Q1 2025 Micron Technology Inc Post Earnings Analyst Call

December 18, 2024

Okay.

Speaker Change: 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 will need to press star one on your telephone.

Speaker Change: I'd like to remove yourself from the queue simply press star one again.

Speaker Change: Today's program is being recorded and now I'd like to introduce your host for today's program sets. Your Kumar corporate Vice President Investor Relations and Treasury. Please go ahead Sir.

Thank you Jonathan and thank you and welcome to Micron technologies fiscal first quarter 2025 post earnings analyst call.

Speaker Change: Joining me today are cement Siddhartha, My Cox, Chief business Officer, Manish Bhatia, EVP of global operations and Mark Murphy our CFO.

Speaker Change: Mind you 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.

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

Speaker Change: We refer you to documents, we have filed with the FCC, including our most recent Form 10-Q and upcoming 10-Q for a discussion of risks that may affect our results. 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're under no duty to update any of the forward looking statements to conform these statements.

Speaker Change: The actual results we can now open the call to Q&A.

Speaker Change: Certainly and our first question for today comes from.

Speaker Change: The line of.

Speaker Change: Harlan sur from Jpmorgan Your question. Please.

Speaker Change: Thanks, Scott for hosting this call Docs I've got two questions on the 100 basis point decline in gross margin in Q2 as you guys mentioned, it's almost all NAND related mix pricing lower shipments, but qualitatively like what are you guys anticipating for DRAM pricing right you talked about positive mix.

Speaker Change: Syntax HBM.

Speaker Change: Partially offset by weak commodity pricing. So I guess my question is is blended DRAM pricing up sequentially in Q2.

Yeah I think.

We don't really guide for pricing.

Speaker Change: I think we have given you.

A lot of data points.

Speaker Change: It can.

Speaker Change: Help you in your modeling.

Speaker Change: But we are not going to provide guidance on the actual pricing expectation.

For competitive reasons and you know I think the overall set of comments that you heard in the prepared remarks and the comments that.

Speaker Change: On June eight.

Speaker Change: And basically.

The mix improvement.

Speaker Change: Here's a good trajectory.

Speaker Change: <unk> growth continues on a good trajectory data center overall revenue trajectory continues to be robust.

Speaker Change: While we do have some near term moderation in data center SSD for a lot of.

Speaker Change: Growth in the past quarters.

Speaker Change: The overall data center.

Speaker Change: Revenue trajectory remains.

Speaker Change: That is a Boston.

Speaker Change: We expect that to underpin.

Speaker Change: Performance through fiscal and calendar 2025.

Speaker Change: And so those are the positives.

Speaker Change: And of course, we spoke about the near term issues related to market environment seasonality.

Speaker Change: Challenges. So those are some of the headwinds.

Speaker Change: The mix and data center growth and overall DRAM robust results.

Speaker Change: And what is helping us ensure that the.

Speaker Change: Margin for rescue too is.

Speaker Change: Were fairly similar too.

Greg: What we have in FQ, one in terms of 100 basis point Greg.

Speaker Change: Only delta despite some of these headwinds we mentioned.

Speaker Change: And so all the other day.

Speaker Change: That's helpful and then.

Speaker Change: Maybe to follow up one of the.

<unk> said this before one of the big Micron specific inflections has been strong increasing in enterprise and data center SSD share right. I mean, you guys have always been strong in SATA.

Speaker Change: Mainstream Pcie and Nvme is where you guys have gone from like.

Speaker Change: 3% to 5% market share in calendar 'twenty one.

Speaker Change: 10% to 12% exiting last year I think in Q3.

Speaker Change: Sure It was like 14% and it grew sequentially again in fiscal Q1. So my guess is 111 $2 billion of datacenter SSD Thats inked.

65% of your overall NAND business you guys. Another number two or number three market share leader I know enterprise SSD can be lumpy as you mentioned right. That's impacting Q2, but you guys expect sequential Reacceleration in data center SSD in fiscal Q3, and just overall growth in data.

Speaker Change: Center SSD business fiscal 'twenty, five and Carlos calendar 'twenty, five just because AI demand pull for those products is just so strong.

Speaker Change: Yes, I think you you laid it out really well we have made tremendous progress in our data center SSD business over the years. This has been an area we had been investing in for.

Speaker Change: You know five seven years now and we have seen a tremendous rejuvenation in our product portfolio with industry leading products now.

So 30 terabyte Ssds 60 turbine that has to be just announced first pcie Gen 560, terabyte SSD under market the $95 15 fastest SSD in the world.

Speaker Change: So there are lots of these amazing products that have enabled us to do.

Speaker Change: Get to a really solid performance seven quarters of <unk>.

Our record setting revenue and market share performance. So as we look ahead.

Speaker Change: Beyond the.

Bill: And the Lumpiness you mentioned bill.

Bill: That.

Bill: F Q2, we do expect.

Bill: Our growth in bit shipments.

Bill: Restarting in Q3 for data Center SSD, and then continuing from there on.

Bill: Into future quarters that trajectory should grow.

Bill: We do expect the overall data center Capex from our end customers to remain strong.

Bill: And that should enable us to get significant opportunity with the portfolio that we have that is now the strongest it has been in our history.

Speaker Change: No that's very helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question here.

Aaron Rakers: Yeah. Thanks for thanks for doing the call back and I have two questions as well.

Aaron Rakers: I guess the first question Mark I wanted to go back to kind of the Q&A and prepared.

Paul.

Aaron Rakers: I'm trying to understand like you talked about constraints on gross margin into the fiscal third quarter.

Aaron Rakers:

Aaron Rakers: I'm trying to kind of frame the impact that youre thinking about from the under load is at a 100 basis points is it 200 does it last.

Speaker Change: And when you say constraints are you.

Speaker Change: Imply are you necessarily applying that there isn't the potential or rather is there a potential to see some gross margin positive drivers into fiscal <unk> relative to fiscal <unk>.

Speaker Change: Even with that under load charges could we see gross margin flat to up.

Speaker Change: I'm, just trying to understand a little bit of what you're trying to kind of frame as far as being constrained.

Yeah, So so erin.

Speaker Change: Yeah, we're not we're not guiding third quarter gross margin so.

Speaker Change: Just trying to be.

Yes, mindful to make sure that when.

Speaker Change: When we provide a number it's a number that we have.

Speaker Change: High conviction on what we do know is that.

Speaker Change: Yes, there are some.

Speaker Change: Unfavorable items that persist into the third quarter, the NAND challenging market conditions.

Speaker Change: We believe extend into calendar Q1, which overlaps.

Speaker Change: With our third quarter fiscal and.

Speaker Change: And so that's that's still an issue.

Speaker Change: And then as I mentioned in third quarter the <unk>.

Speaker Change: <unk> charges will begin to hit and those will hit and.

Speaker Change: Yes in the form of <unk> costs, and then just some higher cost inventory in that effect as you mentioned 100 or 200 basis points closer to a 100 basis points.

Speaker Change: Impact.

Speaker Change: Uh huh.

And then yes, there are definitely some favorable effects, which.

Speaker Change: Continue to occur.

Speaker Change: In second quarter, and third quarter and beyond and that is the most important thing on the call and that is.

Speaker Change: Continued growth in data center.

Speaker Change: Continued mix benefits from higher margin products.

Speaker Change: <unk> high capacity dense LP DRAM and that as Sumit mentioned.

Speaker Change: Volume growth and better market conditions in NAND, but volume growth and data center Ssds continuing.

So all of these.

Speaker Change: Items.

Speaker Change: We believe beyond the third quarter support.

Speaker Change: Margin expansion.

Speaker Change: And then finally are in.

Speaker Change: And we've been clear that we expect inventories to be up in the near term because these volume declines in NAND and DRAM in the second quarter.

Speaker Change: Oh and dollars of inventory level will be up.

Speaker Change: In DRAM, we are still very tight on leading edge overall DRAM inventories are are find and to the point where through the end of the year.

Speaker Change: They will continue to improve from second quarter, and then and at the end of the year.

Our overall DRAM inventories will be below our target levels and then NAND.

Speaker Change: As that market recovers we expect.

Speaker Change: NAND inventories, while not as healthy as DRAM NAND inventories will improve.

Speaker Change: Second to third to fourth quarter.

Speaker Change: That's helpful and then as a quick follow up I know a lot of focus is placed on HBM.

Speaker Change: Understandably, but.

Speaker Change: One of the things that you guys have highlighted over the last several quarters as LP DDR five acts and obviously getting into the black oil product cycle GBP 200 from Nvidia how would you characterize your views of that ramp.

