from it is everyone is focused on back end yield associated with HBM and stacking, but can you help me understand how your front end yield compares to competitors and the same thing for the back end of HBM facilities? So kind of this could help us to better evaluate how well Micron is executing. So if you could just break it up between the front end and back end and how it's compared to the peers, that would be great.

Speaker Change #201: Thank you. And there are questions from Manish and everyone is focused on back and youth, associated with HBM and KSC. But can you help me understand how your front end?

Speaker Change #202: Yield Comters to Comparatures.

Speaker Change #203: and the same thing for the back end of the HBM facility. So, kind of.

Speaker Change #204: He discreet, helped us to better evaluate.

Speaker Change #205: How well mycon is executed, so if you can just break it up between the front end and back end and how it's compared to the peers that will be great.

Manish Bhatia: I won't comment specifically, Mehdi, on competitors, but I will tell you that, and we have made comments on this before. We have made significant investments into what we call smart manufacturing and artificial intelligence for many years now. We focus those in manufacturing both between technology development and manufacturing, and at that interface as we ramp new nodes so that our yield ramps, and we have given some color on this in the past. Our yield ramps continue node over node to be faster than prior nodes and more predictable and achieve higher mature levels as we move forward.

Speaker Change #206: Well, you know, comment specifically Medi on competitors but I will tell you that and we have made comments on this before we have made significant investments into what we call far manufacturing and artificial intelligence for many years now.

Speaker Change #206: and we focus those in manufacturing, both between technology development and manufacturing and at that interface as we ramp new nodes so that our yield ramps.

Speaker Change #206: and we have given some color on this in the past. Our yield ramps continue not over note to be faster than...

Speaker Change #206: and then prior notes and more predictable and achieve higher.

Manish Bhatia: So, I think you can rest assured that all of those structural capabilities, we feel Micron is very, very well positioned, and we are utilizing, you know, all the latest techniques. And in fact, many of the equipment vendors that we talk to tell us that we are leading in smart manufacturing, you know, utilization of these techniques to be able to improve efficiency in the fab, as well as yield performance and quality performance. So, I think, you know, feel good about, about that. And you know, I already on the, you know, previously on the call. You know, I think it was, was it Harlan who asked about yields on HBM, and you know, just continue to reiterate. We feel about where they are, we feel good about where they're going, and being able to support the HBM opportunities we have ahead.

Speaker Change #207: Material Levels as we move forward. So I think...

Speaker Change #207: You can rest assured that all of those structural capabilities we feel micron is very, very well positioned.

Speaker Change #207: and we are utilizing, you know, all the latest techniques and in fact many of the equipment vendors that we talk to.

Speaker Change #207: Tell us that we are leading in smart manufacturing utilization of these techniques to be able to...

Speaker Change #207: Improve efficiency in the Fab as well as yield performance and quality performance.

Speaker Change #207: and I think you know, feel good about that and you know, I already on the, you know, previously on the call, you know, I think it was, um...

Harlan Sir: Harlan, who asked about yields on HBM and continues to reiterate how we feel good about where they are, we feel good about where they're going and being able to support the HBM.

Mehdi Hosseini: But I guess I was asking specifically for any kind of qualitative color comparing Front End and the Back End, not overall yield.

Speaker Change #208: and the opportunity to have a head? But I guess I was asking specifically for any kind of qualitative column comparing front and back end, not overall use.

Manish Bhatia: Yeah, you know, I think that we.

Speaker Change #209: Yeah, you know, I think that we are...

Mehdi Hosseini: You know, I'm not going to sort.

Manish Bhatia: No comment specifically about, you know, our peers, but I think we have very good yields.

Speaker Change #209: Deep.

Speaker Change #210: He knows, I'm not gonna have a zurück.

Speaker Change #211: Comment specifically about, you know, our peers, but I think we have very good yields, right? And I think I feel good about where they are for both the front end and the back end. And you're kind of asking about back end, I'll say across our, you know, back end product lines across the board. I feel like we have very, very good.

Operator: Right.

Manish Bhatia: And I think I feel good about where they are for both the front end and the back end. And you're kind of asking about back end. I'll say across our back end product lines, across the board, I feel like we have very, very good manufacturing capability, both from assembly, but also test capability. A lot of the yield capability that we have comes from our customized development of our own tester equipment and tester hardware, which allows us to be able to have lower cost test equipment as well as equipment solutions and testing solutions that are specifically tuned to our products. In many ways, we design our tester hardware in line with our product design so that we're able to test more efficiently and with better fidelity such that we can improve yields while we're improving outgoing quality as well.

Speaker Change #211: Manufacturing Capability, both from assembly but also test capability, a lot of the yield capability that we have is our comes from our customized development of our own test.

Speaker Change #211: Tester Equipment, and Tester Hardware, which allows us to be able to have lower cost test equipment as well as...

