Q3 2025 Micron Technology Inc Earnings Call
Unknown Attendee: Thank you for standing by and welcome to Micron's third quarter 2025 financial call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. The question has been answered, and if you'd like to remove yourself from the queue, simply press star 1 1 again. As a reminder, today's program is being recorded.
Thank you for standing by and welcome to Micron's third quarter 2025 financial call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the.
You simply press Star one again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program Satya Kumar Investor Relations. Please go ahead Sir.
Satya Kumar: And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead, sir.
Satya Kumar: Thank you and welcome to Micron Technology's fiscal third quarter 2025 financial conference call. On the call with me today are Sanjay Mehrotra, our Chairman, President and CEO, and Mark Murphy, our CFO. Today's call is being webcast from our investor relations site at investors.micron.com, including audio and slides.
Thank you and welcome to Micron technologies fiscal third quarter 2025 financial conference call on.
Speaker Change: On the call with me today are Sanjay Mehrotra, our chairman, President and CEO and Mark Murphy our CFO.
Today's call is being webcast from our Investor Relations site at investors, <unk> com, including audio and slides.
Satya Kumar: In addition, the press release detailing our quarterly results has been posted on the website, along with the prepared remarks for the session. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that are subject to risks and uncertainty. These forward-looking statements include statements regarding our future financial and operating performance, including our guidance, as well as trends and expectations in our business, market, industry, and regulatory and other matters. These statements are based on our current assumptions and we assume no obligation to update these statements.
Edition the press release detailing our quarterly results has been posted on the website along with the prepared remarks for this call.
Speaker Change: Before we begin let me remind everyone that today's discussion contains forward looking statements that are subject to risks and uncertainties.
Speaker Change: These forward looking statements include statements regarding our future financial and operating performance, including our guidance as well as trends and expectations in our business market industry and regulatory and other matters.
These statements are based on our current assumptions and we assume no obligation to update these statements.
Satya Kumar: Please refer to our most recent financial report on Form 10-K and our other filings with the SEC for more information on these risks and uncertainties that could cause actual results to differ materially from expectations.
Please refer to our most recent financial report on Form 10-K, and our other filings with the SEC for more information on these risks and uncertainties that could cause actual results to differ materially from expectations.
Satya Kumar: Today's discussion of financial results is presented on a non-GAAP financial basis unless otherwise specified. The reconciliation of GAAP to non-GAAP financial measures can be found on our website.
Today's discussion of financial results is presented on a non-GAAP financial basis, unless otherwise specified.
Speaker Change: A reconciliation of GAAP to non-GAAP financial measures can be found on our website.
Satya Kumar: We encourage you to visit our website at micron.com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending.
Speaker Change: We encourage you to visit our website at micron dot com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending.
Satya Kumar: You can also follow us on LinkedIn, X and I'll now turn the call over to Sanjay.
Speaker Change: You can also follow us on Linkedin ex and Youtube.
Sanjay: I'll now turn the call over to Sanjay.
Sanjay Mehrotra: Thank you, Satya. Good afternoon, everyone. Micron's strong competitive position and solid execution delivered record revenue in fiscal Q3, with revenue, gross margin, and EPS all exceeding the high end of our guidance ranges. Data center revenue more than doubled year over year and reached a record level, and consumer-oriented markets had strong sequential growth. We generated substantial free cash flow in the quarter, even as we continue to make strategic investments critical to sustain long-term growth. I'm thankful to all our Micron team members for their focus and execution, which made these results possible. In fiscal Q3, DRAM revenue reached a new record driven by a nearly 50% sequential growth in HBM revenue.
Sanjay Mehrotra: Thank you Cynthia and good afternoon, everyone.
Sanjay Mehrotra: Micron's strong competitive position and solid execution delivered record revenue in fiscal Q3 with revenue gross margin and EPS all exceeding the high end of our guidance ranges.
Sanjay: Data center revenue more than doubled year over year and reached a record level and consumer oriented markets had strong sequential growth.