Speaker Change: Where you think micron relative share position is within those that LP DDR Five Act data center opportunity I'm just curious thank you.

Speaker Change: Yes, we are actually the pioneering.

Speaker Change: Memory supplier of LP.

Speaker Change: In the data center, if you think about <unk>.

Speaker Change: All of the.

Market for LTE in the data center worldwide.

Speaker Change: Yes, it is pretty much micron driving that right now.

Over time there'll be.

Speaker Change: Others, but we are in the pole position.

Speaker Change: Having driven the innovations.

That are needed for a data center to deploy.

Speaker Change: Memory that does not purpose built.

Speaker Change: For data center rack environment.

Speaker Change: So reliability availability serviceability that its been thinking DDR five is not available and in LP.

Solution and Micron has made some.

Speaker Change: Important innovations in that product category and hence we are the ones who are.

Speaker Change: Really partnering with customers to drive this significant opportunity for us.

Speaker Change: And this is something that is real.

Speaker Change: Really important part of our overall strategy, it's an important part of our data center business and when you combine this with the <unk>.

Speaker Change: Advantages that we have driven.

Speaker Change: The high capacity dense portion of the data center market wherever you were the first company with more no dye based.

Speaker Change: 128, gigabyte all of them.

Speaker Change: Then you look at the overall advantage that we offer to customers with LTE in the data center high capacity in terms of the data center.

Speaker Change: These two categories.

Speaker Change: Categories for the data center in itself is going to be multi billions of dollars.

<unk>, particularly is multiple billions of dollars data center SSD is going to be multiple billions of dollars and the combined momentum of that is what youre seeing.

Drove the 40% sequential growth in data center, 400% year over year in FQ1.

Speaker Change: And the greater than 50% of our revenue that comes from data Center.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Chris Caso from Wolfe Research. Your question. Please.

Speaker Change: Yes, hi.

Speaker Change: I guess the first question is.

Speaker Change: Maybe just some clarity on what what.

Speaker Change: What may have precipitated.

Speaker Change: Some of the cost of some of the incremental caution here and what might have changed over the last couple of months I know that.

Speaker Change: It's kind of go back and forth a little bit.

There was some cautious signs kind of back in August.

Speaker Change: And they kind of receded in the last earnings call was it I guess the question is is it a function of the customer inventories turned out to be a bit more than we had expected or do you think it was a function of.

Speaker Change: Demand.

Speaker Change: Yes, let me try to.

Speaker Change: Maybe address.

Speaker Change: What changed so if you think about over the course of Q4.

Speaker Change: We have seen a push out of the PC refresh cycle.

That our customers had been anticipating.

Speaker Change: We had been anticipating.

Speaker Change: And it's not like the refresh cycle won't happen it will happen in 2025.

Speaker Change: It's been a little bit delayed there are numerous drivers which we.

Speaker Change: Mentioned an uptick.

Speaker Change: Repaired remarks as to why we believe and our customers believe that the refresh cycle will happen.

Speaker Change: The average age of the PC.

Speaker Change: Has become pretty long in the tooth and.

Speaker Change: It is right for an upgrade and as people look to keep their Pcs for a number of years. They will look to ultimately future proof the hardware specs, which is why we believe that.

Speaker Change: Even with very modest unit volume growth mixed improvement that will come from.

Speaker Change: Higher memory content in these species will be a positive driver.

Speaker Change: In 2025, but the delay in that.

Speaker Change: Upgrade cycle means that our calendar 'twenty four.

Speaker Change: PC shipment.

Speaker Change: Forecast at the unit level for Pcs at our end customers.

Speaker Change: Has been reduced and is now very flattish year over year in.

Speaker Change: In calendar 'twenty four so that has been.

Speaker Change: One driver the other is that.

Speaker Change: Definitely the inventories.

Speaker Change: That we had highlighted in the last earnings call that we expected by spring would become healthier at our customers that inventory and inventory reduction as well as the seasonality of Q1 those are continuing impacts some.

Speaker Change: Some impact coming from.

Speaker Change: The moderation.

Speaker Change: You mentioned previous discussion, we just had sharp available about lumpiness of.

Speaker Change: Demand on the datacenter SSD side, so some moderation in data center SSD.

Speaker Change: Into Q1.

After <unk>.

Speaker Change: Significant bout of buying over seven quarters in calendar 'twenty four so those are the things that have impacted the near term outlook, but I just wanted to mention that.

Most of the impact is limited to consumer oriented segments.

Speaker Change: And.

Speaker Change: The trajectory of demand in the data center continues to be very robust our own.

Speaker Change: Data Center segment view of the overall.

Speaker Change: Revenue.

Speaker Change: Our revenue trajectory through fiscal 'twenty five calendar 'twenty five.

Speaker Change: Remains in a very solid trajectory you have seen our FQ1 results as well that we highlighted so it's mainly the consumer oriented segments.

Speaker Change: And some very temporary moderation of the datacenter SSD, which we expect will pick up again in the.

Speaker Change: A couple of months.

Speaker Change: And so.

Speaker Change: If you think about these consumer oriented segments.

Speaker Change: We do expect that by spring time, the inventories will be much healthier and then we are back to shipment growth because right now we are shipping to these.

Speaker Change: Customers at a rate that is lower than their ship out.

Speaker Change: Because they are consuming.

Speaker Change: DRAM and NAND and <unk>.

Speaker Change: A faster rate than they are purchasing from us and <unk>.

The industry so.

Speaker Change: That's the effect of the inventory that we expect will be in a much healthier place.

Speaker Change: By spring and then a resumption of shipments and growth in shipments for the second half of the fiscal year end, and then things will be much better than overall.

Speaker Change: Ram will be continuing to be in.

Speaker Change: <unk> healthier place.

Speaker Change: The supply is tight HBM continues to pressure non HBM availability.

Speaker Change: Supply so.

Speaker Change: A large part of the issue is NAND related and we have outlined the actions we are taking on the supply that to decisively bring our supply imbalance with demand.

Speaker Change: That's helpful. Thank you I mean, just a follow up to that.

Speaker Change: In terms of.

Speaker Change: I think you've been very clear on what's going on with NAND, but with DRAM.

Speaker Change: And I guess.

Speaker Change: This.

Speaker Change: Lower lower bit bit demand assumption.

Speaker Change: Overall for Q2.

Speaker Change: How much of that is.

Speaker Change: Is DRAM versus NAND and with the mid teens growth that you now have for DRAM for the year.

How backend loaded is that given what youre seeing in Q1, because I guess, you really werent specific in NAND versus DRAM bit demand for.

Speaker Change: <unk> growth for Q1.

Speaker Change: Well, yes.

Speaker Change: Yes, Chris just to be clear, we did say that.

DRAM Thats would be down in Q2, we said that NAND would be down meaningfully.

Speaker Change: Okay.

Speaker Change: Yes, the majority of the revenue decline versus the second quarter will be NAV.

Speaker Change: So, yes, I mean the.

Speaker Change: DRAM decline in FQ, two is largely driven by the dynamics I described on the segment side for consumer oriented segments right.

Speaker Change: Data Center segment very strong.

Speaker Change: On the DRAM side very strong.

Speaker Change: So it's really the consumer oriented segments.

Speaker Change: And we feel that that's we're going to get past a lot of that headwind.

In the spring timeframe software CQ, one things will start to improve there. So we do expect sequential increases in volume in both DRAM and NAND starting in FQ3.

Speaker Change: Q2 is what Mark had mentioned.

Speaker Change: No.

Speaker Change: The.

Speaker Change: Sequential decline in DRAM volume, but.

Speaker Change: Meaningful decline sequentially and non volume.

Okay got it helpful clarification. Thank you.

Yes.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of <unk>.

Speaker Change: Jay Rakesh from Mizuho Your question please.

Speaker Change: Yes, Hi, Mark.

Speaker Change: Thanks for taking the contract just wondering on the BMT.

Speaker Change: We havent capacity might be goes up next year how much.

Speaker Change: I mentioned in the DRAM capacity coming down and can you cite.

Speaker Change: How much do you think that goes up next Q4.

Speaker Change: Hello.

Speaker Change: Hi, Vijay it's finished.

Speaker Change: So I think we've given.

Speaker Change: The data point that.

Speaker Change: As the.

Speaker Change: I think it goes towards mature yields than HBM trade ratio between HBM in DRAM as well.

Speaker Change: <unk> and our conventional DRAM or is it three.

Speaker Change: So thats you can you can.

Speaker Change: Sort of do the math, but how much of our.

Speaker Change: As we grow our HBM share.

Speaker Change: Share towards our natural share, which.

Speaker Change: Which we expect to achieve sometime next year in calendar 'twenty five.

