Q2 2025 Micron Technology Inc Earnings Call

March 20, 2025

Unknown Attendee: 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.

Thank you for standing by and welcome to migrants 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 the session you'll need to press star one on your telephone.

Unknown Attendee: To ask a question during this session, you'll need to press star 11 on your telephone. As a reminder, today's program is being recorded.

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

Satya Kumar: And now I'd like to introduce your host for today's program, Satya Kumar, Corporate Vice President, Vestal Relations and Treasury. Please go ahead, sir. Thank you and welcome to Micron Technology's Fiscal Second Quarter 2025 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 in other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

Sujay Kumar: Thank you and welcome to Micron technologies fiscal second quarter 2025 post earnings analyst call.

Sujay Kumar: On the call with me today are Sumit Sudano, Micron's, Chief business Officer, Manish Bhatia EVP of global operations and Mark Murphy our CFO.

Sujay Kumar: As a reminder, the matters. We're discussing today include forward looking statements regarding market demand and supply market trends and drivers of our expected results and guidance and other matters.

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

Unknown Attendee: 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 are under no duty to update any of the forward-looking statements to conform these statements to actual results.

Sujay Kumar: We refer you to documents, we 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.

Sujay Kumar: 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 to actual results.

Unknown Attendee: We can now open the call up for Q&A. Certainly.

Sujay Kumar: Now open the call up for Q&A.

Sujay Kumar: Certainly.

Vivek Arya: And our first question comes from the line of Vivek Arya from Bank of America. Your question, please. Thanks for taking my questions. I had two of them. First on this, the HPM sales increased to $35 billion. Is that unit or content driven? Like, do you see more GPU units versus before? Or is it, you know, more content, faster move to 12 high or whatnot? And is there flexibility to raise this number further? Yeah, in terms of the...

Sujay Kumar: Our first question comes from the line of.

Sujay Kumar: Yeah from Bank of America. Your question. Please.

Sujay Kumar: Yeah.

Speaker Change: Oh, Thanks for taking my questions I had two of them first on the H B M sales increased to 35 billion is that unit are content.

Speaker Change: Driven like do you see more GPU units versus before or does that in a more content faster move to 12 high or whatnot and has the flexibility to raise this number further.

Speaker Change: Yeah in terms of the I Vivek. This is Simon here I'll take this question. So in terms of the H P. M time, yes. This is the second time, we have increased.

Sumit Sadana: Hi Vivek, this is Sumit here. I'll take this question. So in terms of the HPM TAM, yes, this is the second time we have increased the TAM. And it's coming from a combination of more robust shipments, faster move to 12 high. As we mentioned, we expect most of the overwhelming amount of volume in the second half of the calendar year to be 12 high. And obviously, that comes at a higher ASP due to the higher content. And the overall level of... Demand for HBM continues to be very robust and we feel very good about our own HBM trajectories.

Speaker Change: Increase the span.

Speaker Change: It's coming from a combination of.

Speaker Change: Robust shipments pass.

Speaker Change: Most 212 high.

Speaker Change: As we mentioned we expect most of the overwhelming amount of volume in the second half of the calendar year to be quite as high and obviously that comes at.

Speaker Change: Higher ASP.

Speaker Change: Due to the higher content.

Speaker Change: And the overall level.

Speaker Change: Demand for <unk> continues to be very robust.

Speaker Change: And we feel very good about our own HBM trajectory as well. So that's all part of our own shipments have been ahead of forecast.

Sumit Sadana: That's all part of it. Our own shipments have been ahead of forecast, ahead of our own internal plans. So that's also contributing to the damage.

Speaker Change: And I had a follow on internal plans. So that's also contributing to the increase.

Speaker Change: Alright, thanks, so much.

Speaker Change: Follow up on gross margin.

Speaker Change: I think Mark you mentioned, some startup costs headwinds in Q4, if I recall.

Speaker Change: Could you help us quantify and do they persist beyond Q4 into Q1 et cetera, and kind of related question on gross margin are you shipping bits from higher cost inventory. So when does that headwind go away.

Mark Murphy: So when does that headwind go away? Yeah, and your second second question was that it was it a I'm presuming it was kind of a DRAM and and question or doesn't matter. So So on the startup costs, so they're relatively, you know, you know, modest, you know, kind of an under, yeah, 30, 40 basis point, depending on what the what the revenue is. https://www.kenhub.com And then that, you know, those costs will increase as we, you know, as we increase the level of activity, particularly in Idaho, and, and around our, you know, newest, DRAM node, those costs will increase through 26.

Speaker Change: Yeah and your second second question was it was it a.

Speaker Change: Presuming it was kind of a DRAM and NAND question or doesn't matter okay.

Speaker Change: So on the.

Speaker Change: Startup costs, so they're relatively.

Speaker Change: No.

Speaker Change: Modest.

Speaker Change: Yes.

Speaker Change: Under 30.

Speaker Change: 30, 40 basis points, depending on what the.

Speaker Change: What the Rev.

Speaker Change: Revenue is.

Speaker Change: <unk>.

Speaker Change: In fact, as we sort of exit the year and then that yes, those costs will increase as we.

Speaker Change: You know as we increase the level of activity.

Speaker Change: Particularly in Idaho and.

Speaker Change: And around dark.

Speaker Change: Newest.

Speaker Change: Yeah DRAM node.

Speaker Change: Those costs will increase through 2006, so yes, we will talk more of that.

Mark Murphy: So yeah, we'll talk more about that as we get closer to fiscal year 26. But yeah, we begin to see those increases as we exit this year.

Speaker Change: That as we get closer to fiscal year, 'twenty, six but yeah, we'd begin to see.

Speaker Change: Those increases as we exit this year.

Mark Murphy: And then on the inventories, you know, as you as you recall, we did the, you know, the write down of the inventories. And those inventories have cleared. And, you know, the inventories that we have now are, you know, we've been performing well on cost down. So there are competitive inventories. You know, in NAND, as I mentioned, our underutilization, you know, those costs are reflected in inventories and result in some higher cost inventories, and those begin to pass through in the fourth quarter and into 26.

Speaker Change: And then on the inventories.

As you recall we did.

Speaker Change: The write down of the inventories.

Speaker Change: And those inventories have cleared.

Speaker Change: And yes, the inventories that we have now are.

Speaker Change: We've been performing well on cost down so there are competitive inventories.

Speaker Change: And NAND as I.

Speaker Change: I mentioned.

Speaker Change: Our underutilization.

Speaker Change: Yes.

Speaker Change: Those costs are reflected in inventories and result in some higher cost inventories and those begin to pass through.

Speaker Change: In the fourth quarter and into 2006.

Unknown Attendee: Thank you.

Speaker Change: Thank you.

Thank you and our next question comes from the line of <unk> from Raymond James Your question. Please.

Srini Pajjuri: And our next question comes from the line of Srini Pajjuri from Raymond James. Your question, please. Thank you. I have a couple as well. You know, you talked about price premium as we go from 8 high to 12 high. Can you clarify if it's, you know, like for like price premium? Obviously, you'll get a better price because of higher capacity. And then also on the same topic, as we go from 3E to 4, can you talk about at a high level, can you discuss the differences and similarities of that transition versus, you know, when you when you went from 3 to 3E?

Speaker Change: Thank you I have a couple as well.

Speaker Change: You talked about price premium as we go from eight to 12 high can you clarify if it's.

Speaker Change: Sure.

Speaker Change: Like for like price premium, obviously, you've got a better price because of higher capacity and then.

Speaker Change: Also on the same topic as we go from three to four can you talk about at a high level can you discuss the differences and similarities that transition versus when you. When you went from three years to <unk> and <unk>. I think you went from eight to 12 I'm just curious how difficult of a transition HBM four is going to be from a.

Srini Pajjuri: And 3E, I think, you know, you went from 8 to 12. I'm just curious how difficult of a transition HBM4 is going to be from a manufacturing point of view.

Speaker Change: From standpoint.

Speaker Change: Yes, so in terms of.

Sumit Sadana: Yeah, so in terms of Eight high to 12 high. As you can imagine, 12 high is a more complex product, has also impacts for all suppliers as they move to higher number of layers. and consequently the price is higher not just because of the 50% extra capacity but the price per bit is also higher because of all of those reasons you know.

Speaker Change: Eight to 12 high.

Speaker Change: As you can imagine.

Speaker Change: A more complex product.

Speaker Change: As also.

Speaker Change: <unk>.

Speaker Change: For all suppliers as they move to higher number of layers.

Speaker Change: And consequently the.

Speaker Change: Uh huh.

Speaker Change: This is higher not just because of the 50% extra capacity.

Speaker Change: The price per bit.

Speaker Change: Is also higher because of all of those reasons.

Manish Bhatia: So that's the pricing related issue and in terms of manufacturing, I'll let Manish address the manufacturing So your manufacturing is around moving from HBM3e to HBM4. And, you know, the number of new technologies that are that are going to be coming together to be able to provide the significant increase in, in, you know, performance, that HBM4 will provide that all our customers are really, really thirsty for. And, and so there's, you know, manufacturing, you know, elements that we're integrating together on the front end to be able to really deliver that, that higher performance, as well as new technologies we'll be implementing and process flow for assembly and test, which will enable us to, to deliver the high volumes of, of, you know, integrated HBM3s that, you know, beginning in, in calendar year 26.

Speaker Change: So that's the pricing related issue and in terms of manufacturing.

Mitch: I'll, let Mitch.

Mitch: Address the manufacturing aspect.

Mitch: So your question is always around moving from <unk> to HTM for.

Mitch: And.

Mitch: The <unk>.

Mitch: Number of new technologies that are going to be coming together to be able to provide the significant increase in.

Mitch: <unk>.

Mitch: Performance.

Mitch: That <unk> four will provide that all of our customers are really really first before.

Mitch: And so there is manufacturing.

Mitch: Elements that were integrating together on the front end to be able to really deliver that that higher performance as well as new technologies will be implementing and process flow for.

Mitch: Assembly and test which will.

Mitch: Enable us to to deliver the high volume of.

Mitch: Integrated HBM cubes.

Manish Bhatia: So we feel very good about where we are right now with HBM, you know, eight high having outperformed, or, or prior plans and that, that, that manufacturing experience and base bodes well for the 3E12 high ramp that's coming in the, the, the rest of calendar 25 and into 26. And then we think that that will provide really strong baseline fundamental learning for us with, with HBM4.

Mitch: Beginning in calendar year 2006, so we feel very good about where we are right now with HBM.

Mitch: Eight high having outperformed our prior plans that manufacturing experience in base bodes well for the <unk> 12 high ramp that's coming in the rest of calendar 'twenty five and into 'twenty six and then.

Mitch: We think that that will provide really strong baseline fundamental learning for us with with HBM floor.

Speaker Change: Okay got it and then on the on the Tam.

Unknown Attendee: Unknown Speaker You got it.

Unknown Attendee: And then on the on the TAM, you know, you raised it last quarter and this quarter as well. And at the same time, you know, you're maintaining your market share exiting this year, even though I guess, you know, you You've been talking about getting sold out for the year.

Speaker Change: You've raised it last quarter and this quarter as well and at the same time.

Speaker Change: You're maintaining your market share exiting this year, even though I guess you have been at least you've been talking about getting sold out for the year I'm just trying to reconcile those three items because is.

Unknown Attendee: I'm just trying to reconcile those three items because is it because of better yields that you're able to kind of maintain your market share targets exiting the year, or is there, I'm just trying to, I guess, reconcile that.

Speaker Change: Is it because of better yields that you were able to.

Speaker Change: Kind of maintain your market share targets exiting the year or is there I'm just trying to I guess.

Speaker Change: Reconcile that and then.

Unknown Attendee: And then the follow-up to that is that as you go into next year, obviously, one of your competitors is still struggling to qualify at NVIDIA. So if an opportunity arises, if more market share is available in the market, I guess, how quickly can you ramp up supply if there's an opportunity? So maybe just in terms of the production question, I'll just say that we're very pleased with our progress on being able to provide more, you know, greater supply than what our prior plans were. And so, you know, we do expect that that does play into our projections of what we're able to do for the rest of the year and in particular into this, you know, this target, helping us achieve that target that we've set, which is to get to, you know, our natural market share by the end of the calendar year.

Speaker Change: The follow up to that is that as you go into next year. Obviously, one of your competitors is still struggling to qualify at Nvidia. So if an opportunity arises.

Speaker Change: No.

Speaker Change: More market share is available in the market.

Speaker Change: I guess, how quickly can you ramp up supply if there is an opportunity for you to capture more market share. Thank you.

Speaker Change: Yes.

Speaker Change: Just in terms of the <unk>.

Speaker Change: Production.

Speaker Change: Question I'll, just say that we're very pleased with our progress on being able to provide more supply greater supply is and what our prior plans were and so.

Speaker Change: We do expect that does that does.

Speaker Change: Play into.

Speaker Change: Our projections of what we're able to do for the rest of the year and in particular into this this time.

Speaker Change: Helping us achieve that target that we've set which is to get to.

Speaker Change: Our natural market share by the end of the by the end of the calendar year.

Speaker Change: Yeah in terms of the Tam increase.