We generated substantial free cash flow in the quarter, even as we continued to make strategic investments critical to sustain long term growth.
Sanjay: I am thankful to all our micron team members for their focus and execution, which made these results possible.
Sanjay: In fiscal Q3, DRAM revenue eastern new record driven by a nearly 50% sequential growth in <unk> revenue.
Sanjay Mehrotra: We remain the sole suppliers in volume production of LPD RAM in the data center. In NANT, we achieved a new quarterly record for market share across data center SSDs, as well as client SSDs in calendar Q1. For the first time ever, during calendar Q1, Micron has become the number two brand by share in data center SLDs, according to third party data. Looking ahead to fiscal Q4, we see a robust demand environment and expect to grow revenue by 15% sequentially to a record $10.7 billion at guidance midpoint. In June, we have completed a strategic reorganization of our business units around key market segments to capitalize on the tremendous AI growth opportunity ahead.
Sanjay: We remain the sole supplier and volume production of LP DRAM and the data center.
Sanjay: In NAND, we achieved a new quarterly record for market share across data center ssds as well as client Ssds in calendar Q1.
Sanjay: For the first time ever during calendar Q1, Micron has become the number two brand by shell and data Center Ssds. According to third party data.
Looking ahead to fiscal Q4, we see a robust demand environment and expect to grow revenue by 15% sequentially to a record $10 $7 billion at guidance midpoint.
Sanjay: In June we have completed our strategic reorganization of our business units around key market segments.
Lives on the tremendous growth opportunity ahead.
Sanjay Mehrotra: As high-performance memory and storage becomes increasingly critical to enabling AI-driven innovation, this new structure enhances Micron's ability to engage more deeply with customers by shifting more resources to AI-focused opportunities across our portfolio. We are making excellent progress on our 1 Gamma D-RAM technology node, with yield ramping ahead of the record pace we achieved on our 1 Beta node. We completed several key product milestones during the quarter, including the first qualification sample shipments of one gamma-based LP5 DLAM. Micron 1 Gamma D-LAMP leverages EUV and the node provides a 30% improvement in bit density, more than 20% lower power, and up to 15% higher performance compared to 1 Beta D-LAMP.
And high performance memory and storage becomes increasingly critical to enabling AI driven.
Sanjay: <unk> this new structure enhances micron's ability to engage more deeply with customers by shifting more resources to AI focused opportunities across our portfolio.
We are making excellent progress on our one gamma DRAM technology node with yield ramping ahead of the record pace, we achieved on our one beta node.
Sanjay: We completed several key project milestones during the quarter, including the first qualification sample shipments of <unk> Gamma based LP five DRAM.
Sanjay: Micron, one gamma Dina Leverages EV and provides a 30% improvement in bits density.
Sanjay: More than 20% lower power and up to 15% higher performance compared to one beta DRAM.
Sanjay Mehrotra: We will leverage 1 Gamma across our entire DRAM product portfolio to benefit from this leadership technology. In NANDs, we reached a record high mix of QLC bits per quarter. We started qualifications for new high-performance SSD products based on our G9 2TB QLC NAND, and we continue to ramp our G9 node at a pace consistent with demand. We are making disciplined investments in our global operations network to add to supply in line with demand over time. Two weeks ago, with support from the Trump administration, Micron announced plans to invest approximately $200 billion in the U.S., which includes $150 billion in manufacturing and $50 billion in R&D over the next 20-plus years.
Sanjay: We will leverage one gamma across our entire DRAM product portfolio to benefit from this leadership technology.
Sanjay: In NAND, we leased a record high mix of <unk> beds in the quarter.
We started qualifications for new high performance SSD products based on our <unk>, two terabyte <unk> NAND and we continue to ramp our <unk> nine node at a pace consistent with demand.
Sanjay: We are making disciplined investments in our global operations network to add to supply in line with demand over time.