Speaker Change: You can do the math and determined.

Speaker Change: How much of that impact will be on our.

Speaker Change: Conventional DRAM wafer starts because we will essentially for every.

Speaker Change: Every one.

Speaker Change: We're going to have to have.

Speaker Change: Three wafer starts or in HBM for every one that we would have had for the same number of bits and conventional DRAM.

Speaker Change: And we are focused on being able to.

Speaker Change: Maintain our DRAM bit share.

Speaker Change: As we go through the Patriot transition here next year.

Speaker Change: And I think our DRAM overall bit growth will be in line with the industry.

Speaker Change: Big growth number.

Speaker Change: And numbers that we had talked about for calendar 'twenty five.

Speaker Change: Got it and then on the Capex side.

Speaker Change: Can you talk to what.

Green HBM.

Speaker Change: DRAM and NAND.

Speaker Change: Thanks.

Speaker Change: I don't really breaking it out specifically, but we have said that when you think about HBM in terms of both.

Speaker Change: Uh huh.

Speaker Change: Capital that's specific to the HBM products, whether that's in the front end fab or in specific assembly and test process and the clean room needed for new HBM capability.

Speaker Change: All of that plus you also have.

Speaker Change: The capex to be able to.

Speaker Change: Maintain maintaining a bit output as you as you.

Speaker Change: Are impacted by that trade ratio.

Speaker Change: Overall HBM is the largest.

A portion of our Capex.

Speaker Change: For what.

Speaker Change: This fiscal year.

Speaker Change: Other areas that we're focused on are in facilities and construction.

Speaker Change: Uh huh.

Speaker Change: And also some background as you know we have a facility that we're investing in India.

Speaker Change: And in others.

Speaker Change: Yes P J.

Speaker Change: <unk> NAND is clearly we've mentioned we've cut capex and it's lower.

Speaker Change: Yes.

Speaker Change: Percent spend and that is lower than the percent of the business revenue. So.

Speaker Change: Much lower spend in the DRAM spend as many she mentioned.

Speaker Change: Is largely driven by this trade ratio effect then.

Speaker Change: H band requirements there.

Speaker Change: Thanks.

Speaker Change: Thank you and our next question comes from the line of Brian Chin from Stifel. Your question. Please.

Hi, there good afternoon, and thanks for letting us ask a few questions.

Speaker Change: Maybe first on the NAND side.

Speaker Change: We've heard of at least one other NAND supplier, reducing wafer starts maybe kind of similar to how are you.

Speaker Change: Disclosed.

Speaker Change: Today.

Speaker Change: But back in early 2023, some of the larger suppliers were slow to take actions to reduce wafer inputs do you expect maybe some of these other suppliers to follow more quickly this time.

Speaker Change: Our actions are or lag like they did previously.

Speaker Change: Difficult for us to.

Speaker Change: Project or predict what others would do you'd rather not speculate others' activities.

Speaker Change: <unk>.

Speaker Change: What we can say is how we look at the market and.

Speaker Change: The decisive actions we are taking immediately.

Speaker Change:

Speaker Change: And we feel like.

Speaker Change: These things will at least help me.

Speaker Change: Micron's view supply growth coming from us and our view of demand growth to be aligned.

Speaker Change: That's what we are doing.

Speaker Change: Okay. Thanks, and then on the DRAM side.

Speaker Change: I don't think it was that many quarters ago that youre DDR five that shipments crossover DDR for now youre, indicating only.

Speaker Change: 10% or so of your global DRAM sales will be from DDR for the next several quarters through fiscal year end.

Speaker Change: It's actually a lot lower ratio than I would've expected. This does this shipment mix actually closely match your internal production mix, meaning that is that just youre holding back inventory, but structurally you've shifted a majority of your DRAM production to DDR five HBM specialty.

Speaker Change: Those types of products.

Speaker Change: Yeah, I mean, that's that's correct I mean, we do have.

Speaker Change: Just for clarity DDR, four and LP for right that's in that yes.

Speaker Change: 10% approximately range of revenue for the remainder of fiscal year.

Speaker Change: And we do have long lifecycle products that we support.

Speaker Change: For the different segments like industrial automotive.

Speaker Change: Over time with more.

Speaker Change: Defense Aerospace et cetera.

That will have some of this long cycle effect. However.

Speaker Change: As our overall revenue growth.

Speaker Change: The mix of these products will remain.

Speaker Change: And a very contained level, we have shifted a lot of our mix to these leading edge products.

Speaker Change: And our leading edge nodes are very constrained so.

We are dedicating.

Speaker Change: A lot of capacity to a very fast ramp of HBM and.

And youre seeing the results from that.

Speaker Change: And.

Speaker Change: Even as we continue to.

Speaker Change: <unk> increased our view of calendar 'twenty five time of <unk>, we are maintaining our view of getting to our natural share.

Speaker Change: In the second half come into 25, so youre seeing that a lot of mix shift is happening and I spoke about the.

Speaker Change: LP leadership in the data Center DDR.

Speaker Change: The ship and the growth that has taken place.

Speaker Change: And even the growth MLP five.

The flagship smartphone side that we're supporting.

So, yes definitely that shift is very meaningful.

Speaker Change: Great. Thank you.

Okay.

Speaker Change: Thank you and our next question comes from the line of Quinn Bolton from Needham <unk> Company. Your question. Please.

Speaker Change: Hey, Mark I, just wanted to come back to your comment on the land and I think you said that the NAND would account for most of the sequential decline I mean, if that's right it could be down 30% plus so.

Speaker Change: So I just want to make sure I heard you right.

Speaker Change: That that was indeed, what you said and then I've got a follow up on the consumer facing business.

Speaker Change: Yes.

Speaker Change: It's the majority.

Speaker Change: Already it's the majority of the revenue decline.

Speaker Change: Versus second quarter sequential.

Speaker Change: Okay. Okay. Thank you and then just.

Speaker Change: You talked about the high inventory levels last quarter. It sounded like you thought you might have made some progress.

Speaker Change: Through.

Speaker Change: Fiscal Q1, just wondering if you might be able to sort of quantify.

Speaker Change: How much is left.

Can you give us any sense on how are you.

Looking to reduce a week or two weeks.

Speaker Change: And through the spring.

Speaker Change: And from where you started last quarter I assume most of that inventory reduction is happening in the second quarter that you probably didn't get through that much in.

Speaker Change: Fiscal Q1, but just wondering if you might be able to sort of.

Speaker Change: From where you started how much have you gotten through and how much is left maybe on a percentage basis. If you don't want to talk about on a on a weeks basis.

Speaker Change: Are you talking overall inventories Quinn.

Speaker Change: Yes.

Speaker Change: On the consumer facing business.

Speaker Change: It seems to be.

Speaker Change: Kind of driving most of that sequential decline in the fiscal Q2.

Speaker Change: Yes. So so we didn't we didn't break we didn't break down inventories by market.

Speaker Change: We did make progress in the first quarter as you as you've noted.

Speaker Change: <unk> was down below 150 days overall.

Speaker Change: But we have a volume related decline.

Speaker Change: Our deterioration in <unk> in the second quarter, so on a on a.

Speaker Change: We'll have <unk> go up first the second quarter will have absolute inventory dollars go up and again this is a volume driven.

Speaker Change: Phenomenon and then.

Speaker Change: Some there.

Speaker Change: In part due to the continued data center strength.

Speaker Change: The resumption of <unk>.

Speaker Change: Data center SSD volume growth.

Speaker Change: And the.

Speaker Change: Refresh cycle and content driven growth in consumer and consumer related markets.

Speaker Change: We do see our inventories drawing down through the year, both in NAND and DRAM now.

Speaker Change: In DRAM.

We will need our leading edge inventories that we have now just to be able to supply the market. We see so we're going to on our forecast today.

Speaker Change: And total DRAM inventories below our target levels by the end of fiscal year.

Speaker Change: I'm sorry, Mark I guess my question was more inventory at our customers rather than on your balance sheet. It sort of you said your current <unk> shipping below consumption in Q2, I guess, maybe the other way as it sounds like you think you start shipping in line with consumption again by Q3, Yes, I thought I thought that I thought that was covered.

Speaker Change: Earlier on that we see inventory is getting to a better place in the spring so.

Speaker Change: But as Sumit mentioned, we're shipping in lesson there.

Speaker Change: They're shipping out of consuming so.

Speaker Change: Yes, we have confidence that.

Both in their demand and related our inventory.

Speaker Change: Consumption.

Through fiscal year 'twenty five.

Speaker Change: Beyond our second quarter.

Okay. Thank you.