Sumit Sadana: Yeah, in terms of the time increase, it has been a combination of More robust 12-high, rapid and robust shift to 12-high earlier in the year, as we have said now, most of the second half of the calendar year will be 12-high, and that comes with the higher ASPs. Of course, our own shipments beyond our own plan that we have been articulating over the last few months, including what Manish said, is all contributing to the time increase and the higher shipments from us. are enabling us to continue to keep our share goal despite the higher tax.

Speaker Change: It has been a combination of.

Speaker Change: More robust 12 highs.

Speaker Change: Rapid and robust shifted well hi.

Speaker Change: Earlier in the year.

Speaker Change: As we have said now.

Speaker Change: Most of the second half calendar year will be 12 high and that comes with the higher Asps.

Speaker Change: Of course, our own shipment.

Speaker Change: And our own plan that we have been articulating over the last few months, including but when he said.

Speaker Change: All contributing to the time increase and the higher shipments from us.

Speaker Change: Are enabling us to continue to keep our share goal.

Speaker Change: Despite the higher time now.

Sumit Sadana: Now, as we think longer term, we are making substantial investments in HBM capacity to We are mindful of ensuring that we are being responsible in how much supply we bring online. At the same time, as there are opportunities in the market in terms of how we do and how we mix the shift of our business, the mix of our business and our portfolio of shipments, we will continue to look for opportunities to focus on all of the more profitable portions of the industry profitable. So that will remain an ongoing portion of our.

Speaker Change: Now as we think longer term, we are making substantial investments in HBM.

Speaker Change: <unk> two.

Speaker Change: Drive our opportunity.

Speaker Change: You see them HBM market continuing to expand over the years, we have even told you about.

Speaker Change: <unk> billion dollars.

Speaker Change: Trajectory through 2030.

Speaker Change: And so it is a multiyear growth opportunity.

Speaker Change: We also want to remain disciplined about our investments.

Speaker Change: Of course, we have substantial capex that we have committed that we told you about.

Speaker Change: Also mindful of ensuring that we're being responsible in how much supply we bring online and at the same time.

Speaker Change: Asset other opportunities in the market in terms of.

Speaker Change: How we do and how we mix the shift of our business.

Speaker Change: The mix of our business and our portfolio of shipments we will continue to look for opportunities too.

Focus on all of the more profitable portions of the industry profit pool, so that that will remain on.

Speaker Change: Ongoing portion of our strategy.

Speaker Change: Thank you.

Speaker Change: Sure.

Unknown Attendee: Thank you.

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

Aaron Rakers: And our next question comes to the line of Aaron Rakers from Wells Fargo. Your question, please. Yeah, thanks for taking the question and doing the call. I guess, Mark, I want to, you know, double click on one of the comments that you made in the Q&A around I think some of the gross margin impact. I think you had mentioned that you expect all in DRAM costs down to be more or less flat this year. I think your last kind of description was more of like a mid to high single digit, albeit only the front end cost structure of DRAM.

Speaker Change: Yes, thanks for taking the question and doing the call.

Speaker Change: I guess, Mark I wanted to double click on one of the comments that you've made into Q&A around I think some of the gross margin.

Speaker Change: <unk> I think you had mentioned that you expect all in DRAM costs down to be more or less flat. This year I think your last kind of description with more of like a mid to high single digit, albeit only the front end cost structure of DRAM. So just a point of clarification. There is that is the new flat number a projection based on.

Mark Murphy: So just a point of clarification there is that is the new flat number of projection based on inclusive of HBM? Just if you can help, help us understand that. Yeah, that's right, Aaron. It's correct.

Speaker Change: Inclusive of HBM, just if you can help help us understand that.

Speaker Change: Yes, that's right Eric that's correct right.

Aaron Rakers: Okay, and as a quick follow-up, you know, a lot of focus on HBM, but I think one of the other areas that you guys have done very well in is LPDDR5X on these AI servers. As we move to the SOCAM architecture with the GB300, Do you guys envision yourself maintaining your strong chair position and is there an ASP uplift that comes with moving to a module relative to the solder down solution in the GB200 cycle? Thank you. Yeah, so we're not going to be able to comment on the ASPs between the solid down version and the module.

Speaker Change: Okay, and then as a quick follow up a lot of focus on <unk>, but I think one of the other areas that you guys have done very well in is LP DDR five axon. These AI servers.

Speaker Change: As we move to the <unk> architecture with the GBP 300.

Speaker Change: Do you guys envy.

Speaker Change: Visiting yourself, maintaining your strong share position and is there an ASP uplift that comes with moving to a module relative to the solder down solution in the GBP 200 cycle. Thank you.

Speaker Change: Yes so.

Speaker Change: Going to be able to comment on the asps between the solid down version in the module. However.

Sumit Sadana: However, Aaron, you're absolutely right. Our LP solution for the data center has been a stellar success for Micron. We are the only company, remain till today, the only company in the world to be shipping LPD RAM in volume. And we'll be the first ones to have volume production of SOCAM, which we have been working on for some time in deep partnership with NVIDIA. So we're very excited about the SOCAM opportunity. It will be a very big product for us. And over time, there may be others who will productize and ship in volume, but we maintain a very sizable lead in time and shipments and experience in productizing LP in the data center and continue to look forward to that roadmap to produce really good results for us.

Adam: Adam you're absolutely right.

Speaker Change: Sure.

Speaker Change: <unk> solution for the data center has been a stellar success.

Speaker Change: Micron, we are the only company remained till today, the only company in the world to be shipping LP DRAM in volume and will be the first ones too.

Speaker Change: Have volume production of Silicon, which we have been working on for some time in deep partnership with Nvidia. So we are very excited about the <unk> opportunity. It will be a very big product for us and all time, there may be others, who will.

Speaker Change: Product ties and ship in volume, but we maintain a very sizable lead in time and shipments and experience.

Speaker Change: Prototyping LP in the data center.

Speaker Change: <unk> continued to look forward to that roadmap to produce.

Speaker Change: Really good results for us and as we mentioned the high cap <unk> plus <unk>.

Sumit Sadana: And as we mentioned, the high-cap DIMMs plus LPD RAM also reached across that billion-dollar milestone for Quarterly Revenue this quarter in FQ2. So that was also very exciting for us besides the billion-dollar milestone for HBM in the quarter. Thank you.

Speaker Change: LP DRAM also reached.

Speaker Change: Crossed the $1 billion milestone for quarterly revenue this quarter in Q2. So that was also very exciting for us. Besides the billion dollar milestone for HBM.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Thank you and our next question comes from the line of Vijay Rakesh from Mizuho. Your question. Please.

Vijay Rakesh: And our next question comes from the line of Vijay Rakesh from Mizzou. Your question, please. Yeah, hi, guys. Thanks for doing this call. Just going back on the HBM, I think your market share has almost doubled from the beginning of the year, by 4Q, I guess, if you're considering it in a DRAM market share in HBM. And so as you look at 2026, as HBM4 ramps, and given that market share, your revenues in 2026 on HBM could probably double. Is that fair? And is your capacity on HBM going up?

Speaker Change: Yes, hi, guys. Thanks for doing this call just going back on the HBM.

Speaker Change: And market share.

Speaker Change: Number.

Speaker Change: From the beginning of the year my two I guess.

Speaker Change: Yes.

Speaker Change: We're getting it.

Speaker Change: Our market share and so if you look at 2026.

Speaker Change: Okay.

Speaker Change: And given that market share.

Speaker Change: Revenues in 2000, <unk> lithium could probably double is that fair.

Speaker Change: If you have capacity on ESPN and going up similarly.

Speaker Change: Hello.

Sumit Sadana: So yeah, I mean, of course, we are ramping our HBM capacity throughout calendar 25. And our goal is, you know, obviously, to continue to have our HBM share be approximately the same range as our DRAM share. So it's, as HBM time grows, we definitely intend to ensure that our HBM capacity also keeps growing. Now, in terms of our ramp of HBM throughout 25, you're right, I mean, we expect a robust ramp of our quarterly revenue through calendar 25, as we get to that target share at the end of this calendar year. And that does mean that our 2026 revenue in HBM should be significantly higher than the 2025 revenue.

Speaker Change: So yes, I mean of course, we are ramping our <unk>, we have capacity throughout calendar 'twenty five and our goal is.

Speaker Change: Obviously to continue to have our.

Speaker Change: <unk> sure.

Speaker Change: The approximately the same range as our DRAM share so.

Speaker Change: As <unk> grows.

Speaker Change: Definitely.

Speaker Change: To ensure that our HBM capacity.

Also keeps growing now in terms of.

Speaker Change: Ramp off HBM throughout 25, Youre right I mean, we expect.

Speaker Change: Robust ramp of our quarterly revenue through calendar 'twenty five.

Speaker Change: As we get to that target share at the end of this calendar year and that does mean that 2026.

Speaker Change: Revenue in HBM should be significantly higher than the $20 95 revenue.

Sumit Sadana: And in the 2025 revenue, of course, you know, we will have every quarter being higher than the previous quarter. So it's a pretty, pretty good trajectory. We feel very good about that overall business process. Thanks.

Speaker Change: And in the 2025 revenue of course, we will.

Speaker Change: Have.

Speaker Change: Every quarter being higher than the previous quarter. So it's a pretty pretty good trajectory, we've seen very good about.

Speaker Change: Overall business prospect.

Vijay Rakesh: And then on the NAND side, I thought we'd get a little cautious on NAND side, but as you look at the AI servers, are you seeing a faster pull through on your QLC SSD versus hard disk drive, I guess, faster uptake, I should say? Sorry, I didn't quite hear that question. Can you just repeat a faster on the server side? Yeah, on the AI server side, are you seeing a much faster uptake on on your QLP SSE? Yeah, so definitely the high capacity SSDs. I mean, some of these are depending on the skew and performance requirements.

Speaker Change: Thanks, and then on the NAND side.

Speaker Change: I think you accurately cautious.

Speaker Change: Cautions announcement, but I assume you can.

Speaker Change: Are you seeing.

Speaker Change: Faster.

Speaker Change: Yes.

Speaker Change: I understand I guess.

Speaker Change: Uptake I should say.

Speaker Change: Sorry, I didn't quite hear that question can you just repeat a faster.

Speaker Change: Yeah on the AI.

Speaker Change: Are you seeing.

Speaker Change: Much faster uptake on <unk>.

Speaker Change: Yes.

Speaker Change: Pete.

Speaker Change: Yes, so definitely the high capacity Ssds I mean, some of these are depending on the SKU and performance requirements. Some of these <unk>. Some of these are TLC base.

Sumit Sadana: Some of these are QLC based, some of these are TLC based. And as we get to higher and higher capacities over time, more definitely focused on QLC. So yes, there is a A clear move to higher capacities over time in AI servers and there is a separate, you know, just stepping back and looking at the data center, there is a desire from the large so much more difficult in many ways. They are just not able to use the entirety of the capacity because of these large capacity HDDs have severe limitations in using the part of the platter that's not on the edge.

Speaker Change: And as we get to higher and higher capacities over time.

Speaker Change: More definitely focused on Q, we'll see so yes that is.

Speaker Change: A clear move to higher capacities over time, an AI servers.

Speaker Change: And.

Speaker Change: There is.

Speaker Change: A separate.

Speaker Change: Just stepping back and looking at the data center there is a desire from the large.

Speaker Change: Hyper scaler Stu.

Speaker Change: Find opportunities to reduce.

Speaker Change: HDD usage over time, because hdds not just so much more difficult.

Speaker Change: In many ways, they're just.

Speaker Change: Not able to use the entirety of the capacity because of.

Speaker Change: These large capacity hdds have severe limitations.

Speaker Change: And using that part of the bladder that's not on the edge.

Sumit Sadana: So there are challenges related to reliability as well, power consumption challenges. And so if you think about the trajectory of NAND, the density of storage that we can provide through the roadmap over the next few years, the power consumption benefits, the server consolidation benefits, and then you look at the overall PCO in very power constrained data centers, there will be a substantial desire by more and more customers to minimize the amount of HDDs they have to deploy. And that when we get to closer to that tipping point will become another tailwind for the NAND industry.

Speaker Change: So there are challenges related to reliability as well.

Speaker Change: Our consumption challenges.

Speaker Change: And so if you think about the trajectory of NAND. The density of storage that we can provide through the roadmap over the next few years.

Speaker Change: The power consumption benefits silver consolidation benefits and then you look at the overall <unk> in.

Speaker Change: Very power constrained data centers.

Speaker Change: There will be substantial.

Speaker Change: Desire by more and more customers to minimize the amount of <unk> they have to deploy and that when we get to closer to that tipping point will become another tailwind for the NAND industry.

Sumit Sadana: And the PCO benefits are very substantial. So just looking at the per bit cost of NAND and comparing it to the per bit cost of HDDs is not how our customers are looking at it. And so I think that attempt to dramatically reduce HDDs is already started at the most leading customers. You have seen some announcements from Pure Storage and we are suppliers to them and we are also working directly with the end customers who are wanting to deploy very large capacity SSDs and remove some of those HDDs from their future infrastructure deployment. So it's an exciting opportunity.