Sanjay: Two weeks ago with support from the Trump administration, Micron announced plans to invest approximately $200 million in the U S which.
Which includes $150 million in manufacturing and $50 billion in R&D over the next 20 plus years.
Sanjay Mehrotra: As part of this $200 billion investment plan, Micron plans to invest an additional $30 billion beyond previously announced plans, which includes building a second leading-edge memory fab in Boise, Idaho, expanding and modernizing our existing fab in Manassas, Virginia, serving the automotive, aerospace, defense, and industrial markets. And bringing advanced packaging capabilities to the U.S. to support our long-term HVM growth plans after we have established sufficient DLAM wafer scale in our U.S. operation. We are pleased with the strong endorsement we received for our technology, products, and investment plans from our customers and ecosystem partners as part of this announcement.
As part of this 200 billion investment plan Micron plans to invest an additional $30 billion beyond previously announced plans, which includes building a second leading edge memory fab in Boise Idaho.
Sanjay: Expanding and modernizing our existing fab in Manassas, Virginia, serving the automotive aerospace defense and industrial markets and.
Sanjay: And bringing advanced packaging capabilities to the U S to support our long term <unk> growth plans.
Sanjay: Third we have established sufficient DRAM wafer scale in our U S operations.
Sanjay: We are pleased with the strong endorsement we received for our technology products and investment plans from our customers and ecosystem partners as part of this announcement.
Sanjay Mehrotra: Our first Idaho Fab, ID-1, achieved another key construction milestone in June. We expect first DNAM wafer output at ID 1 to begin in the second half of calendar 2027. with customer qualifications to follow. The second Idaho Fab, ID2, will benefit from manufacturing economies of scale with ID1 and add to R&D co-location benefits with greater efficiencies and faster time to market. To meet anticipated demand, ID.2 will begin production before the first New York fab. We expect to begin ground preparation in New York later this year, following the completion of state and federal environmental review.
Sanjay: Our first Idaho Fab one achieved another key construction milestone in June.
Sanjay: We expect first DRAM wafer output at Ivy one to begin in the second half of calendar 2027.
Sanjay: With customer qualifications to follow.
Sanjay: The second Idaho fab.
Two we will benefit from manufacturing economies of scale with IV <unk> and adds to R&D co location benefits with greater efficiencies and faster time to market.
Sanjay: To meet anticipated demand <unk>.
Sanjay: <unk> will begin production before the first New York Fab.
We expect to begin ground preparation in New York later this year following the completion of state and federal environmental reviews.
Sanjay Mehrotra: Turning to our end market. In data center, we expect the CY25 server market to grow mid-single-digit percentage in units, largely driven by significant growth in AI servers. In Fiscal Q3, data center DRAM revenue reached a new record for the fourth consecutive quarter driven by strong growth and shared gains in HVM and robust performance by our industry-leading portfolio of high-capacity DIMMs and low-power server DRAM products. We are executing well on our HVM ramp and product development road map. Our yield and volume ramp on HBM3E-12i is progressing extremely well and we expect shipment crossover in FQ4. We expect to reach HBM shares similar to our overall DRAM shares sometime in the second half of calendar 2025.
Turning to our end markets.
Sanjay: In data center, we expect the CEVA <unk> five central market to grow at mid single digit percentage in units largely driven by significant growth in AI servers.
Sanjay: In fiscal Q3 data center DRAM revenue leased a new record for the fourth consecutive quarter, driven by strong growth and share gains in HBM and robust performance by our industry, leading portfolio of high capacity dense and low power server DRAM products.
Sanjay: We are executing well on our HBM ramp and product development roadmap.
Sanjay: Our yield and volume ramp on <unk>, CE 12 highest progressing extremely well and we expect shipment crossover in FQ4.
Sanjay: We expected each HBM share similar to our overall DRAM share sometime in the second half of calendar 2095.