Speaker Change: Thank you and our next question comes from the line of Timothy Arcuri from UBS. Your question. Please.

Speaker Change: Thanks, Mark I think I, just want to clarify that I heard that you said so you in terms of your your DRAM bit shipments.

Speaker Change: Youre sort of saying that theyre going to be in line with the mid teens for calendar 'twenty five.

Speaker Change: That right number one and then number two.

Speaker Change: Are you going to under ship the market because I think you said demand is growing low doubles, which you took that down but I would think youre going to under ship that.

Speaker Change: Yes.

Speaker Change: We said, we said that industry, we said.

Speaker Change: That industry bit supply or in the industry bit demand mid teens <unk>.

Speaker Change: Dave.

Speaker Change: We said we'd be ramp yes for DRAM.

Speaker Change: <unk>.

Speaker Change: And we said that volumes to be down in the second quarter.

Speaker Change: And.

Expect to ship in line with the industry.

Speaker Change: For the year for the year for the year.

Speaker Change: Yes, Okay and then.

Speaker Change: And then what about at night I mean, NAND is NAND demand is up low doubles, but.

Speaker Change: Yes, youre going to under ship that for the year is that fair.

Speaker Change: No I mean for the year.

We expect to have stable bit share.

Speaker Change: In calendar 'twenty four 'twenty five.

Speaker Change: Both DRAM and NAND generally that is true across 24 and 25, we expect to have.

Relatively stable.

Speaker Change: Some noise here and there, but relatively stable a bit share across both of those years.

Okay. So youll ship.

Management is going to be up like close to that low double digit demand that's fair yes.

Speaker Change: Yes, yes, Okay, Alright, and then there's always the calendar versus fiscal right I just want to be careful because that skews things somewhat but we have a four month skew between calendar and fiscal year, so that changes things.

Speaker Change: Yes.

Speaker Change: I was talking to calendar to calendar. So I'm just trying to just stay in the in the calendar year, because youre, giving us the demand number for calendar year <unk>.

Speaker Change: In that calendar year youre going to ship in line roughly for both DRAM and NAND, that's right got it okay, all right I'll, let somebody else ask.

Speaker Change: Yes.

Speaker Change: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. Our next question comes from the line of Christopher Tinker from TD Cowen Your question. Please.

Hey, guys. This is Eddie for Krish.

Speaker Change: To clarify your comments regarding HBM, and the volume and pricing agreements being locked in.

Speaker Change: Are these agreements can suitable if so I wonder are under what conditions can customers cancel.

Speaker Change: Im wondering if there are specific like duration limits or restrictions in place.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: These are agreements that relate to.

Speaker Change: The amount of bits.

Speaker Change: And cubes of HBM that our customers are going to purchase.

Speaker Change: <unk> versus 12 high by quarter with pricing associated with them.

Speaker Change: And.

Speaker Change: Once we get into certain.

Speaker Change: Relatively lengthy lead times than we get firm orders.

Speaker Change: Because of these lead times.

Speaker Change: That we built.

Build with and ship for end.

Speaker Change: Given the environment in the industry.

Speaker Change: More of the discussion is around chasing.

Speaker Change: More supply.

Speaker Change: Because we have an extraordinarily strong product that customers want more of and we are.

Speaker Change: Ramping as fast as possible.

Speaker Change: Fast as humanly possible to be able to grow our share to the targets that we have outlined.

Speaker Change: And so.

Speaker Change: Yes customers can cancel if it is not in that phone.

Speaker Change: Time for the purchase order.

Speaker Change: If it is beyond that timeline, yes customers can make.

Speaker Change: <unk> changes, but there is a fairly lengthy timeline win.

Speaker Change: Based on very long lead times that they have to place firm purchase orders for and our customers have been doing that.

Speaker Change: With consistency.

Speaker Change: And.

That's what gives us the confidence with a very strong ramp ahead.

Speaker Change: Got it thank you.

Speaker Change: Sure.

Speaker Change: Thank you and our next question comes from the line of <unk> from Goldman Sachs. Your question. Please.

Speaker Change: Hi, Thank you for taking the follow up here.

Speaker Change: I had one question on HBM and how to think about the ramp going forward on a quarterly basis.

Speaker Change: You guys don't report HBM revenue, so I'm guessing a little bit here, but based on everything you've said over the past couple of quarters.

Speaker Change: We're sort of estimating you did I don't know eight.

Speaker Change: $800 million $900 million.

Speaker Change: Revenue in the quarter I assume it is going to be up again nicely this quarter.

Speaker Change: So when I think about the starting point this quarter and then the comments you made on calendar 'twenty five Tam and your market share goals.

Speaker Change: It feels like the trajectory kind of flattens out from here still up but flatter.

Speaker Change: Curious am I thinking about it the right way and if so what are some of the constraints is it.

Speaker Change: Is it.

Speaker Change: TSV capacity, both and when should we expect your supply side your capacity to increase nicely is it tied to the Taiwan facility.

Speaker Change: Any any insights there would be really helpful. Thank you.

Speaker Change: And I'll give you a couple of opening comments and then I'll pass it over to my niche to talk about.

Speaker Change: The second half of your question that relates to.

Speaker Change: Space and so on.

Speaker Change: Yes, we didn't give you the expectation of how we would.

And how we get to this.

Speaker Change: Market share that is roughly equivalent to our DRAM supply share which is in the low twenties.

Speaker Change: And get there in the calendar second half.

Speaker Change: With a view that there is going to be.

Speaker Change: $30 billion.

Speaker Change: Plus.

Speaker Change: HBM for calendar 'twenty five right so.

Speaker Change: That's sort of the our claim.

Speaker Change: Given you know you're right we've done.

Speaker Change: Report HBM numbers, we may choose to provide some data points in the future, but we haven't.

Speaker Change: So except for that over $100 million.

Speaker Change: Point that we had mentioned when we first cross that.

Speaker Change: Numbers that you outlined for FQ1.

Speaker Change: A little bit high.

Speaker Change: But.

Speaker Change: Nonetheless, I think there is going to be still pretty robust ramp occurring.

Speaker Change: On the HBM revenue for us to hit the targets that we have offline based on the <unk>.

Speaker Change: Im expectation and the growth of them on a quarterly basis that we had mentioned.

Speaker Change: I will just pass it onto Manish to answer the second half of your question.

Manish Bhatia: Yes sure.

Speaker Change: Yes.

Speaker Change: We're pleased with how the eight high ramp has gone we can make.

Speaker Change: Some comments on the prior call about how that had exceeded our expectations in the last quarter and we're continuing to have a strong ramp forward here.

We think that the process choices. We've made are this demonstrates that we have a scalable process and that it's going to be able to again be able to transition into the <unk> as we move.

Speaker Change: Transition our capacity towards that ramp which will become increasingly important as we go through calendar year 'twenty five and.

It's just it's just the ramp of adding capacity across many different dimensions, and just gradually happening over time as we are.

Speaker Change: Installing new equipment and qualifying that new equipment and growing our capacity week over week as we move towards that goal keep in mind, we had zero, we had no product in <unk> III and.

Speaker Change: I am very limited production in HBM two we on a process that was quite a bit different than what we have right now in <unk>.

Speaker Change: Really are starting from a very low point as we were beginning the <unk> ramp and are continuing to grow and we're adding capacity gradually as we went through this year and continuing into next year. So estimate said I think we would expect that as we go through the year and as we get to the <unk>.

Speaker Change: A larger portion of our mix through the year, you will still see.

Speaker Change: Solid revenue growth as we are growing quarter over quarter through the rest of fiscal 'twenty five and even as we go through calendar year.

25.

Speaker Change: Yes.

Speaker Change: That's really helpful. Thank you so much.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: 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.

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Sanjay Kumar: As a reminder, today's program is being recorded and now I would like to introduce your host for today's program set to your Kumar corporate Vice President Investor Relations and Treasury. Please go ahead Sir.

Sanjay Kumar: Yes, Thank you Jonathan and thank you and welcome to Micron technologies fiscal first quarter 2025 post earnings analyst call. Joining me today are Sumit Sudano, Micron's, Chief business Officer Manish Bhatia.

Sanjay Kumar: VP of global operations, and Mark Murphy, our CFO.

Sanjay Kumar: As a reminder, the matters. We're discussing today include forward looking statements regarding market demand and supply market trends and drivers and unexpected 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.

Sanjay Kumar: We refer you to documents, we have filed with the SEC, including our most recent Form 10-Q and upcoming 10-Q for a discussion of risks that may affect our results. 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're under no duty to update any of the forward looking statements to conform these states.

Sanjay Kumar: <unk> actual results, we can now open the call to Q&A.