Speaker Change: And the <unk> benefits are very substantial so just looking at the <unk> cost of NAND and comparing it to the per bit cost of HDD is not how our customers are looking at it.

Speaker Change: And so.

Speaker Change: I think that that attempts to <unk>.

Speaker Change: Dramatically reduce hdds as already.

Speaker Change: It started at the most leading customers you have seen some announcements from pure storage and.

Speaker Change: And we are suppliers to them and we are also working directly with the end customers who are wanting to deploy a very large capacity ssds and.

Speaker Change: And remove some of those hdds from their future infrastructure deployment. So it's an exciting opportunity. It will take some time to develop but once that gets going it will definitely have a snowball effect in terms of deployments.

Unknown Attendee: It'll take some time to develop, but once it gets going, it will definitely have a snowball effect in terms of deployment.

Unknown Attendee: All right, thank you. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Sure.

Brian Chin: And our next question comes from the line of Brian Chin from Stifel. Your question, please. Hi there, thanks for letting me ask a few questions.

Brian Chin: And our next question comes from the line of Brian Chin from Stifel. Your question. Please.

Brian Chin: Hi, there thanks for letting me ask a few questions.

Speaker Change: Could you maybe expand a little bit more on what youre seeing in the enterprise SSD market currently I think.

Brian Chin: Can you expand a little bit more on what you're seeing in the enterprise SSD market currently? I think customers clearly digested some in Fiscal 2Q, but your guidance for Fiscal 3Q, a thought stated that data center NAND shipments do improve queue on queue, so are you starting to see that tick up some, and is that helped by Blackwell shipments also beginning to pick up for all the discussion this week? Sure. So, so Brian, at the end of last calendar quarter, which is CQ 424, there were some large deals that were being bid upon, that caused some customers to purchase SSDs, and those, those got purchased by multiple customers.

Speaker Change: Customers clearly digested some in fiscal <unk>, but your guidance for fiscal <unk> I.

Speaker Change: Thought stated that data center NAND shipments do improve Q on Q. So are you starting to see that tick up some and has that helped by black oil shipments also began to pick up for discussion this week.

Speaker Change: Sure. So so Brian at the end of last calendar quarter, which is CQ424.

Speaker Change: There were some large.

Speaker Change: Deals that were being built upon.

Speaker Change: That caused some customers to purchase.

Speaker Change: Ssds in those.

Speaker Change: Those got purchased by multiple customers and eventually some of those deals didn't go through in terms of deployment and the cloud.

Brian Chin: And eventually, some of those deals didn't go through in terms of deployment at the cloud companies. And so there was some inventory at customers for data center SSD, across multiple suppliers of data center SSD. And that is part of what was. The digestion period in CQ1 as more demand on the AI server side continued to use some of that inventory. I think in CQ2 much of that would have been depleted, that inventory would be mostly depleted and the run rates would start to pick up again in terms of ordering patterns and so we do expect that as AI server growth continues, data center SSD TAM should start to improve again on a sequential basis starting from the months ahead and strengthen into the second half of this calendar year versus the first half where there has been some inventory digestion related issues.

Speaker Change: Companies and so there was some inventory at customers for data Center SSD.

Speaker Change: Across multiple suppliers of data center SSD.

Speaker Change: And that is part of what was.

Speaker Change: The digestion period in Q1.

Speaker Change: As more demand on the silver side continued to use some of that inventory.

Speaker Change: And thank you too.

Speaker Change: Much of that would have been.

Speaker Change: Depleted that inventory would be mostly depleted and the run rates would start to pick up again in terms of.

Speaker Change: Ordering patterns and so we do expect that as AI silver growth continues.

Speaker Change: Data Center SSD, Pam should start to improve again on a sequential basis starting from the months ahead.

Speaker Change: And strengthen into the second half of this calendar year versus the first half there has been some inventory digestion related.

Speaker Change: Issues now in FQ3 we do expect our data center revenue to hit another record.

Brian Chin: Now in FQ3, we do expect our data center revenue to hit another record, but I'm talking about all of data center, we are not parsing out what part of the data center is the record versus a bigger record, smaller record, et cetera, so we're not really parsing out. Different aspects of the data center but we do expect that the aggregate data center revenue will be a record in FQ3.

Speaker Change: But I'm talking about all of data center, we're not parsing out.

Speaker Change: What part of the data center.

Speaker Change: Record versus versus a bigger record smaller etcetera. So we're not not really parsing out.

Speaker Change: Different aspects of the data center, but we do expect that the aggregate data center revenue will be a record in FQ3.

Speaker Change: Okay.

Speaker Change: That's helpful. And then maybe a question about sort of the.

Speaker Change: The China memory supply.

Speaker Change: Clearly negatively impacted pricing on legacy DDR, five DRAM and as well as in NAND.

Speaker Change: Kind of in second half last year, there is more consumer bits a bit demand crosses over to DDR. Five are you seeing that immediate supply and pricing risk from China start to tail off given the bigger technology and quality hurdles posed by the more advanced products.

Unknown Attendee: Well, I'll just make a couple of clarifications. So the The supply from Chinese headquartered companies. that comes to the market has been mostly in DRAM, DDR4, and LP4 focused for last year. So the time frame that you are referencing has been more DDR4, LP4 type of supply. Now, as Chinese customers stayed on these older technologies longer, some of the consumer products In China did reduce their what would have been DDR5 LP5 consumption because they just stayed with the richer mix of DDR4 LP4 to consume local China supply and just the general inventory environment that we had been describing over the past many months for both PCs and smartphones for CQ4, CQ1 has been impacting the DDR4, DDR5 pricing environment and we had mentioned to you that the inventory consumption would be in much healthier place, the inventories would be in much healthier place by spring of 2025 and as we are in that time frame now, we do see that those inventories have become healthier as we had expected and that is part of why in our FQ3, you have heard us say that our consumer mix has increased because particularly in smartphones, the orders have bounced back, not just driven by improving inventories and sell-through but also the average capacities going from 8 gigabyte to 12 gigabyte.

Speaker Change: Well.

Speaker Change: I'll just make a couple of clarification so.

Speaker Change: Okay.

Speaker Change: The supply from Chinese.

Speaker Change: Headquarter companies.

Speaker Change: That comes to the market has been mostly in DRAM DDR for an LP for focused for last year. So the timeframe that you are referencing has been more DDR for LP for type of supply now as Chinese customers stayed on these older.

Speaker Change: Technologies longer.

Speaker Change: Some of the consumer products.

Speaker Change: In China did reduce their what would've been DDR five LP sigh of consumption because they just stayed with the richer mix of DDR for LP forward to consume local China supply.

Speaker Change: And just the general.

Inventory environment that we had been describing over the past many months.

Speaker Change: For both Pcs and smartphones for CQ4 CQ1.

Speaker Change: Has been impacting the DDR for DDR five pricing environment, and we had mentioned to you that the.

Speaker Change: Inventory consumption would be and much healthier place the inventories would have been much healthier place by spring of 2025 and as we are.

Speaker Change: In that timeframe now we do see that those inventories have become healthier as we had expected and that is part of why in our FQ. Three you have heard us say that our.

Speaker Change: Consumer mix has.

Speaker Change: Queens, because particularly in smartphones the orders have been.

Speaker Change: <unk> back not just driven by improving inventories and sell through but also the average capacities going from eight gigabyte to 12 gigabyte. So those are some of the dynamics that have been taking shape the supply in the past months have been some China, mostly DDR for El before there.

Unknown Attendee: So, those are some of the dynamics that have been taking shape. The supply in the past months have been from China, mostly DDR4, LP4 where, you know, looking ahead only about 10% of our revenue is exposed to that portion. So I hope that makes. Great, thanks. It sounds like the tail end of that question was just that you're seeing less. of that direct competitive overlap in DDR5. Yeah, I mean, DDR5 is has not been in volume production in the timeframe that you had outlined. So more of the impact in the last couple of quarters has been things other than DDR5 supply from China.

Speaker Change: Looking ahead, only about 10% of our revenue is exposed to.

Speaker Change: That portion.

Speaker Change: So I hope that that makes sense.

Speaker Change: Great. Thanks, and then it sounds like the tail on that question was just that you are seeing less.

Speaker Change: Have that direct competitive overlap in <unk> five.

Speaker Change: Yes, I mean DDR five is has not been.

Speaker Change: <unk> volume production.

Speaker Change: The timeframe that you had outlined.

Speaker Change: So more of the impact in the last couple of quarters has been things other than DDR five supply from China.

Unknown Attendee: Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Karl Ackerman: And our next question comes from the line of Karl Ackerman from BNP Barnabas. Your question, please. Yes, thank you. I have two.

Speaker Change: And our next question comes from the line of Carl equipment from BNP part of your question. Please.

Speaker Change: Yeah. Thank you I have two.

Karl Ackerman: I'm curious why you believe the industry will ship below and market demand for DRM and NAND this year, given your commentary about shipping below demand, but not losing share, I guess, should we assume that higher mix of HBM is helping offset some of the competitive dynamics from Chinese players for consumer DRM and NAND? Now the follow up, please. The industry will ship below demand. I don't, I don't believe that's what we have been trying to indicate. What we have said is that our supply growth is going to be less than the demand growth hour, meaning microns, and that's going to result in a reduction in our inventory mechanically.

Speaker Change: I'm curious why you believe the industry will ship below end market demand for DRAM and NAND. This year, given your commentary about shipping below demand, but not losing share I guess should.

Speaker Change: Should we assume that higher mix of HCM is helping offset some of the competitive dynamics from Chinese players for consumer DRAM and NAND.

Speaker Change: One follow up please.

Speaker Change:

Speaker Change: The industry will ship below demand.

Speaker Change: I don't I don't believe.

Speaker Change: That's what we have been trying to indicate what we have said is that our supply growth is going to be less than the demand growth, our meaning microns and thats going to result in a reduction in our inventory.

Speaker Change: Mechanically and so that's what we have been trying to communicate.

Sumit Sadana: And so that's what we have been trying to communicate. So in terms of HBM, of course, as HBM mix has been increasing in the demand because of the trade ratio that is 3 to 1 now, and as we have described in the prepared remarks over time, we'll go to past 4 to 1 with HBM4E. Those factors. do cause the non-HBM portion of the DRAM supply to be constrained and more investments then needed to expand wafer capacity to prevent that portion from getting too constrained and you know that's that's really the dynamic that is playing out on the DRAM side.

Speaker Change: So in terms of.

Speaker Change: <unk> of course as HBM mix has been increasing.

Speaker Change: And the demand.

Speaker Change: Cause of the trade ratio that is three to one now and as we have described in the prepared remarks over time, we will go to fast forward to one <unk>.

Speaker Change: Those factors too.

Speaker Change: <unk> caused the non HBM portion of the DRAM supply to be constrained and more investments than needed to expand wafer capacity to prevent that portion from getting too constrained.

Speaker Change: <unk>.

Speaker Change: That's that's really the dynamic that is playing out on the DRAM side. So that's the reason why we have said that the DRAM leading edge capacity.

Sumit Sadana: So that's the reason why we have that the DRAM leading edge capacity is constrained in the industry for us and looking ahead we expect that the trajectory is going to be healthier driven by ongoing HBM increases and the broadening of the demand drivers beyond just AI that has been driving demand for the last few quarters because you know other aspects of the demand will start to come back if smartphones is already improving and over time with the Windows EOL or Windows 10, Windows PCs, AI PCs will start to improve, average capacities will start to improve and at some point the industrial and automotive inventories will also have improved enough to kickstart that portion of the market.

Speaker Change: Is constrained.

In the industry for us.

Speaker Change: And looking ahead, we expect that the <unk>.

Speaker Change: <unk>.

Speaker Change: Is going to be healthier driven by ongoing HBM increases and the broadening of the demand drivers beyond just.

Speaker Change: That has been driving demand for the last few quarters.

Speaker Change: Because other aspects of the demand will start to come back in smartphones is already improving.

Speaker Change: And over time that the windows.

Speaker Change: Windows 10 Windows Pcs AIP season will start to improve average capacity you can start to improve.

Speaker Change: And at some point the.

Speaker Change: Industrial and automotive inventories will also have improved enough to kick start that portion of the market. So we see a broadening of the demand drivers looking ahead and more constructive environment.

Karl Ackerman: So we see a broadening of the demand drivers looking ahead and a more constructive environment which gives us optimism about the future. Got it. Just as a quick follow up to that, because it's related. So I suppose if the industry supply is being restrained by overall capital investment, and the HBM trade ratio continues to increase, as you indicated, does capital investment need to increase from this 14 billion annual rate to support your market share goals on HBM into fiscal 26? And do those two factors limit margin upside from a growing mix of HBM sales? Thank Yeah, I mean, we're not obviously giving any CapEx forecast for 2026.

Speaker Change: Which gives us optimism about the future.

Speaker Change: Got it just as a quick follow up to that because it's related so I suppose if the industry supply.

Speaker Change: Is being restrained by overall capital investment in the HBM trade ratio continues to increase as you indicated.

Speaker Change: Capital investment need to increase from the $14 billion annual rate to support your market share goals on HCM into fiscal 'twenty six.

Speaker Change: And do those two factors limit margin upside from a growing mix of HCM sales. Thank you.