Sanjay Mehrotra: At AMD's Advancing AI event earlier this month, we announced that Micron's HBM3E 36GB 12i has been designed into AMD's Instinct MI355X GPU platform. We are now shipping HVM in high volume to four customers, spanning both GPU and ASIC platforms. As generative AI workloads grow in size and complexity, the performance demands on HVM continue to rise. Micron's HPM4 leverages our well-established 1-beta DNAM technology, along with an internally developed and manufactured advanced CMOS logic-based die, to deliver bandwidth exceeding 2TBps per memory stack, over 60% higher performance than the previous generation. Additionally, Micron's HBM4 offers a 20% lower power consumption compared to the already industry-leading power performance on our HBM3E12i product, setting new benchmarks in power efficiency for this product category.
Sanjay: At AMD is advancing AI event earlier this month, we announced that Mike <unk> CE 36, Gigabyte 12 high has been designed into Amd's instinct.
Sanjay: At $3 55 X GPU platform.
Sanjay: We are now shipping HBM in high volume to four customers spanning bullets, GPU and ASIC platforms.
Sanjay: At generator, we add workloads grow in size and complexity the performance demands on HBM continue to rise.
Sanjay: My son's HBM forward Leverages, our well established one beta DRAM technology, along with an internally developed and manufactured advanced Cmos logic based die to.
Sanjay: To deliver bandwidth exceeding two terabyte per second part memory stack.
Sanjay: Over 60% higher performance than the previous generation.
Sanjay: Additionally, <unk> offers a 20% lower power consumption compared to the already industry, leading power performance on other <unk> 12 high product setting new benchmarks and power efficiency for this product category.
Sanjay Mehrotra: The expanded interface for HBM4 facilitates rapid communication and a high-throughput design that accelerates the in-fill-and-splat performance of large language models and chain-of-thought reasoning Micron has delivered samples of HBM4 to multiple customers and expects to run volume production in calendar 2026, aligned with our customer's plan. We are exceptionally well-positioned for the ramp of HBM4. Building on the success of our HBM3 eRamp, we have high-quality, field-proven technology and have executed a robust and significant ramp in our HBM manufacturing capacity. We have deep relationships with practically every major customer of HBM and have earned their trust with our execution, delivering the world's lowest power, highest performance HBM.
Sanjay: The expanded interface with <unk> facilitates rapid communication and a high throughput design that accelerates and financed plant performance of large language models and Ciena Todd reasoning systems.
Sanjay Mehrotra: Micron has delivered samples of HBM forward to multiple customers and expect to ramp volume production in calendar 2026 aligned with our customer's plans.
Sanjay Mehrotra: We are exceptionally well positioned for the ramp of <unk>.
Sanjay Mehrotra: Building on the success of our <unk>, we have high quality field proven technology and have executed a robust and significant ramp in our <unk> manufacturing capacity.
Sanjay Mehrotra: We have deep relationships with virtually every major customer of HBM and have earned their trust with our execution delivering the world's lowest power highest performance HBM.
Sanjay Mehrotra: Our portfolio of high-capacity DIMMs and low-power server DRAM solutions delivered another record revenue quarter. Micron has pioneered the adoption of LPD RAM for servers, and we continue to maintain our sole source position for LPEM servers. Together, our high-capacity DIMM and LP server products have already generated multiple billions of dollars in revenue in fiscal 2025, reflecting a remarkable five-fold growth compared to the same period in the previous year. During calendar Q1, for the third consecutive quarter, Micron achieved a record for data-centered SSD market share, driven by our portfolio of differentiated products enabled through vertical integration In Fiscal Q3, our Data Center 9550 Performance SSD, which is on the NVIDIA GB200 NVL72 Recommended Vendor list, completed additional customer qualifications at multiple OEMs. Micron's 9550 SSDs provide and in industry leading performance and energy efficient Gen 5 data center storage solution for AI servers.
Sanjay Mehrotra: Our portfolio of high capacity dense and low power server DRAM solutions delivered another record revenue quarter.