Speaker Change: Certainly and our first question for today comes from.

Speaker Change: The line of.

Speaker Change #100: Harlan sur from Jpmorgan Your question. Please.

Speaker Change #101: Thanks, Scott for hosting this call back so I've got two questions on the 100 basis point decline in gross margin in Q2 as you guys mentioned, it's almost all NAND related mix pricing lower shipments.

Speaker Change #101: <unk> like what are you guys anticipating for DRAM pricing, where you talked about positive mix impacts HCM server DRAM, partially offset by weak commodity pricing. So I guess my question is is blended DRAM pricing up sequentially in Q2.

Speaker Change #102: Yes, I think we don't really guide for pricing.

I think we have given you on board.

Speaker Change #102: Sort of data points that Ken.

Speaker Change #102: Help you in your modeling.

Speaker Change #102: But we are not going to provide guidance on the actual pricing expectation.

For competitive reasons and I think the overall set of comments that you heard in the prepared remarks and the comments that.

Jean Marc: Jean Marc you made.

Jean Marc: Basically the.

Jean Marc: The mix improvement.

Jean Marc: News on a good trajectory.

Jean Marc: <unk> growth continues on a good trajectory data center overall revenue trajectory continues to be robust.

Jean Marc: While we do have some near term moderation in data center SSD for a lot of <unk>.

Jean Marc: Growth in the past quarters, the overall data center.

Jean Marc: Revenue trajectory remains.

Jean Marc: That is robust and we.

Jean Marc: We expect that to underpin our performance through fiscal and calendar 2025.

Jean Marc: And so those are the positives.

Jean Marc: And of course.

Jean Marc: We spoke about the near term issues related to market environment seasonality.

Jean Marc: <unk> related challenges. So those are some of the headwinds.

Jean Marc: Mix and data center growth and overall DRAM robust results.

Jean Marc: And what is helping us ensure that the.

Jean Marc: Margin for rescue two is.

Jean Marc: Still fairly similar too.

Jean Marc: What we have in FQ, one in terms of 100 basis point Greg.

Jean Marc: The only delta despite some of these.

Jean Marc: Headwinds we mentioned.

Jean Marc: And some of the other day.

Jean Marc: That's helpful and then.

Jean Marc: Maybe to follow up one of the and I've said this before one of the big Micron specific inflections.

Jean Marc: Been strong increasing enterprise and datacenter SSD share right.

Speaker Change #104: You guys have always been strong in Saudi.

Speaker Change #104: Mainstream Pcie and Nvme is where you guys have gone from like.

3% to 5% market share in calendar 'twenty one.

Speaker Change #104: 10% to 12% exiting last year I think in Q3, your shareholders like 14% and it grew sequentially again in fiscal Q1. So my guess is 111 $2 billion of data Center said definitely 65% of your overall NAND business.

Speaker Change #105: You guys have another number two or number three market share leader I know enterprise SSD can be lumpy as you mentioned right. That's impacting Q2, but do you guys expect sequential Reacceleration in data center SSD in fiscal Q3, and just overall growth in data center SSD business fiscal 'twenty five.

Speaker Change #106: And Carlos calendar 'twenty, five just because AI demand pull for those products is just so strong.

Speaker Change #107: Yes, I think you you laid it out really well we have made tremendous progress in our datacenter SSD business over the years. This has been an area we had been investing in for.

Speaker Change #107: $5 seven years, now and we have seen a tremendous rejuvenation in our product portfolio with industry leading products now.

So Tobey terabyte Ssds 60, terabyte Ssds, we just announced first pcie Gen 560, terabyte SSD under market the $95 50 fastest SSD in the world.

So there are lots of these amazing products that have enabled us to get.

Get to a really solid performance several quarters of record setting revenue and market share performance. So as we look ahead.

Speaker Change #107: Beyond the.

Speaker Change #108: The Lumpiness you mentioned.

Speaker Change #108: Beyond that.

You too.

Speaker Change #108: Do expect.

Speaker Change #108: Growth in bit shipments.

Speaker Change #108: Restarting in Q3 for data Center SSD, and then continuing from there on.

Speaker Change #108: Into future quarters that trajectory should grow.

We do expect the overall data center Capex from our end customers to remain strong.

Speaker Change #108: And that should enable us to get significant opportunity with the portfolio that we have that is now the strongest it has been in our history.

Speaker Change #109: No that's very helpful. Thank you.

Speaker Change #110: Thank you and our next question comes from the line of Aaron Rakers from Wells Fargo. Your question here.

Aaron Rakers: Yes, thanks for thanks for doing the call back and I have two questions as well.

Speaker Change #111: I guess the first question Mark I wanted to go back to kind of the Q&A in the prepared call.

Aaron Rakers: <unk>.

Mark: I'm trying to understand like you talked about constraints on gross margin into the fiscal third quarter.

Mark: Trying to kind of frame the impact that youre thinking about from the under load is at a 100 basis points is it 200 does it last.

Speaker Change #113: And when you say constraints are you.

Speaker Change #113: Imply are you necessarily applying that there isn't the potential or rather is there a potential to see some gross margin positive drivers into fiscal <unk> relative to fiscal <unk>.

Speaker Change #113: With that under load charges could we see gross margin flat to up.

Speaker Change #114: I'm, just trying to understand a little bit of what you're trying to kind of frame as far as being constrained.

Speaker Change #115: Yes, so erinn.

Yes were not guiding third quarter gross margin. So we're just trying to be.

Speaker Change #115: Mindful to make sure that when we.

Speaker Change #115: When we provide a number it's a number that.

Speaker Change #115: We have.

Speaker Change #115: High conviction on what we do know is that.

Speaker Change #115: Yes, there are some.

Speaker Change #115: Unfavorable items that persist into the third quarter, the NAND challenging market conditions.

Speaker Change #115: We believe extend into calendar Q1, which overlaps.

Speaker Change #115: With our with our third quarter fiscal and.

Speaker Change #115: And so that's that's still an issue.

Speaker Change #115: And then as I mentioned in third quarter.

Speaker Change #115: Under load charges will begin to hit and those will hit and.

In the form of <unk> costs, and then just some higher cost inventory in that effect as you mentioned 100 or 200 basis points closer to a 100 basis points.

Speaker Change #115: <unk>.

Speaker Change #115: And then yes, there are definitely some favorable effects, which.

Speaker Change #115: Continue to occur.

Speaker Change #115: In the second quarter, and third quarter and beyond and that is the most important thing on the call and that is.

Speaker Change #115: Continued growth in data center.

Speaker Change #115: Continued mix benefits from higher margin products.

High capacity dense LP DRAM and then as Sumit mentioned.

Speaker Change #116: Volume growth and better market conditions in NAND, but volume growth in data center Ssds continuing.

Speaker Change #116: So all of these items.

Speaker Change #116: We believe beyond the third quarter support.

Speaker Change #116: Margin expansion.

Speaker Change #116: And then finally Erin.

Speaker Change #117: We've been clear that we expect inventories to be up in the near term because these volume declines in NAND and DRAM in the second quarter.

Dio and dollars of inventory will be up.

Speaker Change #117: In DRAM, we are still very tight on leading edge and overall DRAM inventories are are find and to the point where through the end of the year.

Speaker Change #117: They will continue to improve from second quarter, and then and at the end of the year.

Speaker Change #117: Our overall DRAM inventories will be below our target levels and then NAND.

Speaker Change #117: As that market recovers we expect.

Speaker Change #117: NAND inventories, while not as healthy as DRAM NAND inventories will improve.

Speaker Change #117: Second or third or fourth quarter.

Speaker Change #118: That's helpful and then as a quick follow up I know a lot of focus is placed on HBM understandably, but.

Speaker Change #118: One of the things that you guys have highlighted over the last several quarters as LP DDR five acts and obviously getting into the black oil product cycle GBP 200 from Nvidia how would you characterize your views of that ramp and where.

Speaker Change #118: Where you think micron relative share position is within those that LP DDR Five act datacenter opportunity I'm just curious thank you.

Speaker Change #119: Yes, we are actually the pioneering.

Speaker Change #119: Memory supplier of LP.

The data center, if you think about.

Speaker Change #119: All of the.

Speaker Change #119: The market for LTE in the data center worldwide.

Speaker Change #119: It is pretty much micron driving that right now.

Speaker Change #119: Over time there'll be others, but we are in the pole position.

Having driven the innovation.

Speaker Change #119: That are needed for a data center to deploy.

Speaker Change #119: Memory that does not purpose built.

Speaker Change #119: For data center rack environment, so reliability availability serviceability that it's been empty DDR five is not available in an LP.