Speaker Change: Yes.

Speaker Change: Getting any capex forecast for 2026 right now.

Mark Murphy: Right now, we're just, you know, in 2025, early 25 calendar year. So we will, we will obviously provide it, you know, CapEx guidance later, later in the year, as we approach 2026 fiscal year. But there is no doubt that the growth in HBM, the multi year growth in HBM, and the types of Forecasts that our customers are placing on us in terms of the consumption of HBM that they expect over the years is going to require more HBM capacity and even that HBM capacity will constrain more and more the non-HBM portion of the industry and will require some level of investment to ensure that the non-HBM portion of the demand which is, you know, obviously the overwhelming majority of the bid demand from a bid perspective at least is non-HBM and that portion, you know, will need to be supplied and, you know, we'll obviously continue to focus on the right balance.

Speaker Change: In 2025 early 'twenty five calendar year. So we will obviously provided capex guidance later later in the year.

Speaker Change: As we approach 2026 fiscal year, but there is no doubt.

Speaker Change: That the growth in HBM, the multiyear growth in HBM and the types of.

Speaker Change: Forecast that our customers are placing on us in terms of.

Speaker Change: The consumption of HBM that they expect over the years.

Speaker Change: Is going to require more HBM capacity.

Speaker Change: And even that HCM capacity will constrain more than more than non HBM portion of the <unk>.

Speaker Change: Industry and.

Speaker Change: It will require some level of investment to ensure that the non HBM portion of the demand which is obviously the.

Speaker Change: All of them the majority of the big demand from a bid perspective at least as non HBM.

Speaker Change: And that portion.

Speaker Change: We'll need to be.

Speaker Change: Supplied.

Speaker Change: <unk>.

Speaker Change: Obviously.

Speaker Change: Continue to focus on the right balance between the two.

Mark Murphy: Thank you, Karl. Just a little color. Sumit, sorry, we're not providing any guidance on CAPEX. But, you know, we have, you know, announced that we are, you know, we've broken ground and that we will be adding a second HBM manufacturing facility that will be operational and providing output in 2027. So, you know, there will be investment that will be happening to get us to that point.

Carl: Thank you Carl just a little color.

Speaker Change: Right, we're not providing any guidance on capex, but we have.

Speaker Change: It's that we are broken ground and that we will be adding a second HBM manufacturing facility.

Speaker Change: That will be operational in propane and providing all putting in.

Speaker Change: 2027 so.

Speaker Change: There will be investment that will be happening.

Mark Murphy: And that just, you know, speaks to the opportunity that, you know, we've talked about the North Star, you know, of a, you know, $100 billion plus market in 2030. We do have to make HBM specific investments, primarily on the back end, on assembly and test to be able to meet that, the market requirements for the volume growth, as well as the technology requirements as HBM grows from HBM 3E to HBM 4, and then future, future generations. But in terms of the spending on core DRAM wafer manufacturing, technology and equipment, that's one where we'll continue to be disciplined and, you know, continually reacting to market demands in terms and the market signals we see in terms of how much the bit supply requirement.

Speaker Change: At that point and that just.

Speaker Change: Speaks to the opportunity that we've talked about the Northstar.

Speaker Change: $100 billion plus market in 2013, we do have to make HBM specific investments primarily on the backend.

Speaker Change: On the assembly and test to be able to meet the market requirements for the <unk>.

Speaker Change: Volume growth as well as the technology requirements as HBM grows from <unk>, four and then future future generations, but in terms of.

Speaker Change: The spending on core DRAM.

For manufacturing technology and.

Speaker Change: Equipment, that's one way, we will continue to be disciplined and continually reacting to market.

Speaker Change: And in terms and the market signals, we see in terms of.

Speaker Change: How much.

Speaker Change: The bit supply.

Speaker Change: Requirements are.

Unknown Attendee: Yeah, thank you. Thank you.

Speaker Change: Yes. Thank you.

Speaker Change: Thank you.

Unknown Attendee: And our next question comes from the line. From SIG, your question please. Thank you. A couple of follow ups from my end. The first one is for the team. Sanjay has been talking about how Micron is currently best positioned in terms of competitive advantage. And I want to better understand the underlying assumption, especially as we look at the historical earning trend. Back in calendar 18, Micron had the best earning for calendar 18. Micron was able to recognize more than $15 of EPS.

Our next question comes from the line.

Speaker Change: Mehdi Hosseini.

Speaker Change: From <unk> your question please.

Speaker Change: Thank you a couple of follow ups from my end.

Speaker Change: The first one is for the team.

Speaker Change: Sanjay.

Speaker Change: <unk> been talking about how micron is currently best position in terms of it.

Speaker Change: That's the advantage.

Speaker Change: Understood.

Speaker Change: The assumption.

Speaker Change: Especially as we look at the historical early trends that can and cannot do.

Speaker Change: 18.

Speaker Change: Michael had the best earning for 18 months.

Speaker Change: It was able to recognize more than 15 Denver of EPS. So when Sanjay talks about and refers to best competitive positioning should we assume that the earth.

Unknown Attendee: So when Sanjay talks about and refers to best competitive positioning, should we assume that the earning opportunities could be double digit, setting a new record and any color there will be appreciated?

Speaker Change: Early opportunities could be double digit.

Speaker Change: Setting a new record and any color there would be appreciated.

Sumit Sadana: And I have a follow Yeah, so let me start and we'll ask Mark to jump in. So in terms of that comment that Sanjay made about Micron's competitive positioning, it's really referring to... Our product and technology capabilities as it relates to the competition, and we have mentioned to you before that Micron is gaining share in all of the high margin areas of the industry, and what are those high margin areas? You look at HBM, Micron is gaining share. You look at high-capacity DIMMs. We have a supernormal share of high-capacity DIMMs, more than our DRAM supply share.

Speaker Change: Yeah, So let me.

Speaker Change: Let me start with last month to jump in.

Speaker Change: And to add some thoughts so in terms of that comment that Sanjay made about Mike.

Speaker Change: <unk> competitive positioning it's really referring to.

Speaker Change: Our product and technology capabilities as it relates to the competition.

Speaker Change: And we have mentioned to you before that.

Speaker Change: Micron is gaining share.

Speaker Change: <unk>.

Speaker Change: All of the high margin areas of the industry and what are those high margin areas.

Speaker Change: You look at HBM Micron is gaining share you look at <unk>.

Speaker Change: High capacity dense we have a super normal share of high capacity <unk> more than our.

Speaker Change: DRAM supply share you look at NPD Ram and the data center very innovative robust Ottawa product.

Sumit Sadana: You look at LPD RAM in the data center, very innovative, robust ROI product that is a pioneering achievement by us to be the sole supplier of this. And another important product in our portfolio at scale, you look at data center SSDs. We have been hitting new record share quarter after quarter, including in the latest reports for CQ4 that came out from analysts and third parties, and that again places us at a new record share for that portion of the business. We have significantly higher share than our normalized DRAM supply share. So, we are continuing to drive the portfolio to areas where every large profit pool that is above average, above normal, above the rest of the industry average profit capability, we have The strongest products in the industry and momentum in terms of share gains in those areas, even while at an aggregate level, we are maintaining our bid share flat as part of our strategy.

Speaker Change: That is.

Speaker Change: Pioneering achievement by us to be.

Speaker Change: Be the sole supplier of this.

Speaker Change: And another important product in our portfolio at scale indicated data center Ssds.

Speaker Change: We have been hitting new record share quarter after quarter, including in the latest reports for <unk> that came out from analysts and third parties and that again plays will set a new record share.

Speaker Change: For that portion of the business you look at the mobile products for <unk> or <unk>.

Speaker Change: For the highest speeds LP <unk>.

Speaker Change: Automotive products with functional safety features that no one has automotive and industrial distribution channel, which is larger.

Speaker Change: A larger portion of the profit pools compared to the other distribution products.

Speaker Change: We have significantly higher share than our.

Speaker Change: Normalized DRAM supply share. So we are continuing to drive the portfolio too.

Speaker Change: Areas, where.

Speaker Change: Every large profit pool that is.

Speaker Change: Above average above normal above.

Speaker Change: The rest of the industry average profit capability, we have.

Speaker Change: The strongest products in the industry and momentum in terms of share gains in those areas, even while at an aggregate level, we are maintaining our bit share flat as part of our strategy. We are gaining share in all of these large profit pools now in terms of EPS and operating.

Sumit Sadana: We are gaining share in all these large profit pools.

Sumit Sadana: Now, in terms of EPS and operating margins, et cetera, we have spoken about some of the areas where there have been impacts more related to the industry environment. So, there has been a challenging industry environment in NAND, and we spoke about, and we are probably the first company to speak about the three-pronged strategy that we believe if there is underutilization in the short-term, lower capex and capacity in the medium-term, and lengthening of time between nodes in the long-term, the industry can get to better health. And we are not just talking about that. We are doing that actively ourselves and taking the lead in doing that.

Speaker Change: <unk> margins et cetera.

Speaker Change: I have spoken about some of the areas where.

Speaker Change: There have been impacts more related to the industry environment. So there has been challenging industry environment in man and we spoke about and we are probably the first company to speak about the three pronged strategy that.

Speaker Change: We believe.

Speaker Change: If that is.

Speaker Change: The utilization in the short term lower capex and capacity in the medium term and lengthening of time between nodes and the long term the industry can get to better health and we are not just talking about that we're doing that actively ourselves and.

Speaker Change: And taking the lead in doing that.

Mark Murphy: Of course, the DRAM industry is in a much better place compared to NAND in terms of balance, health, and profitability, and we continue to focus on our technology and portfolio there. And if you then – I'll just end with the technology view first in the industry with OneGamma, utilizing EUV for the first time in OneGamma at a very cost-effective approach. And so, all of those different ways, you can see that as the industry environment improves, particularly in NAND, you will see a much better – Project from a from an operating product perspective.

Speaker Change: Of course, the DRAM industry is in a much better place.

Speaker Change: To NAND in terms of valence health and profitability and we continue to.

Focus on technology and portfolio there and if you then I'll just end with a technology view.

Speaker Change: First in the industry with one gamma.

Utilizing <unk> for the first time in one gamma at a very cost effective approach.

Speaker Change: And so all of those different ways, you can see that as the industry environment.

Speaker Change: Proves, particularly in then you will see much.

Speaker Change: Much better.

Speaker Change: Trajectory from us.

Speaker Change: From an operating profit perspective, Mark do you want to add anything I would just emphasize what samit said that our financial potential is certainly shaped by.

Mark Murphy: Mark, do you want to add anything? I would just emphasize what Sumit said that, you know, our financial potential is certainly shaped by the market conditions and state of the industry. And, you know, I think on the supply demand on the demand side, You know, very encouraging trends with the AI-driven demand and the GPU ASIC architecture is driving more differential memory and, you know, very clear demand signals and, you know, continued growth as we can see in those markets and content-driven growth in some of the more traditional markets. So, you know, our technology products and manufacturing capability are going to allow us to.

Speaker Change: Market conditions and state of the industry and.

Speaker Change: I think on the supply demand on the demand side.

Speaker Change: Very encouraging trends with <unk>.

Speaker Change: Driven demand in the GPU ASIC architecture is driving a more differentiated memory.

Speaker Change: And very clear demand signals.

Speaker Change: And.

Speaker Change: Continued growth is as we can see in those in those markets.

Speaker Change: And content driven growth in some of the more traditional market. So.

Speaker Change: Our technology products and manufacturing capability are going to allow us to.

Mark Murphy: You know, find the best profit pools, as mentioned on the supply side. Also. Good trends in the case of DRAM, where HBM-driven trade ratio will constrain supply, and we see that on the leading edge. And we're very well positioned there. And then on the NAND side, we've talked about quite a bit today about the discipline that we're exhibiting there. I think finally, in addition to the technology product and manufacturing, we've got a strong balance sheet, which we did some activity this past quarter to provide us additional flexibility and pay down near-term maturities. But we continue to have the Capacity to sustain our leadership and exploit what should be, you know, a very good market going forward.

Speaker Change: Find the best profit pools, as Sumit mentioned on the supply side.

Speaker Change: Also.

Speaker Change: Good trends in the case of DRAM, where HBM driven.

Speaker Change: Trade ratio well.

Speaker Change: Constrained supply and we see that on a leading edge.

Speaker Change: And we're very well positioned there and then on the NAND side, we've talked about quite a bit today about the discipline that we're exhibiting there.

Speaker Change: I think finally in addition to the technology product and manufacturing, we've got a strong balance sheet, which.

Speaker Change: Yes, we did some activity this past quarter to.

Speaker Change: Provide us additional flexibility in pay down near term maturities, but we continue to have the.

The capacity to sustain our leadership and exploit what should be a very good market going forward.

Speaker Change: And I appreciate all the details, but I guess, what we're struggling here given all these secular trends that you are.

Speaker Change: Detailed here, we're struggling with better understanding the launch activity.

Speaker Change: In the earning opportunities.

Speaker Change: These secular trends are also obviously on the mix increases dramatically you are susceptible to market condition, because we have with this.

Speaker Change: Last quarter, but we're just trying to understand okay.

Mix increases to include more secular trend.