Speaker Change #211: Equipment solutions and testing solutions that are specifically tuned to our products.

Speaker Change #211: In many ways, we design our test for hardware, in line with our product design, so that we're able to...

Speaker Change #211: the test more efficiently and with better fidelity, such that we can improve yields while we're improving outgoing quality as well. So, you know, I feel like we have very, very strong capabilities in both front end yields as well as back end yields and on back end both in assembly as well as in test.

Manish Bhatia: So, you know, I feel like we have very, very strong capabilities in both front end yields as well as back end yields, and on back end, both in assembly as well as in test.

Mehdi Hosseini: Thank you.

Operator: Thank you. Our next question comes from the line of Brian Chin from Stifel. Your question please.

Speaker Change #212: Okay, thank you.

Speaker Change #212: Thank you and our next question comes from a line of Brian Chin from Teethol, your question please.

[Analyst]: Hi there.

Hi there.

Brian Chin: Good afternoon, and congratulations on the results and execution. Maybe related to something that was just discussed a moment ago, we had. Yeah, this is our modeling. We'd model the February quarter revenue kind of sideways relative to November for some of the reasons that were stated around seasonality and kind of this, you know, some inventories maybe that have built up in consumer. Maybe just to deconstruct that a little.

Brian Chin: and other good afternoon and congratulations on the results and execution.

Speaker Change #213: They've related to something that was just discussed a moment ago. We had, yeah, this is our modeling. We had modeled the February quarter revenue kind of sideways relative to November. For some of the reasons that were stated around seasonality and kind of this, you know, some of the stories that have built up in consumer.

Sumit Sadana: Bit.

Brian Chin: When you think about seasonality, Mark, can you define what that looks like in a February quarter from a bit shipment standpoint, and then in terms of the portfolio mix, which kind of works in the company's favor in the November quarter, driving some of that sequential growth? Why would it not be? Why would that mix effect not be similar in the February quarter relative to November?

Mark Murphy: Porfolio mix which kind of works in the company's favor in the November quarter, driving some of that sequential growth. Why would that mix a sack not be similar in the February quarter relative to November?

Mark Murphy: Yeah, let me start and then maybe Sumit can add on this. You know, Brian, we're not going to guide to the second quarter, and I understand the interest in learning about our view on that quarter. But right now, just the contours of the year, we see strong data center demand through this first half of the year, fiscal year, and then through the year that AI-related server demand continuing to be strong and then it broadening out. We're seeing traditional server volumes increase now, and then other markets see that broadening out, and, as I mentioned earlier, the HBM volumes we see being heavier weighted in the second half of the fiscal year. And you know there will be some favorable, as you say, because some of these high performance markets here that are strong.

Speaker Change #214: Yeah, let me start and then maybe Simit can add on this. Brian, we're not going to guide to this second quarter and I understand that they interest in learning about our view on that quarter, but right now, just the contours of the year we see.

Simit: You know, strong data center demand through this first half of the year, fiscal year, and then through the year, that, um...

Speaker Change #215: A.I. related server demand continuing to be strong and then it's broadening out, we're seeing traditional server volumes increase now and then in other markets see that broadening out.

Speaker Change #215: and as I mentioned earlier the...

Speaker Change #215: Our volumes, we see being...

Speaker Change #216: Have your weighted in the second half of the fiscal year. And there will be some favorable, as you say, because some of these high performance markets here that are strong.

Mark Murphy: There is continued favorable mix growth through the year as we ramp HBM. We've given enough markers on that profile, but also high-capacity DIMMs, LP, and data center SSDs.

Speaker Change #216: Um, yeah, there.

Speaker Change #216: There is continued favorable mix growth through the year as we ramp HBM, we've given enough.

Speaker Change #216: Markers on that profile, but also high capacity dims LP and data center, SFB, we continue to grow.

Sumit Sadana: We continue to grow.

Mark Murphy: So, I think, Sumit, anything to add?

Sumit Sadana: Yeah, I think Mark provided the important relevant color. The only thing I'll mention is Q2. Like Mark said, we're not providing any guidance, but just in terms of, you know, how you think about it, definitely the ramp of our higher margin data center products will continue throughout the year. So Q2 will get benefit from that. But it is also, as Mark said, a quarter where there is seasonality of Q1 that is part of Q2. And also, you know, we mentioned this point in our prepared remarks about the PC OEMs and to a lesser extent.

Sumit Sadana: Um, I think Sumit anything that add.

Sumit Sadana: Yeah, I think Mark provided the important relevant color. The only thing I'll mention is the second quarter, like Mark said, we're not providing any guidance but just in terms of how you think about it, definitely be.

Sumit Sadana: Ramp of our...

Sumit Sadana: Higher margin, data center products will continue throughout the years so the second quarter will get benefit from that, but it is also as Mark said, a quarter where there is a seasonality of CQ1 that is spot for FQ2.