Sanjay Mehrotra: Micron has has pioneered the adoption of LP DRAM for servers, and we continue to maintain our sole source position for LP in server.
Sanjay Mehrotra: Together, our high capacity them and LP several products have already generated multiple billions of dollars in revenue in fiscal 2025, reflecting our remarkable fivefold growth compared to the same period in the previous year.
Sanjay Mehrotra: During calendar Q1 for the third consecutive quarter Micron achieved a record for data center SSD market share driven by our portfolio of differentiated products enable through vertical integration.
Sanjay Mehrotra: In fiscal Q3, our datacenter $95 50 performance SSD, which is on the Nvidia GBP 200, enviable 72 recommended vendor list completed additional customer qualifications at multiple Oems.
Sanjay Mehrotra: <unk> $95 50 Ssds provides.
Sanjay Mehrotra: And in industry, leading performance and energy efficient Gen five data center storage solution for <unk>.
Sanjay Mehrotra: AI server systems.
Sanjay Mehrotra: We continue to qualify additional customers and ramp revenue for our 6550 ION 60TB Capacity SSD. Turning to PC, we expect PC market units to grow in the low single-digit percentage range in calendar 2025. In the quarters ahead, key catalysts for growth include the increasing adoption of AI-enabled PCs and the Windows 11 upgrade cycle. Micron is focused on bringing differentiated high performance products to the PC market. Our strong SSD portfolio resulted in Micron achieving a record high client SSD market share in calendar Q1. Tomorrow, we will be announcing our new G9QLC 2TB-based SSD featuring our proprietary Adaptive Light technology, which enables 4x faster light performance.
Sanjay Mehrotra: We continue to qualify additional customers and ramped revenue for our $65 50.
Sanjay Mehrotra: On 60 terabyte capacity Ssds.
Sanjay Mehrotra: Turning to <unk>, we expect VC market units to grow in the low single digit percentage range in calendar 2025.
Sanjay Mehrotra: In the quarters ahead key catalysts for growth include the increasing adoption of AI enabled Pcs and the Windows 11 upgrade cycle.
Sanjay Mehrotra: Micron is focused on bringing differentiated high performance products to the PC market.
Sanjay Mehrotra: Our strong SSD portfolio resulted in micron, achieving a record high client SSD market share in calendar Q1.
Sanjay Mehrotra: Tomorrow, we will be announcing our new Jeannine <unk> two terabyte based SSD, featuring our proprietary adaptive light technology, which enables forex faster light performance.
Sanjay Mehrotra: This technology expands the addressable market for QLC SSDs by delivering performance equivalent to TLC NAND for most consumer use cases. Turning to mobile, we expect smartphone units to grow low single digits in calendar 2025. AI adoption remains a key driver of DRAM content growth for smartphones, and we expect more smartphone launches featuring 12GB or more compared to 8GB of capacity in the average smartphone today. Micron is focused on providing solutions to the high-end smartphone segments, leveraging our leading 1 Beta and 1 Gamma technology nodes for LP5X DRAM and G8 and G9 technology nodes for our UFS4 NAND products.
Sanjay Mehrotra: This technology expands the addressable market for <unk> by delivering performance equivalent to TLC NAND for most consumer use cases.
Sanjay Mehrotra: Turning to mobile.
Sanjay Mehrotra: We expect smartphone units to grow low single digits in calendar 2025.
Sanjay Mehrotra: AI adoption remains a key driver of DRAM content growth for smartphones, and we expect more smartphone launches featuring 12 gigabyte or more compared to eight gigabyte of capacity and the average smartphone today.
Sanjay Mehrotra: Micron is focused on providing solutions to the high end smartphone segments, leveraging our leading one beta and <unk> gamma technology nodes, but <unk>, DRAM and GE and <unk> technology nodes for our USS Ford NAND products.