Speaker Change: <unk> allocated to high margin.

Speaker Change: How is it going to play out in terms of.

Speaker Change: Operating profit your revenues have already exceeded prior peak with earning.

Speaker Change: Sustainability of early.

Speaker Change: We'll also happened I guess would you be purchasing that we just have to.

Speaker Change: We don't see how it plays out because.

Unknown Attendee: There are also variables that hold you back from providing specific targets. Maybe just to comment, Mehdi, so. The mixed transformation that's occurring and the value added content that's being added to certain products, almost a new industry being created. And, you know, the combination of these AI product, AI demand that we're seeing on on HBM and low-power DRAM and high-cap DIMMs and so forth. But, you know, that that will that's that's occurring now, and that's having a positive effect, you know, but the overall industry profitability, while while those products are at a premium, you know, the overall industry inventory levels are still elevated from, you know, the severe downturn that occurred.

Speaker Change: We're also valuables that holds you back from providing specific targets.

Speaker Change: Maybe just to comment that so.

Speaker Change: Yes.

Speaker Change: Mix transformation, that's occurring in the value added content, that's being added to certain products.

Speaker Change: Almost a new industry being created.

Speaker Change: The combination of these.

Speaker Change: AI product AI demand that we're seeing on an HBM in la.

Speaker Change: Low power DRAM and high cap terms and so for us.

Speaker Change: But yes that will that's that's occurring now and thats, having a positive effect.

Speaker Change: But the overall industry profitability.

Speaker Change: While while those products are at a premium.

Speaker Change: Overall industry inventory levels are still elevated from the severe downturn that occurred now.

Mark Murphy: Now, they they have have been improving, they picked up a bit in this last quarter, but, you know, with volumes being down in DRAM and and and modest growth in NAND, but the, you know, but that volume growth continues or resumes the shipments increase in the in this third quarter. And, and as we've said, our, you know, our inventory level. tied on the leading edge, but our inventory levels overall decrease. And, you know, that's, that's why we provide those numbers, because that's associated, we believe, with, you know, more favorable market conditions.

Speaker Change: They have has been improving they ticked up a bit in this.

Speaker Change: Last quarter, but.

Speaker Change: With volumes being down.

Speaker Change: In DRAM and <unk>.

Speaker Change: Modest growth in NAND, but the.

Speaker Change: But that volume growth continues our resumes.

Speaker Change: Shipments.

Speaker Change: Increase in the third quarter.

Speaker Change: And as we've said our.

Speaker Change: Our inventory levels.

Speaker Change: Tight on the leading edge, but our inventory levels overall.

Speaker Change: Decrease and.

Speaker Change: That's why we provide those numbers because thats associated we believe with.

Speaker Change: For more favorable market conditions and in the case of DRAM, we should be below our target levels of inventory by year end.

Mark Murphy: And in the case of DRAM, we should be below our target levels of inventory by year end.

Unknown Attendee: Thank you.

Speaker Change: Got it thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Thank you.

Unknown Attendee: And this does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation.

Speaker Change: 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.

Unknown Attendee: You may now disconnect.

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Unknown Attendee: No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. This film was made possible with the support of Mooji Media Ltd.'s express consent. Mooji Media Ltd.'s Copyright © 2021 Mooji Media Ltd. All Rights Reserved.

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Unknown Attendee: No part of this recording may be reproduced 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 brief introduction. During the presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. As a reminder, today's program is being recorded.

Speaker Change: Thank you for standing by and welcome to Micron's Post earnings Analyst call. At this time all participants are in a 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.

Sujay 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 you Kumar corporate Vice President Investor Relations and Treasury. Please go ahead Sir.

Satya Kumar: And now I'd like to introduce your host for today's program, Satya Kumar, Corporate Vice President, Vestal Relations & Treasury. Please go ahead, sir. Thank you, and welcome to Micron Technology's Fiscal Second Quarter 2025 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 on other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

Speaker Change: Thank you and welcome to Micron technologies fiscal second quarter 2025 post earnings analyst call on the call with me today are Sumit Sudano Micron's, Chief business Officer, many chabertia 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 unexpected 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: For you to documents, we have filed with SEC, including our most recent Form 10-Q and upcoming 10-Q for a discussion of risks that may affect our results.

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, we're under no duty to update any of the forward looking statements to confirm these statements to actual results. We can now open the call up for Q&A.

Unknown Attendee: We can now open the call up for Q&A. Certainly.

Speaker Change: Certainly.

Speaker Change: Our first question comes from the line of.

Speaker Change: Vivek Arya from Bank of America. Your question. Please.

Speaker Change: Hello, Thanks for taking my questions I had two of them first on the HBM sales increased to 35 billion is that unit or content.

Speaker Change: Driven like do you see more GPU units versus before or is it more content faster move to 12 high or whatnot and has the flexibility to raise this number further.

Sumit Sadana: Yeah, in terms of the, hi Vivek, this is Sumit here, I'll take this question. So in terms of the HPM TAM, yes, this is the second time we have increased this TAM, and it's coming from a combination of more robust shipments, faster move to 12 high. As we mentioned, we expect most of the overwhelming amount of volume in the second half of the calendar year to be 12 high. And obviously that comes at a higher ASP due to the higher content and the overall level. Demand for HBM continues to be very robust and we feel very good about our own HBM trajectories.

Speaker Change: Yes in terms of the <unk> summit here I'll take this question. So in terms of the HBM time, Yes. This is Seth.

Speaker Change: Second time, we have increased the spam and it's coming from a combination of.

Speaker Change: Robust shipments faster move to 12 high as.

Speaker Change: As we mentioned we expect most of the overwhelming amount of volume in the second half of the calendar year to be 12 high and obviously that comes at a higher.

Speaker Change: Higher ASP.

Speaker Change: Due to the higher content.

Speaker Change: And the overall level of demand for HBM continues to be very robust.

Speaker Change: And we feel very good about our own HBM trajectory as well. So that's all part of our own shipments have been ahead of forecast.

Sumit Sadana: That's all part of our own shipments have been ahead of forecast in ahead of our own internal plans. So that's also contributing to the damage.

Speaker Change: Ahead of our own internal plans. So that's also contributing to the increase.

Vivek Arya: And for my follow-up on gross margins, I think, Mark, you mentioned some startup cost headwinds in Q4, if I recall. Can you help us quantify and do they persist beyond Q4 into Q1, et cetera? And kind of related question on gross margins, are you shipping bits from higher cost inventory? So when does that headwind go away? Yeah, and your second second question was that it was that a presuming it was kind of DRAM and and question or doesn't matter. So on the startup costs, so they're relatively, you know, you know, modest, you know, kind of an under, yeah, 30, 40 basis point, depending on what the what the revenue is.

Speaker Change: Alright, thanks, so much.

Speaker Change: Follow up on gross margin.

Speaker Change: Mark you mentioned some startup cost headwinds.

Speaker Change: Q4, if I recall.

Speaker Change: Could you help us quantify and do they persist.

Speaker Change: Beyond Q4 into Q1 et cetera, and kind of related question on gross margin are you shipping bits from higher cost inventory. So when does that headwind go away.

Speaker Change: Yes.

Second second question was it was it a.

Speaker Change: Im presuming it was kind of a DRAM and NAND question or doesn't matter okay.

Speaker Change: So on the.

Speaker Change: Startup costs. So they are relatively.

Speaker Change: Yes.

Speaker Change: Modest.

Speaker Change: Yes kind of in <unk>.

Speaker Change: Yes.

Speaker Change: 30, 40 basis points, depending on what the what the.

Speaker Change: Revenue is.

Speaker Change: <unk>.

Speaker Change: The fact is we sort of exit the year and then that those costs will increase as we.

Mark Murphy: https://www.youtube.com.au And then that, you know, those costs will increase as we, you know, as we increase the level of activity, particularly in Idaho, and, and around our, you know, newest DRAM node, those costs will increase through 26. So we'll talk more about that as we get closer to fiscal year 26, but we begin to see those increases as we exit this year. And then on the inventories, you know, as you as you recall, we did the, you know, the write down of the inventories. And those inventories have cleared. And, you know, the inventories that we have now are, you know, we've been performing well on cost down.

Speaker Change: As we increase the level of activity.

Speaker Change: Particularly in Idaho and.

Speaker Change: And around our.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: Yeah DRAM node.

Speaker Change: Those costs will increase through 2006, so we'll talk more of that.

Speaker Change: That as we get closer to fiscal year, 'twenty, six, but we began to see.

Speaker Change: Those increases as we exit this year.

Speaker Change: Yes.

Speaker Change: And then on the inventories.

Speaker Change: As you recall we did.

Speaker Change: The write down of the inventories.

Speaker Change: And those inventories have cleared.

And yes, the inventories that we have now are.

Speaker Change: We have been performing well on cost down so theyre competitive inventories.

Mark Murphy: So there are competitive inventories. You know, in NAND, as I mentioned, our underutilization, you know, those costs are reflected in inventories and result in some higher cost inventories, and those begin to pass through in the fourth quarter and into 26. Thank you.

Speaker Change: In NAND.

Speaker Change: I mentioned our Underutilization.

Speaker Change: Yes.

Speaker Change: Those costs are reflected in inventories and result in some higher cost inventories and those begin to pass through.

Speaker Change: In the fourth quarter and into 2006.

Speaker Change: Thank you.

Speaker Change: Thank you and our next question comes from the line of swing you Gerry from Raymond James Your question. Please.

Speaker Change: Thank you.

Speaker Change: Couple as well.

Speaker Change: You talked about price premium as we go from eight to 12 high can you clarify if it's.

Speaker Change: Like for like price premium, obviously, you've got a better price because of higher capacity and then.

Speaker Change: Also on the same topic as we go from three to four can you talk about at a high level can you discuss the differences and similarities that transition versus when you. When you went from three to three and three I think you went from eight to 12 I'm just curious how difficult of a transition HBM four is going to be from a.

Srini Pajjuri: And 3E, I think, you know, you went from 8 to 12.

Sumit Sadana: I'm just curious how difficult of a transition HBM4 is going to be from a manufacturing point of view. Yeah, so in terms of Eight High to 12 High. As you can imagine, 12 High is a more complex product, has also impacts for all suppliers as they move to higher number of layers.

Speaker Change: From standpoint.

Speaker Change: Yes, so in terms of.

Speaker Change: Eight to 12 high.

Speaker Change: As you can imagine 12 hall is a more complex product.

Speaker Change: Has also impact.

Speaker Change: <unk>.

Speaker Change: For all suppliers as they move to higher number of layers.

Manish Bhatia: and consequently the price is higher not just because of the 50% extra capacity but the price per bit is also higher because of all of those reasons So that's the pricing related issue and in terms of manufacturing, I'll let Manish address the manufacturing So your manufacturing is around moving from HBM3e to HBM4. And, you know, the number of new technologies that are that are going to be coming together to be able to provide the significant increase in, in, you know, performance, that HBM4 will provide that all our customers are really, really thirsty for. And, and so there's, you know, manufacturing, you know, elements that we're integrating together on the front end to be able to really deliver that, that higher performance, as well as new technologies we'll be implementing and process flow for assembly and test, which will enable us to, to deliver the high volumes of, of, you know, integrated HBM cubes that, you know, beginning in calendar year 26.

Speaker Change: And consequently the.

Speaker Change: Uh huh.

Speaker Change: This is higher not just because of the 50% extra capacity.

Speaker Change: The price per bit.

Speaker Change: There's also higher because of all of those reasons.

Speaker Change: So that's the pricing related issue.

Speaker Change: And in terms of manufacturing.

Speaker Change: Ill, let manish addressed the manufacturing aspect.

Speaker Change: So your question is always around moving from <unk> to HTM for.

Speaker Change: The <unk>.

Speaker Change: Number of new technologies that are going to be coming together to be able to provide the significant increase in.

Speaker Change: <unk>.

Speaker Change: Performance.

Speaker Change: Then <unk> will provide that all of our customers are really really first before.

Speaker Change: And so there is manufacturing.

Speaker Change: Elements that were integrating together on the front end to be able to really deliver that that higher performance as well as new technologies will be implementing.

Speaker Change: Process flow for.

Speaker Change: Assembly and test which will.

Speaker Change: Enable us to to deliver the high volume of.

Speaker Change: Integrated HBM cubes that.

Manish Bhatia: So we feel very good about where we are right now with HBM, you know, eight high having outperformed, our prior plans and that, that, that manufacturing experience in base bodes well for the 3E12 high ramp that's coming in the, the, the rest of calendar 25 and into 26. And then we think that that will provide really strong baseline fundamental learning for us with, with HBM4.

Speaker Change: Beginning in calendar year 'twenty six so we feel very good about where we are right now with HBM.

Speaker Change: Eight high having outperformed our prior plans that manufacturing experience in base bodes well for the <unk> 12 high ramp that's coming in the rest of calendar 'twenty five and into 'twenty six and then.

Speaker Change: We think that that will provide really strong baseline fundamental learning for us with with HBM floor.

Unknown Attendee: And then on the TAM, you know, you raised it last quarter and this quarter as well. And at the same time, you know, you're maintaining your market share exiting this year, even though I guess, you know, you're still in the market. You've been talking about getting sold out for the year.