Speaker Change #217: and also, you know, we mentioned this point in a prepared remarks about the PC OEMs and to a lesser extent, smartphone OEMs.

Mark Murphy: Smartphone OEMs.

Sumit Sadana: Working to get their inventory to a healthier place by spring of 2025, which again encapsulates the FQ2 time frame. So those are some of the things to keep in mind, which is what leads us to that second half of fiscal year 2025. Second half of calendar 2025 should be strong, broadening of demand drivers AI, PCI, and smartphone mix improvements helping on top of the full year fiscal and calendar 2025 data center robust demand continuing.

Speaker Change #218: Working to get there in inventory to help the place by spring of 2025, which again encapsulates the FU to timeframe.

Speaker Change #219: So those are some of the things to keep in mind which is what leads us to that second half of a fiscal year 25, second half of calendar 25 should be strong broadening of demand drivers.

Speaker Change #220: AIPCS, Mark von Mix Improvement Helping on top of the full year fiscal in Calamber 25 data center robust demand continuing.

Manish Bhatia: Okay, great.

Brian Chin: That's actually super helpful. Maybe just a very quick follow-up. But from a timing standpoint, when roughly does your 12-high HBM3E product need to be qualified by in order to be on track with your HBM production and shipment schedule that you've communicated?

Speaker Change #221: Okay, that's actually super helpful and maybe just a very quick follow-up from a timing standpoint.

Speaker Change #222: What roughly does your 12-high 3E product need to be qualified by in order to be on track with your HP and production and shipment schedule that you've communicated?

Sumit Sadana: Yeah, so our HBM 8-high continues to ship in volume, and we are working very closely with our customers to figure out what their plans for switching to 12-high are based on, of course, the qualifications, but more importantly, the readiness of their products to leverage 12-high and the readiness of the ecosystem to rank 12-high. Because 12-high obviously [is a] more complex product than 8-high, so [it] will go through its own yield ramp. Our expectation is that we are going to be selling this product in volume starting in the early part of calendar 2025, and then throughout 2025, every quarter the mix of 12-high will keep increasing, and in the second half of calendar 2025, you'll have a very large mix of 12-high.

Speaker Change #223: So, our HBM, eight high continues to ship and volume and we are working very closely with our customers too

Speaker Change #224: Figure out what their plans for...

Speaker Change #224: Switching to 12th high R based on

Speaker Change #225: Of course, the qualifications, but more importantly, the readiness of their...

Speaker Change #225: products to leverage 12.5.

Speaker Change #225: and the readiness of the ecosystem to rank 12 high because 12 high obviously more complex products than 8 high so we'll go through its own yield grant and our expectation is that we're going to be in

Speaker Change #225: So we are going to be selling this product involved in starting in early part of Cal and the 25 and then 12, 20, 25.

Speaker Change #225: every quarter of the mix of 12 high will keep increasing and the second half of Caledit 25.

Sumit Sadana: In order to support that, obviously you know, we provide samples to customers ahead of time. We go through a qualification process, and we have mentioned that production-ready 12-high samples have been provided to our customers, and we provided you some of the expectations we have of our industry leadership of that 12-high product with the 20% lower power consumption versus others 8-high products. So we feel really good about our 12-high, and it should constitute the majority of our sales in H2 2025, assuming our customers make the transitions on the timelines that they are currently expecting.

Speaker Change #225: and you'll have a very large mix of 12 high.

Speaker Change #225: and in order to support that obviously, [inaudible]

Speaker Change #225: We provide samples to customers ahead of time, we go through a call process.

Speaker Change #225: And we have mentioned that production, ready 12 high samples have been provided to our customers, and we provided you some of the expectations we have of our industry, the leadership of that 12 high product with the 20% lower power consumption versus other's eight high product. So, we feel really good about 12 high and...

Speaker Change #225: It should constitute the majority of our sales in the second half of Kalin 25, assuming our customers make the transitions on the timelines that they are currently expecting.

Manish Bhatia: Great. Thank you very much. Yeah. And I'll just add, we feel good about where we are. With 12-high, Sumit mentioned, we started sampling with customers, and we're getting feedback and learning to be able to prepare for that ramp that Sumit mentioned that'll start in early calendar year 2025.

Speaker Change #226: Um, great, thank you very much.

Speaker Change #226: We feel good about where we are with the 12-high summit mentioned. We've started Samir Patodia, customer, so we're getting feedback and learning to be able to prepare for that ramped at Samir Patodia.

Mehdi Hosseini: Thanks.

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

Speaker Change #226: Thanks.

Speaker Change #227: Thank you and this does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation. You may now disconnect. Good day.

Manish Bhatia: Good day.

Good day.

Speaker Change #227: [inaudible]

Micron Technology Inc Post Earnings Analyst Call

Request a DemoDemo