Speaker Change #119: Solution and Micron has made some.

Speaker Change #119: Important innovations in that product category and hence.

Speaker Change #119: The ones who are.

Speaker Change #119: And really partnering with customers to drive this significant opportunity for us.

Speaker Change #119: And this is something that is.

Speaker Change #119: Really important part of our overall strategy, it's an important part of our data center business and when you combine this with the.

Speaker Change #119: Advantages that we have driven.

Speaker Change #119: The high capacity dense portion of the data center market, where we were the first company with more no dye based.

128, gigabyte all of them.

Then you look at the overall advantage that we offer to customers with LTE in the data center high capacity given some of the data center.

Speaker Change #119: This.

Speaker Change #119: These two categories for the data center in itself is going to be multi billions of dollars.

Speaker Change #119: <unk>, particularly is multiple billions of dollars data center SSD is going to be multiple billions of dollars and the combined momentum of that is what youre seeing.

Speaker Change #119: Drove the 40% sequential growth in data center, 400% year over year in FQ1.

Speaker Change #119: And the greater than 50% of our revenue that comes from data Center.

Speaker Change #120: Thank you.

Speaker Change #121: Thank you.

Speaker Change #122: Our next question comes from the line of Chris Caso from Wolfe Research. Your question. Please.

Speaker Change #123: Yes, hi.

Speaker Change #124: I guess the first question is.

Maybe just some clarity on what what.

Speaker Change #124: What may have precipitated.

Some of the cost of some of the incremental caution here.

Speaker Change #124: It may have changed over the last couple of months I know that.

Speaker Change #124: It's kind of go back and forth a little bit.

Speaker Change #124: There was some cautious signs kind of back in August.

Speaker Change #124: And they kind of receded in the last earnings call was it I guess the question is is it a function of the customer inventories turned out to be a bit more than we had expected or do you think it was a function of.

Speaker Change #124: Demand.

Speaker Change #125: Yeah, let me try to.

Maybe address.

Speaker Change #125: What changed so if you think about over the course of Q4.

Speaker Change #125: We have seen a push out of the PC refresh cycle.

Speaker Change #125: That our customers had been anticipating.

Speaker Change #125: We had been anticipating.

Speaker Change #125: And it's not like the refresh cycle won't happen it will happen in 2025.

Speaker Change #125: Just been a little bit delayed there are numerous drivers which we.

Speaker Change #125: Mentioned in our prepared remarks as to why we believe and our customers believe that the refresh cycle will happen.

Speaker Change #125: The average age of the PC.

Speaker Change #125: Has become pretty long in the tooth and.

Speaker Change #125: It is right for an upgrade and as people look to keep their Pcs for a number of years. They will look to ultimately future proof the hardware specs, which is why we believe that.

Speaker Change #125: Even with very modest unit volume growth mixed improvement that will come from.

Speaker Change #125: Higher memory content in these species will be a positive driver.

Speaker Change #125: In 2025.

Speaker Change #125: The delay in that.

Grade cycle means that our calendar 'twenty four.

Speaker Change #125: PC shipment forecast at the unit level for Pcs at our end customers.

Speaker Change #125: Has been reduced and is now very flattish year over year in.

Speaker Change #125: In calendar 'twenty four so that has been.

Speaker Change #125: One driver the other is that.

Speaker Change #125: Definitely the inventories.

Speaker Change #125: That we had highlighted in the last earnings call that we expected by spring would become held view that our customers that inventory and inventory reduction as well as the seasonality of Q1 those are continuing impacts some.

Speaker Change #125: Some impact coming from.

The moderation.

Speaker Change #126: You mentioned previous discussion, we just had sharp available about lumpiness of.

Demand on the datacenter SSD side, so some moderation in data center SSD.

Speaker Change #126: Into Q1.

Speaker Change #126: After <unk>.

Significant bout of buying over seven quarters.

Speaker Change #126: <unk> 24, so those are the things that have impacted the near term outlook, but I just wanted to mention that.

Speaker Change #126: Most of the impact is limited to consumer oriented segments.

Speaker Change #126: And.

Speaker Change #126: The trajectory of demand in the data center continues to be very robust our own.

Speaker Change #126: Data Center segment view of the overall.

Speaker Change #126: Revenue.

Our revenue trajectory through fiscal 'twenty five calendar 'twenty five.

Speaker Change #126: Remains in a very solid trajectory you have seen our FQ1 results as well that we highlighted.

Mainly the consumer oriented segments.

And some very temporary moderation of the datacenter SSD, which we expect will pick up again in a couple of months.

Speaker Change #126: And so.

Speaker Change #126: If you think about these consumer oriented segments.

Speaker Change #126: We do expect that by spring time, the inventories will be much healthier and then we are back to shipment growth because right now we are shipping to these.

Speaker Change #126: Customers at a rate that is lower than their ship out.

Speaker Change #126: Because they are consuming.

Speaker Change #126: DRAM and land at a faster rate than they are purchasing from us and from the industry. So.

Speaker Change #126: That's the effect of the inventory that we expect will be in a much healthier place.

Speaker Change #126: By spring and then a resumption of shipments and growth in shipments for the second half of the fiscal year end and then things will be much better than overall DRAM will be continuing to be in.

Speaker Change #126: Much healthier place.

Speaker Change #126: Supply is tight HBM continues to pressure non HBM availability.

Of supply so.

Speaker Change #126: Large part of the issue is NAND related and we have outlined the actions we are taking on the supply that to decisively bring our supply in balance with the demand.

Speaker Change #126: Okay.

Speaker Change #127: Thats helpful. Thank you just a follow up to that.

Speaker Change #126: <unk>.

Speaker Change #126: In terms of.

Speaker Change #126: I think.

Speaker Change #126: <unk> been very clear on on what's going on with NAND, but with DRAM.

Speaker Change #126: And I guess.

Speaker Change #126: Lower lower bit demand assumption.

Speaker Change #126: Overall for Q2.

Speaker Change #126: How much of that is.

Speaker Change #126: DRAM versus NAND and with the mid teens growth that you now have for DRAM for the year.

How backend loaded is that given what youre seeing in Q1, because I guess, you really werent specific in NAND versus DRAM bit demand for.

Big growth for Q1.

Speaker Change #126: Yeah.

Speaker Change #128: Yes, Chris just to be clear, we did say that day.

Speaker Change #128: DRAM bits would be down in Q2, we said that Dan would be down meaningfully.

Okay.

Speaker Change #128: Yes, the majority of the revenue decline versus the second quarter will be NAV.

So yes, I mean, the DRAM decline in FQ2 is largely driven by the dynamics I described on the segment side for consumer oriented segments.

Speaker Change #128: Data Center segment very strong on.

Speaker Change #128: On the DRAM side very strong.

Speaker Change #128: So it's really the consumer oriented segments.

Speaker Change #128: And we feel that Thats, we are going to get past a lot of that headwind.

Speaker Change #128: In the spring timeframe software CQ, one things will start to improve there. So we do expect sequential increases in volume in both DRAM and NAND starting in FQ3.

Speaker Change #129: F Q2 is what Mark had mentioned.

Speaker Change #128: The.

Speaker Change #128: Sequential decline in DRAM volume, but a meaningful decline sequentially and non volume.

Speaker Change #130: Okay got it helpful clarification. Thank you.

Speaker Change #130: Yes.

Speaker Change #130: Thank you.

Speaker Change #130: Our next question comes from the line of.

Speaker Change #130: Jay Rakesh from Mizuho Your question please.

Speaker Change #131: Yes, Hi, Mark.

Speaker Change #131: Thanks for doing this contract just wondering on the <unk>.

Mark: PMT capacity, maybe goes up next year how much.

I mentioned in the DRAM capacity coming down can you cite.

Mark: How much do you think that goes up next Q4.

Mark: Hello.

Speaker Change #132: Hi, Vijay it's finished.

Speaker Change #132: So I think we've given.

Speaker Change #132: The data point that.

Speaker Change #132: As the.

Speaker Change #132: I think it goes towards mature yields in HBM trade ratio between HBM in DRAM as HP, <unk> and our conventional DRAM or is it three.

Speaker Change #132: So thats you can you can sort of do the math, but how much of our.

Speaker Change #132:

Speaker Change #132: As we grow our HBM.

Speaker Change #132: Share towards our natural share.

Speaker Change #132: Which we expect to achieve sometime next year in calendar 'twenty five.

Speaker Change #132: You can do the math and determined.

Speaker Change #132: How much of that impact will be on our.

Speaker Change #132: Conventional DRAM wafer starts because we will essentially for every.

Speaker Change #132: Every one.

Speaker Change #132: We're going to have to have.