Speaker Change: Okay got it and then on the on the Tam.

Speaker Change: You've raised it last quarter and this quarter as well and at the same time.

Unknown Attendee: I'm just trying to reconcile those three items because is it because of better yield that you're able to kind of maintain your market share targets exiting the year, or is there, I'm just trying to, I guess, reconcile that. And then the follow-up to that is that as you go into next year, obviously, one of your competitors is still struggling to qualify at NVIDIA. So if an opportunity arises, if more market share is available in the market, I guess, how quickly can you ramp up supply if there's an opportunity?

Speaker Change: Is it because of better yields that you were able to.

Speaker Change: Kind of maintain your market share targets exiting the year or is there I'm just trying to I guess.

Speaker Change: Reconcile that and then.

Speaker Change: The follow up to that is that as we go into next year. Obviously, one of your competitors is still struggling to qualify it and video so.

Speaker Change: If an opportunity arises.

Speaker Change: It's more market share is available in the market.

Speaker Change: I guess, how quickly can you ramp up supply if there is an opportunity for you to capture more market share. Thank you.

Unknown Attendee: So maybe just in terms of the production question, I'll just say that we're very pleased with our progress on being able to provide more, you know, greater supply than what our prior plans were. And so, you know, we do expect that that does play into our projections of what we're able to do for the rest of the year and in particular into this, you know, this target, helping us achieve that target that we've set, which is to get to, you know, our natural market share by the end of the calendar year. Yeah, in terms of the time increase, it has been a combination of More robust 12 high, rapid and robust shift to 12 high earlier in the year.

Speaker Change: Talk maybe just in terms of the production question I'll, just say that we're very pleased with our progress on being able to provide more supply greater suppliers and with our prior plans were and so.

Speaker Change: We do expect that that that does play into our projections of what we're able to do for the rest of the year and in particular into this this is Tom.

Speaker Change: Helping us achieve that target that we've set which is to get to.

Speaker Change: Our natural market share by the end of the bed.

Speaker Change: The end of the calendar year.

Speaker Change: Yeah in terms of the Tam increase.

Speaker Change: It has been a combination of.

Speaker Change: More robust 12 high.

Speaker Change: Rapid and robust shift to dwell pie.

Speaker Change: Earlier in the year.

Sumit Sadana: As we have said now, most of the second half of the calendar year will be 12 high, and that comes with the higher ASPs. Of course, our own shipment beyond our own plan that we have been articulating over the last few months, including what Manish said, is all contributing to the time increase and the higher shipments from us. are enabling us to continue to keep our share goal despite the higher tax.

Speaker Change: As we have said now.

Speaker Change: Most of the second half calendar year will be 12 high and that comes with the higher Asps.

Speaker Change: Of course, our own shipment.

Speaker Change: And our own plan that we have been articulating over the last few months, including for him and he said.

Speaker Change: All contributing to the time increase and the higher shipments from us.

Speaker Change: Are enabling us to continue to keep our share goal.

Speaker Change: Despite the higher Tan.

Unknown Attendee: Now, as we think longer term, we are making substantial investments in HBM capacity to . . http://youtu.bee.gov http://youtu.bee.gov Thank you.

Speaker Change: Now as we think longer term, we are making substantial investments in HBM capacity to.

Speaker Change: Drive our opportunity.

Speaker Change: You see them HBM market continuing to expand over the years, we have even told you about.

Speaker Change: <unk> billion dollars.

Speaker Change: Trajectory through 2030.

Speaker Change: And so it is a multiyear growth opportunity.

Speaker Change: We also want to remain disciplined about our investments.

Speaker Change: Of course, we have substantial capex that we have committed that we told you about.

Speaker Change: Also mindful of ensuring that we're being responsible in how much supply we bring online and at the same time.

Speaker Change: Asset other opportunities in the market in terms of.

Speaker Change: How we do and how we mix the shift of our business.

Speaker Change: The mix of our business and our portfolio of shipments we will continue to look for opportunities too.

Speaker Change: Our focus on all of the more profitable portions of the industry profit pool, so that that will remain on.

Speaker Change: Ongoing portion of our strategy.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: <unk>.

Aaron Rakers: And our next question comes to the line of Aaron Rakers from Wells Fargo. Your question, please. Yeah, thanks for taking the question and doing the call. I guess, Mark, I want to, you know, double click on one of the comments that you made in the Q&A around I think some of the gross margin impacts. I think you had mentioned that you expect all in DRAM costs down to be more or less flat this year. I think your last kind of description was more of like a mid to high single digit, albeit only the front end cost structure of DRAM.

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

Speaker Change: Yes, thanks for taking the question and doing the call.

Speaker Change: Mark I wanted to double click on one of the comments that you've made into Q&A around I think some of the gross margin.

Mark Murphy: So just a point of clarification there is that is the new flat number of projection based on inclusive of HBM? Just if you can help us understand that. Unknown Attendee Yeah, that's right, Aaron. It's correct.

Speaker Change: Inclusive of HBM, just if you can help help us understand that.

Eric: Yes, that's right Eric that's correct right.

Eric: Okay, and then as a quick follow up a lot of focus on <unk>, but I think one of the other areas that you guys have done very well in is LP DDR five axon. These AI servers.

Eric: As we move to the <unk> architecture with the GBP 300 do.

Eric: Do you guys envision yourself, maintaining your strong share position and is there an ASP uplift that comes with moving to a module relative to the solder down solution in the GBP 200 cycle. Thank you.

Eric: Yes, so we are not going to be able to comment on the asps between the solid down version in the module. However.

Sumit Sadana: However, Aaron, you're absolutely right. Our LP solution for the data center has been a stellar success for Micron. We are the only company, remain till today, the only company in the world to be shipping LPD RAM and volume. And we'll be the first ones to have volume production of SOCAM, which we have been working on for some time in deep partnership with NVIDIA. So we're very excited about the SOCAM opportunity. It will be a very big product for us. And over time, there may be others who will productize and ship in volume, but we maintain a very sizable lead in time and shipments and experience and productizing LP in the data center and continue to look forward to that roadmap to produce really good results for us.

Eric: And you're absolutely right.

Eric: Our LP.

<unk> solution for the data center has been a stellar success for Micron. We are the only company remain till today, the only company in the world to be shipping LP DRAM in volume and will be the first ones to.

Eric: Have volume production of Silicon, which we have been working on for some time in deep partnership with Nvidia. So we're very excited about the <unk> opportunity. It will be a very big product for us and over time, there may be others, who will.

Eric: Product ties and ship in volume, but we maintain a very sizable lead in time and shipments and experience.

Eric: Prototyping LP in the data center.

Eric: <unk> continued to look forward to that roadmap to produce.

Eric: Really good results for us and as we mentioned the high cap <unk> plus LP DRAM also reached.

Sumit Sadana: And as we mentioned, the high cap DIMMs plus LPD RAM also reached across that billion dollar milestone for quarter V revenue this quarter in FQ2. So that was also very exciting for us besides the billion dollar milestone for HBM in the quarter. Thank you.

Eric: <unk> crossed the $1 billion milestone for quarterly revenue this quarter in Q2. So that was also very exciting for us. Besides the billion dollar milestone for HBM and the court.

Eric: Yeah.

Eric: Thank you.

Speaker Change: Thank you and our next question comes from the line of Vijay Rakesh from Mizuho. Your question. Please.

Vijay Rakesh: Yes, hi, guys. Thanks for taking this call.

Speaker Change: Secondly, I think in <unk>.

Speaker Change: Sure.

Speaker Change: From the beginning of the year.

Speaker Change: My two I guess.

Speaker Change: Getting it.

Speaker Change: DRAM market share in SPM and so as we look at 2026.

Sumit Sadana: And so as you look at 2026, as HBM 4 ramps, and given that market share, your revenues in 2026 on HBM could probably double, is that fair? And is your capacity on HBM going up? I have a follow up. So yeah, I mean, of course, we are ramping our HBM capacity throughout calendar 25. And our goal is, you know, obviously to continue to have our HBM share be approximately the same range as our DRAM share. So it's as HBM time grows, we definitely intend to ensure that our HBM capacity also keeps growing. Now, in terms of our ramp of HBM throughout 25, you're right, I mean, we expect a robust ramp of our quarterly revenue through calendar 25, as we get to that target share at the end of this calendar year.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: And given that market share.

Speaker Change: Yes revenues in 'twenty two.

Speaker Change: Could probably double is that fair.

Speaker Change: Is it capacity on ESPN going up similarly.

Speaker Change: Hello.

Speaker Change: So yes, I mean of course, we are ramping our rates we have capacity throughout calendar 'twenty five and our goal is.

Speaker Change: Obviously to continue to have our HBM sure.

Speaker Change: Be approximately the same range as our DRAM share so.

Speaker Change: As <unk> grows.

Speaker Change: We definitely intend to ensure that our HBM capacity.

Speaker Change: Also keeps growing now in terms of our.

Speaker Change: Sure.

Speaker Change: Ramp off HBM throughout 25, Youre right I mean, we expect.

Speaker Change: Robust ramp of our quarterly revenue through calendar 'twenty five.

Speaker Change: As we get to that target share at the end of this calendar year and that does mean that our 2026.

Sumit Sadana: And that does mean that our 2026 revenue in HBM should be significantly higher than the 2025 revenue. And in the 2025 revenue, of course, you know, we will have every quarter being higher than the previous quarter. So it's a pretty good trajectory, we feel very good about that overall business process. Thanks.

Speaker Change: Revenue in HBM should be significantly higher than the 2025 revenue and in the 2025 revenue of course, we will have.

Speaker Change: Every quarter being higher than the previous quarter, So, it's a pretty pretty good trajectory.

Speaker Change: What about <unk>.

Speaker Change: Overall.

Speaker Change: Business prospect.

Vijay Rakesh: And then on the NAND side, I thought you guys were a little cautious on the NAND side, but as you look at the AI servers, are you seeing a faster pull through on your QLC SSD versus hard disk drive, I guess? A faster uptake, I should say?

Speaker Change: Thanks, and then on the NAND side.

Speaker Change: Thank you guys a little caution on that.

Speaker Change: And you can see.

Speaker Change: Yes.

Speaker Change: Faster to arm on your Q&A.

Speaker Change: <unk> versus <unk> I guess.

Speaker Change: That's uptake I should say.

Sumit Sadana: Sorry, I didn't quite hear that question. Can you just repeat a faster? On the AI server side, yeah, on the AI server side, are you seeing a much faster uptake on on your QLC SFC? Yeah, so definitely the high capacity SSDs. I mean, some of these are depending on the skew and performance requirements. Some of these are QLC based, some of these are TLC based. And as we get to higher and higher capacities over time, more definitely focused on QLC. So yes, there is a A clear move to higher capacities over time in AI servers and there is a separate, you know, just stepping back and looking at the data center, there is a desire from the large so much more difficult in many ways.

Speaker Change: Sorry, I didn't quite hear that question can you repeat a faster.

Speaker Change: Yeah on the AI.

Speaker Change: Are you seeing much.

Speaker Change: Much faster uptake on <unk>.

Speaker Change: Yes.

Speaker Change: Pete.

Speaker Change: Yes, so definitely the high capacity Ssds I mean, some of these are depending on the SKU and performance requirements. Some of these <unk>. Some of these are TLC base.

Speaker Change: And as we get to higher and higher capacities over time.

Speaker Change: More definitely focused on KFC, so yes that is.

Speaker Change: A clear move to higher capacities over time, an AI servers.

Speaker Change: And.

Speaker Change: There is.

A separate.

Speaker Change: Just stepping back and looking at the data center there is a desire from the large.

Speaker Change: Hyper scaler Stu.

Speaker Change: Find opportunities to reduce.

Speaker Change: HDD usage over time, because hdds not just so much more difficult.

Sumit Sadana: They are just not able to use the entirety of the capacity because of these large capacity HDDs have severe limitations in using the part of the platter that's not on the edge. So, there are challenges related to reliability as well, power consumption challenges. And so, if you think about the trajectory of NAND, the density of storage that we can provide through the roadmap over the next few years, the power consumption benefits, the server consolidation benefits, and then you look at the overall PCO in very power-constrained data centers, there will be a substantial desire by more and more customers to minimize the amount of HDDs they have to deploy.

Speaker Change: In many ways, they're just.

Speaker Change: Not able to use the entirety of the capacity because of.

Speaker Change: These large capacity hdds have severe limitations.

Speaker Change: And using that part of the bladder that's not on the edge.

Speaker Change: So there are challenges related to reliability as well.

Speaker Change: Our consumption challenges.

Speaker Change: And so if you think about the trajectory of NAND. The density of storage that we can provide through the roadmap over the next few years.

Speaker Change: The power consumption benefits silver consolidation benefits and then you look at the overall <unk> in.

Speaker Change: Very power constrained data centers.

Speaker Change: There will be substantial.

Speaker Change: Desire by more and more customers to minimize the amount of HDD is they have to deploy and that when we get to closer to that tipping point will become another tailwind for the NAND industry.