Sanjay Mehrotra: During the quarter, we began shipping qualification samples of the industry's first LP5X memory built on the OneGamma node, offering a wide range of capacities and industry-leading speed grades for 2026 flagship smartphones. Micron's 1 Gamma LP5x DRAM is engineered to accelerate AI applications in high end devices, delivering over 25% faster recommendations across several use cases, while reducing power consumption by 20%, all in an ultra thin form factor ideal for mobile. In NANT, we secured a key customer design win and ramped high-volume production of our G9-based UFS4 product. The strength of our mobile portfolio was further recognized through top quality awards from seven smartphone OEMs during the quarter.
Sanjay Mehrotra: During the quarter, we began shipping qualification samples of the industry's first LP <unk> memory built on the one gamma node offering a wide range of capacities and industry, leading speed grades for 2026 flagship smartphones.
Speaker Change: Mike <unk> Gamma LP <unk> DRAM is engineered to accelerate AI applications and high end devices.
Speaker Change: <unk> over 25% faster recommendations across several use cases, while reducing power consumption by 20% all in an ultra thin form factor ideal for mobile.
Speaker Change: In NAND, we secured a key customer design win and ramped high volume production of our <unk> based <unk> products.
Speaker Change: The strength of our mobile portfolio was further recognized through top quality awards from seven smartphone Oems during the quarter.
Sanjay Mehrotra: Turning to automotive, industrial, and consumer-embedded markets. We expect increasing adoption of L2 and L3 ADAS features and AI-enabled in-vehicle infotainment systems to drive memory and storage content growth, as well as higher bandwidth requirements. Micron is positioned for long-term success in the automotive market with new product introductions such as the industry's first one beta dual-channel LP5 DNAM with high-speed 9.6 gigabits per second support, which achieved production readiness during the quarter. In industrial, we are seeing a resumption in our growth as customers increase their investments for the adoption of AI, including in key areas like factory automation.
Speaker Change: Turning to automotive industrial and consumer embedded markets.
Speaker Change: We expect increasing adoption of <unk> and L. Three Adas features and AI enabled in vehicle infotainment systems to Jive memory and storage content growth as well as higher bandwidth requirements.
Speaker Change: Micron is positioned for long term success in the automotive market with new product introductions, such as the industry's first one beta dual channel LP <unk> with high speed nine six gigabytes per second support Mitch achieved production readiness during the quarter.
Speaker Change: In industrial we are seeing a resumption and our growth as customers increase their investments for the adoption of AI, including in key areas like factory automation.
Sanjay Mehrotra: Micron is driving price improvements with a market backdrop of constrained D4 and LP4 supply and low distributor channel inventory.
Speaker Change: My phone is driving price improvements with the market backdrop of constrained default MLP for supply and low distributor channel inventory.
Sanjay Mehrotra: Now turning to our market outlet. Customer inventory levels have been healthy overall across end markets, and there may have been some tariff-related pull-ins by certain customers. Our customers continue to signal a constructive demand environment for the remainder of this calendar year, and we remain agile to adjust to any unforeseen demand changes that may occur due to macro conditions or the evolving tariff-related situation. We expect CY25 industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double digit percentage range. We expect Micron's bit supply growth to be below industry bit demand growth for non-HVMDRAM and NAND.
Speaker Change: Now turning to our market outlook.
Customer inventory levels have been healthy overall across end markets and there may have been some tariff related balloons by certain customers.
Speaker Change: Our customers continued to signal a constructive demand environment for the remainder of this calendar year.
Speaker Change: And we remain agile to adjust to any unforeseen demand changes that may occur due to macro conditions are the evolving tariff related situation.
Speaker Change: We expect to see by 'twenty, five industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double digits percentage range.
Speaker Change: We expect micron's bit supply growth to be below industry bit demand growth for non HBM DRAM and NAND.