Speaker Change #132: Three wafer starts or in HBM for every one that we would have had for the same number of bits and conventional DRAM.

Speaker Change #132: And we are focused on being able to.

Speaker Change #132: Maintain our DRAM bit share.

Speaker Change #132: As we go through the Patriot transition here next year.

Speaker Change #132: And I think our DRAM overall bit growth will be in line with the industry.

Big growth number.

Speaker Change #132: And numbers that we had talked about for calendar 'twenty five.

Speaker Change #133: Got it and then on the Capex side.

Speaker Change #133: Can you talk to what.

Speaker Change #133: Green HBM.

Speaker Change #133: DRAM and NAND.

Speaker Change #133: Thanks.

Speaker Change #134: I don't really breaking it out specifically, but we have said that when you think about HBM in terms of both.

Speaker Change #134: Uh huh.

Speaker Change #134: Capital Thats specific to the HBM products, whether that's in the front end fabs or in the specific assembly and test process and the clean room needed for new HBM capability.

Speaker Change #134: All of that plus you also have.

Speaker Change #134: The capex to be able to.

Maintain maintaining the bit output as you as you.

Speaker Change #134: Are impacted by that trade ratio.

Speaker Change #134: Overall HBM is the largest.

Speaker Change #134: A portion of our Capex.

Speaker Change #136: For what.

This fiscal year.

Speaker Change #136: Other areas that we're focused on are in facilities and construction.

Speaker Change #137: Uh huh.

And also some in back end as you know we have a facility that we're investing in India.

And in others.

Yes P J.

P J: NAND is clearly we've mentioned we've cut capex and it's lower.

Speaker Change #137: Yes.

Speaker Change #137: <unk> percent spend and that is lower than the percentage of the business on revenue. So.

Speaker Change #139: Much lower spend in the DRAM spend as <unk> mentioned.

Speaker Change #139: Is largely driven by this trade ratio effect.

Speaker Change #139: H band requirements there.

Speaker Change #139: Thanks.

Speaker Change #139: Yes.

Speaker Change #140: Thank you and our next question comes from the line of Brian Chin from Stifel. Your question. Please.

Brian Chin: Hi, there good afternoon, and thanks for letting us ask a few questions.

Speaker Change #142: Maybe first on the NAND side.

Speaker Change #143: We've heard of at least one other NAND supplier, reducing wafer starts maybe kind of similar to how are you.

Speaker Change #144: Disclosed today.

Speaker Change #144: Today.

Speaker Change #144: Back in early 2023, some of the larger suppliers were slow to take actions to reduce wafer inputs do you expect maybe some of these other suppliers to follow more quickly this time.

Speaker Change #144: Similar actions.

Speaker Change #144: Or or lag like they did previously.

Speaker Change #144: Difficult for us to.

Speaker Change #144: Project or predict what others will do you'd rather not speculate.

Speaker Change #144: Others activities.

Speaker Change #144: One weekend.

Speaker Change #144: <unk> is how we look at the market and.

Speaker Change #144: The decisive actions we are taking immediately.

Speaker Change #144: And and we feel like.

Speaker Change #144: These things will lead to.

Speaker Change #144: Least help.

Speaker Change #144: Micron's view of supply growth.

Speaker Change #144: Coming from us.

Speaker Change #144: And our view of demand growth to be aligned.

Speaker Change #144: So that's that's what vehicle.

Okay. Thanks, and then on the DRAM side.

Speaker Change #144: I don't think it was that many quarters ago that youre DDR five that shipments crossover DDR, four and now youre, indicating only.

Speaker Change #144: 10% or so of your global DRAM sales will be from DDR for the next several quarters through fiscal year end.

Speaker Change #145: It's actually a lot lower ratio than I would've expected.

Speaker Change #146: Is this shipment mix actually closely match your internal production mix, meaning that is that just youre holding back inventory, but structurally you have shifted the majority of your DRAM production to DDR five HBM specialty.

Speaker Change #146: Those types of products.

Speaker Change #147: Yeah, I mean, that's that's correct I mean, we do have.

Speaker Change #148: Just for clarity DDR, four and LP for right that's in that yes.

Speaker Change #148: 10% approximately range of revenue for the remainder of fiscal year <unk>.

And we do have long lifecycle products that we support.

Speaker Change #148: For the different segments like industrial automotive.

Speaker Change #148: Over time with more.

Speaker Change #148: Fence aerospace et cetera.

Speaker Change #148: That will have some of this long cycle effect. However.

Speaker Change #148: As our overall revenue growth.

Speaker Change #148: The mix of these products will remain.

Speaker Change #148: And a very contained level, we have shifted a lot of our mix to these leading edge products.

Speaker Change #148: And leading edge nodes are very constrained so.

Speaker Change #148: We are dedicating.

Speaker Change #148: A lot of capacity to a very fast ramp of HBM and.

Speaker Change #148: And youre seeing the results from that and.

Speaker Change #148: Even as we continue to.

Speaker Change #148: Increase our view of calendar 'twenty five time of HBM, we are maintaining our view of getting to our natural share.

Speaker Change #148: In the second half come into 25, so youre seeing that a lot of mix shift is happening and I spoke about the.

Speaker Change #148: LP leadership in the data center DDR Vito.

Speaker Change #148: Leadership and the growth that has taken place.

Speaker Change #148: And even the growth MLP five on the flagship smartphone side that we're supporting.

Speaker Change #148: So, yes definitely that shift is very meaningful.

Speaker Change #149: Great. Thank you.

Okay.

Speaker Change #150: Thank you and our next question comes from the line of Quinn Bolton from Needham <unk> Company. Your question. Please.

Speaker Change #151: Hey, Mark I, just wanted to come back to your comment on the NAND and I think you said that the NAND would account for most of the sequential decline I mean, if that's right it could be down 30% plus so.

Speaker Change #150: So I just want to make sure I heard you right.

Speaker Change #150: That that was indeed, what you said and then I've got a follow up on the consumer facing business.

Speaker Change #150: Yes.

Speaker Change #150: It's the majority of it is the majority of the revenue decline.

Versus second quarter sequential.

Speaker Change #152: Okay. Okay. Thank you and then just.

Speaker Change #153: You talked about the high inventory levels last quarter. It sounded like you thought you might have made some progress.

Speaker Change #152: Through.

Speaker Change #154: Fiscal Q1, just wondering if you might be able to sort of quantify.

Speaker Change #154: How much is left.

Speaker Change #155: Can you give us any sense on how are you.

Speaker Change #155: Looking to reduce a week or two weeks.

Speaker Change #155: Through the spring.

Speaker Change #156: And from where you started last quarter I assume most of that inventory reduction is happening in the second quarter that you probably didn't get through that much.

Speaker Change #156: In.

Speaker Change #156: Fiscal Q1, but just wondering if you might be able to sort of.

Speaker Change #156: From where you started how much have you gotten through and how much is left maybe on a percentage basis, we don't want to talk about on a on a weeks basis.

Speaker Change #157: Are you talking overall inventories Quinn.

Speaker Change #156: Yes.

Speaker Change #156: Mostly on the consumer facing business.

Speaker Change #156: It seems to be.

Speaker Change #156: Kind of driving most of that sequential decline into fiscal Q2.

Speaker Change #156: Yeah. So so we didn't we didn't break we didn't break down inventories by market.

Speaker Change #156: We did make progress in the first quarter as you as you've noted.

Speaker Change #156: <unk> was down below a 150 days overall.

Speaker Change #156: But we have a volume related decline.

Speaker Change #156: Deterioration in <unk> in the second quarter, so on a on a.

Speaker Change #156: We'll have <unk> go up first the second quarter, we will have absolute inventory dollars go off and again this is a volume driven.

Speaker Change #156: Phenomenon and then.

There.

Speaker Change #156: In part due to the continued data center strength.

The resumption of <unk>.

Speaker Change #156: Data center SSD volume growth.

And the.

Speaker Change #156: Refresh cycle and content driven growth in consumer and consumer related markets. We.

Speaker Change #156: We do see our inventories drawing down through the year, both in NAND and DRAM now.

Speaker Change #156: In DRAM.

Speaker Change #156: We will need our leading edge inventories that we have now just to be able to supply the market. We see so we're going to on our forecast today.

Speaker Change #156: And total DRAM inventories below our target levels by the end of fiscal year.

Speaker Change #158: I'm sorry, Mark I guess my question was more inventory at our customers rather than on your balance sheet. It sort of you said you are currently shipping below consumption in Q2, I guess, maybe the other way as it sounds like you think you start shipping in line with consumption again by Q3, Yes, I thought I thought that I thought that was covered.