Sumit Sadana: And that, when we get to closer to that tipping point, will become another tailwind for the NAND industry. And the PCO benefits are very substantial. So, just looking at the per-bit cost of NAND and comparing it to the per-bit cost of HDDs is not how our customers are looking at it. And so, I think that attempt to dramatically reduce HDDs is already started at the most leading customers. You have seen some announcements from Pure Storage and we are suppliers to them and we are also working directly with the end customers who are wanting to deploy very large capacity SSDs and remove some of those HDDs from their future infrastructure deployments.

Speaker Change: And the Tcl benefits are very substantial so just looking at the per bit cost of NAND and comparing it to the per bit cost of HDD is not how our customers are looking at it.

Speaker Change: And so.

Speaker Change: I think that that attempt to <unk>.

Speaker Change: Dramatically reduce hdds as already.

Speaker Change: It started at the most leading customers you have seen some announcements from pure storage and.

Speaker Change: And we are suppliers to them and we are also working directly with the end customers who are wanting to deploy a very large capacity ssds and.

Speaker Change: And remove some of those hdds from the future infrastructure deployment. So it's an exciting opportunity. It will take some time to develop but once that gets going it will definitely have a snowball effect in terms of deployments.

Unknown Attendee: So, it's an exciting opportunity. It will take some time to develop, but once it gets going, it will definitely have a snowball effect in terms of deployment.

Unknown Attendee: All right, thank you.

Speaker Change: Alright, thank you.

Brian Chin: Thank you. And our next question comes from the line of Brian Chin from Stifel. Your question, please. Hi there. Thanks for letting me ask a few questions.

Speaker Change: Sure.

Brian Chin: And our next question comes from the line of Brian Chin from Stifel. Your question. Please.

Brian Chin: Hi, there thanks for letting me ask a few questions.

Brian Chin: Could you maybe expand a little bit more on what you're seeing in the enterprise SSD market currently? I think customers clearly digested some in fiscal 2Q, but your guidance for fiscal 3Q, a thought stated that data center NAND shipments do improve queue on queue. So are you starting to see that tick up some? And is that helped by Blackwell shipments also beginning to pick up for all the discussion this week? Sure. So, Brian, at the end of last calendar quarter, which is CQ 424, there were some large deals that were being bid upon that caused some customers to purchase SSDs, and those got purchased by multiple customers, and eventually some of those deals didn't go through in terms of deployment at the cloud companies.

Speaker Change: Could you maybe expand a little bit more on what youre seeing in the enterprise SSD market currently I think.

Speaker Change: Customers clearly digested some in fiscal <unk>, but your guidance for fiscal <unk> I thought.

Speaker Change: <unk> stated that data center NAND shipments due to improved Q on Q. So are you starting to see that tick up some and has that helped by black oil shipments also began to pick up our discussion this week.

Brian Chin: Sure So Brian at the end of last calendar quarter Which's CQ424.

Speaker Change: There were some large.

Speaker Change: Deals that were being built upon.

Speaker Change: That caused some customers to purchase.

Speaker Change: Ssds in those.

Speaker Change: Those got purchased by multiple customers and eventually some of those deals didn't go through in terms of deployment and the cloud.

Brian Chin: And so there was some inventory at customers for data center SSD across multiple suppliers of data center SSD, and that is part of what was The digestion period in CQ1, as more demand on the AI server side continued to use some of that inventory. I think in CQ2, much of that would have been depleted, that that inventory would be mostly depleted and the run rates would start to pick up again in terms of ordering patterns. And so we do expect that as AI server growth continues, data center SSD TAM should start to improve again on a sequential basis starting from the months ahead and strengthen into the second half of this calendar year versus the first half where there has been some inventory digestion related issues.

Speaker Change: Companies and so there was some inventory at customers for data Center SSD.

Speaker Change: Across multiple suppliers of datacenter SSD.

Speaker Change: And that is part of what was.

Speaker Change: The digestion period in CQ1.

As more demand on the silver side continue to use some of that inventory.

Speaker Change: And thank you too.

Speaker Change: Much of that would have been.

Speaker Change: Depleted that inventory would be mostly depleted and the run rates would start to pick up again in terms of.

Speaker Change: Ordering patterns.

Speaker Change: So we do expect that as AI silver growth continues.

Speaker Change: Data Center SSD, Pam should start to improve again.

On a sequential basis, starting from the months ahead.

Speaker Change: And strengthen into the second half of this calendar year versus the first half where there has been some inventory digestion related.

Brian Chin: Now, in FQ3, we do expect our data center revenue to hit another record, but I'm talking about all of data center. We are not parsing out, you know, what part of the data center is the record versus a bigger record, smaller record, etc. So we're not really parsing out. Different aspects of the data center, but we do expect that the aggregate data center revenue will be a record in FQ3.

Speaker Change: Issues now in FQ3 we do expect our data center revenue to hit another record.

Speaker Change: But I'm talking about all of data center, we're not parsing out.

Speaker Change: What part of the data center.

Speaker Change: The record versus versus a bigger record smaller records et cetera, we're not not really parsing out.

Speaker Change: Different aspects of the data center, but we do expect that the aggregate data center.

Speaker Change: <unk> will be a record in FQ3.

Speaker Change: Okay.

Speaker Change: That's helpful. And then maybe a question about sort of the.

Speaker Change: The China memory supply.

Speaker Change: Clearly negatively impacted pricing on legacy DDR, five DRAM and as well as in NAND.

Speaker Change: And second half last year, there is more consumer bits a bit demand crosses over to DDR. Five are you seeing that immediate supply and pricing risk from China start to tail off given the bigger technology and quality hurdles posed by the more advanced products.

Speaker Change: Well.

Speaker Change: I'll just make a couple of flattish vacation so.

Speaker Change: Okay.

Speaker Change: The supply from Chinese.

Speaker Change: Headquartered companies.

Speaker Change: Older technologies longer.

Speaker Change: Some of the consumer products.

Speaker Change: In China did reduce their what would've been DDR five.

Speaker Change: LP sigh of consumption because they just stayed with the richer mix of DDR for LP forward to consume local.

Speaker Change: China supply.

Speaker Change: And just the general <unk>.

Speaker Change: Inventory environment that we had been describing over the past many months.

Speaker Change: For both Pcs and smartphones for CQ4 CQ1.

Speaker Change: Has been impacting the DDR for DDR five pricing environment, and we had mentioned to you that the.

Speaker Change: Inventory consumption would be and much healthier place the inventories would be much healthier place by spring of 2025 and as we are.

Speaker Change: In that timeframe now we do see that.

Speaker Change: Add those.

Speaker Change: <unk> have become healthier as we had expected.

Speaker Change: And that is part of why in our FQ3 you have heard us say that our.

Speaker Change: Consumer mix has.

Speaker Change: Increase because particularly in smartphones the orders have bounce back not just driven by improving inventories and sell through but also the average capacities going from eight gigabyte to 12 gigabyte. So those are some of the dynamics that have been taking shape the supply.

Unknown Attendee: So, those are some of the dynamics that have been taking shape. The supply in the past months have been from China, mostly DDR4, LP4 where, you know, looking ahead, only about 10% of our revenue is exposed to that portion. So I hope that that makes. Great, thanks. It sounds like the tail end of that question was just that you're seeing less. of that direct competitive overlap in DDR5. Yeah, I mean, DDR5 is has not been in volume production in the timeframe that you had outlined. So more of the impact in the last couple of quarters has been things other than DDR5 supply from China.

Speaker Change: The past months have been some China, mostly DDR for El before there.

Speaker Change: Looking ahead.

Speaker Change: About 10% of our revenue is exposed to.

Speaker Change: That portion.

Speaker Change:

So I hope that that makes sense.

Speaker Change: Great. Thanks, and then it sounds like the tail on that question was just that you are seeing less.

Speaker Change: Have that direct competitive overlap.

Speaker Change: <unk> five.

Speaker Change: Yes, I mean DDR five is has not been.

Speaker Change: <unk> volume production.

Speaker Change: The timeframe that you had outlined so more of the impact in the last couple of quarters has been things other than DDR five supply from China.

Speaker Change: Thank you.

Unknown Attendee: Thank you.

Karl Ackerman: And our next question comes from the line of Karl Ackerman from BNP Barnabas. Your question please. Yes, thank you. I have two.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Carl equipment from BNP Barclays. Your question. Please.

Speaker Change: Yes. Thank you I have two.

Speaker Change: Should we assume that higher mix of HBM is helping offset some of the competitive dynamics from Chinese players for consumer DRAM and NAND.

Speaker Change: I have a follow up please.

Speaker Change: The industry will ship below demand.

Speaker Change: I don't I don't believe.

Sumit Sadana: And so that's what we have been trying to communicate. So in terms of HBM, of course, as HBM mix has been increasing in the demand because of the trade ratio that is 3 to 1 now, and as we have described in the prepared remarks over time, we'll go to past 4 to 1 with HBM4E. Those factors. do cause the non-HBM portion of the DRAM supply to be constrained and more investments than needed to expand wafer capacity to prevent that portion from getting too constrained. And that's really the dynamic that is playing out on the DRAM side.

Speaker Change: Mechanically and so that's what we have been trying to communicate.

Speaker Change: So in terms of.

Speaker Change: HBM of course as HBM mix has been increasing.

Speaker Change: And the demand.

Speaker Change: Cause of the trade ratio that is three to one now and as we have described in the prepared remarks over time, we will go to fast forward to one mid HBM for E.

Speaker Change: Those factors too.

Speaker Change: <unk>.

Speaker Change: That's that's really the dynamic that is playing out on the DRAM side. So that's the reason why we have said that the DRAM leading edge capacity.

Sumit Sadana: So that's the reason why we have said that the leading-edge capacity is constrained in the industry for us. And looking ahead, we expect that the trajectory is going to be healthier driven by ongoing HBM increases and the broadening of the demand drivers beyond just AI that has been driving demand for the last few quarters. Because, you know, other aspects of the demand will start to come back. Smartphones is already improving. And over time with the Windows EOL or Windows 10, Windows PCs, AI PCs will start to improve. Average capacities will start to improve. And at some point, the industrial and automotive inventories will also have improved enough to kickstart that portion of the market.

Speaker Change: Is constrained.

Speaker Change: And the industry for us.

Speaker Change: And looking ahead, we expect that the <unk>.

Speaker Change: <unk>.

Speaker Change: Is going to be healthier driven by ongoing HBM increases and the broadening of the demand drivers beyond just.

Speaker Change: That has been driving demand for the last few quarters.

Speaker Change: Because other aspects of the demand will start to come back in smartphones is already improving.

Speaker Change: And over time that the windows.

Speaker Change: Windows 10 Windows Pcs AIP season will start to improve average capacity you can start to improve.

Speaker Change: And at some point the.

Karl Ackerman: So we see a broadening of the demand drivers looking ahead and a more constructive environment, which gives us optimism about this. Got it. Just as a quick follow up to that, because it's related.

Speaker Change: This gives us optimism about the future.

Speaker Change: Got it just as a quick follow up to that because it's related so I suppose if the industry supply.

Mark Murphy: So I suppose if the industry supply is being restrained by overall capital investment, and the HBM trade ratio continues to increase, as you indicated, does capital investment need to increase from this $14 billion annual rate to support your market share goals on HBM into fiscal 26? And do those two factors limit margin upside from a growing mix of HBM sales? Thank Yeah, I mean, we're not obviously giving any CapEx forecast for 2026. Right now, we're just, you know, in 2025, early 25 calendar year. So we will, we will obviously provide it, you know, CapEx guidance later, later in the year, as we approach 2026 fiscal year.

Is being restrained by overall capital investment in the HBM trade ratio continues to increase as you indicated.

Speaker Change: Capital investment need to increase from this $14 billion annual rate to support your market share goals on HCM into fiscal 'twenty six.

Speaker Change: And do those two factors limit margin upside from a growing mix of HCM sales. Thank you.

Speaker Change: Yes.

Leaving any capex forecast for 2026 right now.

Speaker Change: In 2025 early 'twenty five calendar year. So we will obviously provided capex guidance later later in the year.

Speaker Change: As we approach 2026 fiscal year, but there is no doubt.

Sumit Sadana: But there is no doubt that the growth in HBM, the multi year growth in HBM, and the types of Forecasts that our customers are placing on us in terms of the consumption of HBM that they expect over the years is going to require more HBM capacity and even that HBM capacity will constrain more and more the non-HBM portion of the industry and will require some level of investment to ensure that the non-HBM portion of the demand, which is obviously the overwhelming majority of the bid demand from a bid perspective at least, is non-HBM and that portion will need to be supplied and we'll obviously continue to focus on the right balance.

Speaker Change: That the growth in HBM, the multiyear growth in HBM and the types of.

Speaker Change: Forecast that our customers are placing on us in terms of.

Speaker Change: The consumption of HBM that they expect over the years.

Speaker Change: Is going to require more HBM capacity.

Speaker Change: And even that HCM capacity will constrain more than more than non HBM portion of the <unk>.

Speaker Change: Industry and we.

Speaker Change: We will require some level of investment to ensure that the non HBM portion of the demand which is obviously the.

Speaker Change: All of them and majority of the big demand from a bid perspective at least as non HBM.

Speaker Change: And that portion.

Speaker Change: You'll need to be.

Supplied.