Sanjay Mehrotra: Over the medium term, we anticipate industry bid demand growth of mid-team schedule for both DRAM and NAS. As previously communicated, our efficient node conversions will result in 10% structurally lower NAND wafer capacity ending fiscal 2025 versus the end of fiscal 2024 level. Additionally, given NAND technology transitions provide a significant increase in overall bit output, Micron plans to manage our node conversions at a measured pace consistent with our demand. Recent press reports have discussed the end of life of D4 and LP4 products. Micron's leading-edge DRAM nodes, such as 1-beta and 1-gamma, are focused on the latest generation products, such as D5, LP5, and HVM, and are not utilized to produce D4 and LP4.
Speaker Change: Over the medium term, we anticipate the industry bit demand growth of mid teens CAGR for both DRAM and NAND.
Speaker Change: As previously communicated our efficient node conversions will result in 10% structurally lower NAND wafer capacity ending fiscal 2025 versus the end of fiscal 2024 levels.
Speaker Change: Initially given NAND technology transitions provided a significant increase in overall better output micron plans to manage our node conversions at a measured pace consistent with our demand.
Speaker Change: Recent press reports have discussed the end of life of default and LP for products.
Speaker Change: <unk>, leading edge DRAM nodes, such as one beta and one gamma.
Speaker Change: <unk> on the latest generation products, such as <unk>, LTE, five and HBM and are not utilized to produce <unk> and LP for.
Sanjay Mehrotra: D4 and Lp4 products are largely produced in our 1αDNAM node. Micron had sent EOL notices for these products to customers in high-volume segments like mobile, client, data center, and consumer several months ago, with final shipments occurring in two to three quarters from now. This EOL process is similar to prior transitions from one generation of memory to another, and consistent with history. Micron intends to support its longevity customers with long-term and relatively low-volume requirements in segments like automotive, industrial, defense, and networking, with supply of these one-alpha DRAM products for several years. In the near term, customers in the high volume segments are starting to see increasing shortages of B4 products.
Speaker Change: Before an LP full products are largely produced in our <unk> DRAM node.
Speaker Change: Micron has send email notices for these products to customers in high volume segments like mobile client datacenter and consumer several months ago with final shipments occurring in two to three quarters from now.
Speaker Change: This UL process is similar to prior transitions from one generation of memory to another and consistent with history Micron intends to support its longevity customers with long term and relatively lower volume requirements and segments like automotive industrial defense and networking with supply of these one alpha.
Speaker Change: DRAM products for several years.
Speaker Change: In the near term customers into high volume segments are starting to see increasing shortages of default products.
Sanjay Mehrotra: We are now on allocation for these products and are working with customers to try and support their high priority near term demand. D4 revenues are low single-digit percentage of our revenues in second half of fiscal 2025. We anticipate LP4 shortages may also increase as a result of EOL.
Speaker Change: We are now on allocation for these products and are working with customers to try and support they had high priority near term demand.
Speaker Change: Deferred revenues are low single digit percentage of our revenues in second half of fiscal 2025.
Speaker Change: We anticipate LP for shortages May also increase as a result of UL.
Sanjay Mehrotra: In closing, Micron's record Q3 revenue performance and strong Q4 outlook are the results of our strategic focus and consistent execution. As AR drives unprecedented demand for high-performance memory and storage, Micron is exceptionally well-positioned to catalyze on this transformative era. Our leadership in technology, highlighted by progress in HBM, 1 Gamma D-RAM, and G9 NAND, alongside disciplined global manufacturing investments, supports our path to sustained growth. We are confident that our strategic direction, innovation capabilities, and the execution by our exceptional team will continue to create meaningful value for our shareholders, customers, and employees. We are on track to deliver record revenue with solid profitability and free cash flow in fiscal year 25, while we invest to build on our leadership to addressing growing AI-driven memory demand.
Speaker Change: In closing Micron's record Q2 revenue performance and strong Q4 outlook are the results of our strategic focus and consistent execution.
Speaker Change: As <unk> unprecedented demand for high performance memory and storage.
Speaker Change: <unk> is exceptionally well positioned to capitalize on this transformative era.