Speaker Change #158: Earlier on that we see inventory is getting to a better place in the spring so.

But as Sumit mentioned, we're shipping in lesson there.

Speaker Change #158: And they're shipping out of consuming so.

Yes, we have confidence that.

Speaker Change #158: Both in their demand and related our inventory.

Speaker Change #158: Consumption.

Speaker Change #158: Through fiscal year 'twenty five.

Speaker Change #158: Beyond our second quarter.

Speaker Change #158: Okay. Thank you.

Speaker Change #158: Yes.

Speaker Change #159: Thank you and our next question comes from the line of Timothy Arcuri from UBS. Your question. Please.

Timothy Arcuri: Thanks, Mark I think I, just want to clarify that I heard that you said so you in terms of your your DRAM bit shipments.

Timothy Arcuri: Youre sort of saying that theyre going to be in line with the mid teens for calendar 'twenty five.

Speaker Change #161: Is that right number one.

Speaker Change #161: And then number two.

Speaker Change #161: Are you going to under ship the market because I think you said demand is growing low doubles, which you took that down but I would think youre going to under ship that.

Speaker Change #162: We said, we said that industry, we said.

Speaker Change #162: That industry bit supply or in the industry bit demand mid teens.

Speaker Change #162: He gave.

Speaker Change #162: We said we'd be ramp for DRAM.

Speaker Change #162: <unk>.

And we've said that volumes to be down in the second quarter.

Speaker Change #162: <unk>.

Speaker Change #162: Expect to ship in line with the industry.

Speaker Change #162: For the year for the year for the year.

Speaker Change #163: Yeah, Okay, and then and then what about NAND NAND NAND demand is up low doubles, but.

Speaker Change #163: I would guess youre going to under ship that for the year is that fair.

Speaker Change #164: For the year.

Speaker Change #165: We expect to have stable bit sure.

Speaker Change #166: In calendar 'twenty, four and 'twenty five.

Speaker Change #166: Across both DRAM and NAND generally that is true across 24% and 25, we expect to have.

Speaker Change #166: Relatively stable.

Speaker Change #166: Some noise here and there, but relatively stable bit share across both of those years.

Speaker Change #167: Okay. So youll ship.

Shipments are going to be up like close to that low double digit demand. It's fair, yes, yes, Okay, Alright, and then they're done.

Speaker Change #168: Or is that calendar versus fiscal right I just wanted to again careful because that skews things somewhat but we have a four month skew between calendar and fiscal year, so that changes things.

Speaker Change #168: Yes.

Speaker Change #169: I was talking calendar to calendar. So I'm just trying to just stay in the in the calendar year, because youre, giving us the demand number for calendar year something in that calendar year, you're going to ship in line roughly for both DRAM and NAND, that's right got it okay, all right I'll, let somebody else ask.

Speaker Change #169: Yes.

Speaker Change #170: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. Our next question comes from the line of Christopher <unk> from TD Cowen Your question. Please.

Speaker Change #171: Hey, guys. This is Eddie for Chris would like to clarify your comments regarding HBM and the volume and pricing agreements being locked in R&D.

Speaker Change #173: Are these agreements can suitable if so I wonder are under what conditions can customers cancel I'm wondering if there are specific like duration limits or restrictions in place. Thank.

Speaker Change #173: Thank you.

Speaker Change #175: Yes, I mean these are.

Speaker Change #173: Sure.

Speaker Change #173: These are agreements that relate to.

Speaker Change #173: Amount of bids.

Speaker Change #173: And cubes of HBM that our customers are going to purchase.

Speaker Change #173: Hey, Tayo versus 12 high by quarter with pricing associated with them.

Speaker Change #173: And.

Speaker Change #173: Once we get into certain relatively lengthy lead times than we get firm orders.

Speaker Change #173: Because of these lead times that.

Speaker Change #173: That we.

Build with and ship for and.

Given the environment in the industry.

Speaker Change #173: More of the discussion is around chasing.

Speaker Change #173: More supply.

Speaker Change #173: Because we have an extraordinarily strong product that customers want more of and we are.

Speaker Change #173: Ramping as fast as possible.

Speaker Change #173: Fast as humanly possible to be able to grow our share to the targets that we have outlined.

Speaker Change #173: And so.

Speaker Change #173: Yes customers can cancel if it is not in that firm.

Speaker Change #173: Time for the purchase order.

Speaker Change #173: If it is beyond that timeline, yes customers can make.

Speaker Change #173: Big changes, but there is a fairly lengthy timeline win.

Speaker Change #173: Based on very long lead times that they have to place firm purchase orders for and customers have been doing that.

With consistency.

And.

That's what gives us the confidence with a very strong ramp ahead.

Speaker Change #176: Got it thank you.

Speaker Change #176: Sure.

Speaker Change #177: Thank you and our next question comes from the line of <unk> from Goldman Sachs. Your question. Please.

Speaker Change #178: Hi, Thank you for taking the follow up here.

Speaker Change #178: I had one question on HBM and how to think about the ramp going forward on a quarterly basis.

Speaker Change #180: You guys don't report HBM revenue, so I'm guessing a little bit here, but based on everything you've said over the past couple of quarters.

Speaker Change #181: We're sort of estimating you did I don't know $800 million $900 million in revenue in the quarter.

Speaker Change #181: Assume it's going to be up again nicely this quarter.

Speaker Change #182: So when I think about the starting point this quarter and then the comments you made on calendar 'twenty five Tam and your market share goals.

Speaker Change #182: It feels like the trajectory kind of flattens out from here still up but flatter.

Speaker Change #183: I'm curious am I thinking about it the right way and if so what are some of the constraints of the space is.

Speaker Change #183: TSV capacity, both and when should we expect your.

Speaker Change #183: Your supply side your capacity to increase nicely is it tied to the Taiwan facility.

Speaker Change #184: Any insights there would be really helpful. Thank you.

Speaker Change #185: And I'll give you a couple of opening comments and then I'll pass it over to <unk> to talk about.

Speaker Change #184: The second half of your question that relates to.

Speaker Change #185: Space and so on.

Speaker Change #186: Yes, we didn't give you the expectation of how we would.

Speaker Change #186: Ramp and how we get to this.

Speaker Change #186: Market share that is roughly equivalent to our DRAM supply share which is in the low twenties.

Speaker Change #186: Get there in the calendar second half.

Speaker Change #186: With a view that there is going to be.

Speaker Change #187: $30 billion.

Speaker Change #187: Plus.

Speaker Change #187: HBM for calendar 'twenty five right so.

That's sort of the outlook, we have given you know you're right we've done.

Port HBM numbers, we may choose to provide some data points in the future, but we haven't.

Speaker Change #187: So except for that over $100 million.

The point that we had mentioned when we first cross that.

Speaker Change #187: The numbers that you outlined for FQ1.

A little bit high.

Speaker Change #187: But.

Speaker Change #187: Nonetheless, I think there is going to be still pretty robust ramp occurring.

Speaker Change #187: On the HBM revenue for us to hit the targets that we have offline based on the.

Speaker Change #187: Time expectation and the growth of them on a quarterly basis that we had mentioned.

Manish Bhatia: Then I'll just pass it onto Manish to answer the second half of your question.

Yes sure so.

Manish Bhatia: We're pleased with how the eight high ramp has gone we made some comments on the prior call about how that had exceeded our expectations in the last quarter and we're continuing to have a strong ramp forward here.

We think that the process choices. We've made are this demonstrates that we have a scalable process and that it is going to be able to again be able to transition into the <unk> as we move.

Manish Bhatia: Transition our capacity towards that ramp which will become increasingly important as we go through calendar year 'twenty five.

Manish Bhatia: And really it's just the way, it's just the ramp of adding capacity across many different dimensions, and it's just gradually happening over time as we are.

Manish Bhatia: Following new equipment, and qualifying that new equipment and growing our capacity week over week as we move towards that goal keep in mind, we had zero, we had no product in <unk> III.

Manish Bhatia: And very limited production in HBM two we on a process that was quite a bit different than what we have right now in <unk>.

Manish Bhatia: Really are starting from a very low point as we were beginning the <unk> ramp and are continuing to grow and we're adding capacity gradually as we went through this year and continuing into next year. So estimate said I think we would expect that as we go through the year and as we get to the <unk>.

A larger portion of our mix through the year, you will still see.

Manish Bhatia: Solid revenue growth as we're growing quarter over quarter through the rest of fiscal 'twenty five and even as we go through calendar year.

Manish Bhatia: 25.

Speaker Change #189: That's really helpful. Thank you so much.

Manish Bhatia: Okay.

Speaker Change #190: 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.

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