Speaker Change: And we'll obviously.

Speaker Change: Continue to focus on the right balance between the two.

Mark Murphy: Thank you, Karl. Just a little color. Sumit's right, we're not providing any guidance on CAPEX. But, you know, we have, you know, announced that we are, you know, we've broken ground and that we will be adding a second HBM manufacturing facility that will be operational and providing output in 2027. So, you know, there will be investment that will be happening to get us to that point. And that just, you know, speaks to the opportunity that, you know, we've talked about the North Star, you know, of a, you know, $100 billion plus market in 2030, we do have to make HBM specific investments, primarily on the back end, on assembly and test to be able to meet that, the market requirements for the volume growth, as well as the technology requirements as HBM grows from HBM 3E to HBM 4, and then future, future generations.

Carl: Thank you Carl just a little color.

Carl: Right, we're not providing any guidance on capex, but we have.

Carl: It's that we are you know, we broken ground and that we will be adding a second HBM manufacturing facility.

Carl: That will be operational in propane and providing all putting in 2027 so.

Carl: There will be investments that will be happening.

Carl: Get us to that point and that just.

Carl: Speaks to the opportunity that we've talked about the Northstar.

Carl: $100 billion plus market in 2013, we do have to make HBM specific investments primarily on the backend.

Carl: On the assembly and test to be able to meet the market requirements for the <unk>.

Carl: Volume growth as well as the technology requirements of HBM grows from <unk>, four and then future future generations, but in terms of.

Carl: The spending on core DRAM.

Mark Murphy: But in terms of the spending on core DRAM wafer manufacturing, technology and equipment, that's one where we'll continue to be disciplined, and, you know, continually reacting to market demands in terms, and the market signals we see in terms of how much the bit supply requirement. Yeah, thank you. Thank you.

Carl: For manufacturing technology and.

Carl: Equipment, that's one where we will continue to be disciplined and continually reacting to market.

Carl: And in terms of payment.

Carl: A market signals, we see in terms of.

Carl: How much.

The bit supply.

Carl: Requirements are.

Carl: Yes. Thank you.

Carl: Thank you.

Unknown Attendee: And our next question comes from the line. From SIG, your question please. Thank you. A couple of follow-ups from my end. The first one is for the team. Sanjay has been talking about how Micron is currently best positioned in terms of competitive advantage, and I want to better understand the underlying assumption, especially as we look at the Micron was able to recognize more than $15 of EPS. So when Sanjay talks about and refers to best competitive positioning, should we assume that the earning opportunities could be double digit, setting a new record, and any color there will be appreciated?

Carl: Our next question comes from the line.

Carl: Mehdi Hosseini.

Carl: From <unk> your question please.

Speaker Change: Thank you a couple of follow ups from my end.

Carl: The first one is for the team.

Speaker Change: Sanjay.

Speaker Change: <unk> been talking about Mike.

Speaker Change: Micron is currently best position in terms of.

Speaker Change: Our competitive advantage.

Speaker Change: Got it understood.

Speaker Change: Underlying assumption.

Speaker Change: Actually as we look at the historical early trends. Thank you Kevin.

Speaker Change: Michael had the best early for 18 months.

Speaker Change: It was able to recognize more than 50% owner of EPS. So when certain Judy talks about and refers to best competitive positioning should we assume that.

Speaker Change: The early opportunities could be double digit.

Speaker Change: Setting a new record and any color there would be appreciated.

Unknown Attendee: And I have a follow-up.

Sumit Sadana: Yeah, so let me, let me stop and we'll ask Mark to jump in. So in terms of that comment that Sanjay made about Micron's competitive positioning, it's really referring to Our product and technology capabilities as it relates to the competition, and we have mentioned to you before that Micron is gaining share in all of the high margin areas of the industry, and what are those high margin areas? You look at HBM, Micron is gaining share. You look at high-capacity DIMMs. We have a supernormal share of high-capacity DIMMs, more than our DRAM supply share. You look at LPD RAM in the data center, very innovative, robust ROI product that is a pioneering achievement by us to be the sole supplier of this.

Speaker Change: Yes, So let me.

Speaker Change: Let me start.

Speaker Change: I will ask mark to jump in.

Speaker Change: And to.

Speaker Change: To add some thoughts so in terms of that comment that Sanjay made about.

Speaker Change: Micron's competitive positioning it's really referring to.

Speaker Change: Our product and technology capabilities as it relates to the competition.

Speaker Change: And we have mentioned to you before that Mike.

Speaker Change: Micron is gaining share.

Speaker Change: In.

Speaker Change: All of the high margin areas of the industry and what are those high margin areas.

Speaker Change: You look at HBM Micron is gaining share you look at <unk>.

High capacity dense we have a super normal share of high capacity <unk> more than our.

Speaker Change: DRAM supply share you look at NPD Ram and the data center very innovative robust Ottawa product.

Speaker Change: That is.

Speaker Change: Pioneering achievement by us to be.

Speaker Change: Be the sole supplier of this.

Speaker Change: And another important product in our portfolio at scale indicated data center Ssds.

Speaker Change: For that portion of the business and you look at the mobile products for <unk> or <unk>.

Speaker Change: For the highest speeds LP <unk>.

Speaker Change: Automotive products with functional safety features that no one has automotive and industrial distribution share which is larger.

Speaker Change: A larger portion of the profit pools compared to the other distribution products.

Sumit Sadana: We have significantly higher share than our normalized DRAM supply share. So we are continuing to drive the portfolio to areas where every large profit pool that is above average, above normal, above the rest of the industry average profit capability, we have The strongest products in the industry and momentum in terms of share gains in those areas, even while at an aggregate level, we are maintaining our bid share flat as part of our strategy, we are gaining share in all these large profit pools now in terms of EPS and operating margins, et cetera, we have spoken about some of the areas where the industry can get to better health.

Speaker Change: We have significantly higher share than our.

Speaker Change: Normalized DRAM supply share. So we are continuing to drive the portfolio too.

Speaker Change: Areas, where.

Speaker Change: Every large profit pool that is.

Speaker Change: Above average above normal above.

Speaker Change: The rest of the industry average profit capability, we have.

Speaker Change: <unk> margins et cetera.

Speaker Change: I have spoken about some of the areas where.

Speaker Change: We believe.

Speaker Change: That is on the utilization in the short term lower capex and capacity in the medium term and lengthening of time between nodes and the long term the industry can get to better health and we are not just talking about that we're doing that actively ourselves and.

Mark Murphy: And we are not just talking about that, we are doing that actively ourselves and taking the lead in doing that. Of course, the DRAM industry is in a much better place compared to NAND in terms of balance, health and profitability. And we continue to focus on technology and portfolio there. And if you then, I'll just end with the technology view, first in the industry with OneGamma, utilizing EUV for the first time in OneGamma at a very cost-effective approach. And so all of those different ways, you can see that as the industry environment improves, particularly in NAND, you will see a much better, Projects, Srinivas Pajjuri, Srinivas Pajjuri, Srinivas Pajjuri, Srinivas Pajjuri, Sanjay You know, very encouraging trends with the AI-driven demand and the GPU ASIC architectures driving more different memory and, you know, very clear demand signals and, you know, continued growth as we can see in those markets and content-driven growth in some of the more traditional markets.

Speaker Change: And taking the lead in doing that.

Speaker Change: Of course, the DRAM industry is in a much better place.

Speaker Change: <unk> NAND in terms of balance health and profitability and we continue to.

Speaker Change: Focus on technology and portfolio there and if you then I'll just end with a technology view.

Speaker Change: First in the industry with one gamma.

Speaker Change: Utilizing <unk> for the first time in one gamma at a very cost effective approach.

Speaker Change: And so all of those different ways, you can see that as the industry environment.

Speaker Change: Proves, particularly and then you will see much.

Speaker Change: Much better.

Speaker Change: Trajectory from us.

Speaker Change: From an operating profit perspective, Mark do you want to add anything I would just emphasize what samit said that our financial potential is certainly shaped by.

Speaker Change: Market conditions and state of the industry and.

Speaker Change: I think on the supply demand on the demand side.

Speaker Change: Very encouraging trends with.

Speaker Change: Driven demand.

Speaker Change: GPU ASIC architecture is driving more differentiation memory.

Speaker Change: And very clear demand signals.

Speaker Change: And.

Speaker Change: Continued growth is as we can see in those in those markets.

Speaker Change: And content driven growth in some of the more traditional market. So.

Mark Murphy: So, you know, our technology products and manufacturing capability are going to allow us to. you know, find the best profit pools as mentioned on the supply side. Also, Good trends in the case of DRAM, where HBM-driven trade ratio will constrain supply, and we see that on a leading edge, and we're very well positioned there. And then on the NAND side, we've talked about quite a bit today about the discipline that we're exhibiting there. I think finally, in addition to the technology product and manufacturing, we've got a strong balance sheet, which we did some activity this past quarter to provide us additional flexibility and pay down near-term maturities, but we continue to have the Capacity to sustain our leadership and exploit what should be a very good market going forward.

Speaker Change: Our technology products and manufacturing capability are going to allow us to.

Speaker Change: Find the best profit pools, as Sumit mentioned on the supply side.

Speaker Change: Also.

Speaker Change: Good trends in the case of DRAM, where HBM driven.

Speaker Change: <unk> ratio well.

Speaker Change: Constrained supply and we see that on the leading edge.

Speaker Change: And we're very well positioned there and then on the NAND side, we've talked about quite a bit today about the discipline that we're exhibiting there.

Speaker Change: I think finally in addition to the technology product and manufacturing, we've got a strong balance sheet, which.

Speaker Change: Yes, we did some activity this past quarter to.

Speaker Change: Provide us additional flexibility and pay down near term maturities, but we continue to have the.

Speaker Change: The capacity to sustain our leadership and exploit what should be a very good market going forward.

Speaker Change: And I appreciate all the details, but I guess, what we're struggling here given all these secular trends that you.

Speaker Change: Detailed here, we're struggling with better understanding the launch activity.

Speaker Change: In the earning opportunities.

Speaker Change: These secular trends are offering obviously on the mix increases dramatically you are susceptible to market condition, because we have with this.

Speaker Change: Last quarter, but we're just trying to understand okay.

Speaker Change: Mix increases to include more secular trend.

Speaker Change: <unk> allocated to higher margin work.

Speaker Change: How is it going to play out in terms of.

Speaker Change: Operating profit your revenues have already exceeded prior peak with earning sustain.

Speaker Change: Sustainability of early.

Speaker Change: We'll also happened I guess would you be subject to that we just have to.

Speaker Change: We don't see how it plays out because.

Unknown Attendee: There are also variables that hold you back from providing specific targets.

Speaker Change: We're also valuables that holds you back from providing specific targets.

Mark Murphy: Maybe just a comment, Mehdi. So. The mixed transformation that's occurring and the value added content that's being added to certain products, almost a new industry being created. And, you know, the combination of these AI product, AI demand that we're seeing on on HBM and low power DRAM and high cap dims and so forth. But, you know, that that will that's that's occurring now, and that's having a positive effect, you know, but the overall industry profitability, while while those products are at a premium, you know, the overall industry inventory levels are still elevated from, you know, the severe downturn that occurred now, they they have have been improving, they picked up a bit in this last quarter, but, you know, with volumes being down in DRAM and, and, and modest growth in, in band, but the, you know, but that volume growth continues or resumes the shipments increase in the in this third quarter.

Speaker Change: Maybe just a comment that <unk> so.

Speaker Change: Yes.

Speaker Change: Mix transformation, that's occurring in the value added content, that's being added to certain products.

Speaker Change: Almost a new industry being created.

Speaker Change: Combination of these.

Speaker Change: AI product AI demand that we're seeing on an HBM and.

Speaker Change: Low power DRAM and high cap terms and so forth.

Speaker Change: That will that's that's occurring now and thats, having a positive effect.

Speaker Change: But the overall industry profitability.

Speaker Change: While while those products are at a premium.

Speaker Change: Overall industry inventory levels are still elevated from the severe downturn that occurred now.

Speaker Change: They have has been improving they ticked up a bit and this.

Speaker Change: Last quarter, but.

With volumes being down.

Speaker Change: In DRAM and modest growth in <unk>.

Speaker Change: Dan but the.

Speaker Change: But that volume growth continues a resumes.

Speaker Change: Shipments.

Speaker Change: Increase in this third quarter.

Mark Murphy: And, and as we've said, our, you know, our inventory level tied on the leading edge, but our inventory levels overall decrease. And that's that's why we provide those numbers, because that's associated, we believe, with more favorable market conditions. And in the case of DRAM, we should be the lower target levels of inventory by year end. Thank you.

Speaker Change: And as we've said our.

Speaker Change: Our inventory levels.

Speaker Change: Tight on the leading edge, but our inventory levels overall.

Speaker Change: Decrease and.

Speaker Change: That's why we provide those numbers because thats associated we believe with.

Speaker Change: More favorable market conditions and in the case of DRAM, we should be below our target levels of inventory by year end.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Unknown Attendee: 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.

Speaker Change: Thank you.

Speaker Change: 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.

Unknown Attendee: Good day.

Q2 2025 Micron Technology Inc Earnings Call

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