Speaker Change: Our leadership in technology highlighted by progress in HBM, one gamma DRAM and <unk> NAND alongside disciplined global manufacturing investments supports our path to sustained growth.
Speaker Change: We're confident that our strategic direction innovation capabilities and execution by our exceptional team will continue to create meaningful value for our shareholders customers and employees we.
Speaker Change: We are on track to deliver record revenue with solid profitability and free cash flow in fiscal year 'twenty five.
Speaker Change: While we invest to build on our leadership to addressing growing AI driven memory demand.
Mark Murphy: I will now turn it over to Mark for our financial results and outlays. Thank you, Sanjay, and good afternoon, everyone. Micron delivered strong results in fiscal Q3 with revenue, gross margin, and EPS all above the high end of the guidance ranges provided in our last earnings Total fiscal Q3 revenue is $9.3 billion, up 15% sequentially and up 37% year-over-year, and a quarterly revenue record for Micron. Higher sequential revenue was driven by growth across our end markets, including record data center revenues and strong sequential growth in consumer oriented markets. Fiscal Q3 DRAM revenue was $7.1 billion, up 51% year-over-year, and represented 76% of total revenue.
Mark Murphy: I will now turn it over to Mark for our financial results and outlook.
Mark Murphy: Thank you Sanjay and good afternoon, everyone.
Mark Murphy: Micron delivered strong results in fiscal Q3 with revenue gross margin and EPS all above the high end of the guidance ranges provided in our last earnings call.
Speaker Change: Total fiscal Q3 revenue was $9 3 billion.
Speaker Change: Up 15% sequentially and up 37% year over year, and a quarterly revenue record for micron.
Speaker Change: Higher sequential revenue was driven by growth across our end markets, including record datacenter revenues and strong sequential growth in consumer oriented markets.
Speaker Change: Fiscal Q3, DRAM revenue was $7 1 billion.
Speaker Change: Up 51% year over year and represented 76% of total revenue.
Mark Murphy: Sequentially, DRAM revenue increased 15%, with fit shipments increasing over 20%, and prices decreasing in the low single-digit percentage range, primarily due to a higher consumer-oriented revenue mix. Fiscal Q3 NAND revenue was $2.2 billion, up 4% year over year, and represented 23% of Micron's total revenue. Sequentially, NAN revenue increased 16%. with fit shipments increasing in the mid 20s percentage range and prices decreasing in the high single digit percentage range.
Speaker Change: Sequentially, DRAM revenue increased 15% with bit shipments, increasing over 20% and prices decreasing in the low single digit percentage range, primarily due to a higher consumer oriented revenue mix.
Speaker Change: Fiscal Q3, NAND revenue was $2 2 billion.
Speaker Change: Up 4% year over year and represented 23% of Micron's total revenue.
Speaker Change: Sequentially NAND revenue increased 16%.
Speaker Change: With bit shipments increasing in the mid 20 percentage range and prices decreasing in the high single digit percentage range.
Mark Murphy: Now turning to revenue by business. Compute and networking business unit revenue is $5.1 billion, up 11% sequentially and a quarterly record. This performance was driven by a nearly 50% sequential increase in HBM, along with growth in our high-capacity DRAM and low-power server DRAM. Revenue for the storage business unit was $1.5 billion, up 4% sequentially. This growth was primarily driven by an increase in consumer-oriented revenue. Mobile business unit revenue is $1.6 billion, up 45% sequentially. Sequential revenue growth was due to reduced customer inventory. and strong demand from DRAM content. embedded business unit revenue is $1.2 billion up 20% sequential Supported by Growth and Industrial and Consumer Embedded Markets.
Speaker Change: Now turning to revenue by business unit.
Speaker Change: Compute and networking business unit revenue was $5 1 billion.
Speaker Change: Up 11% sequentially and a quarterly record.
Speaker Change: This performance was driven by a nearly 50% sequential increase in HBM.
Speaker Change: Along with growth in our high capacity DRAM and low power server DRAM.
Speaker Change: Revenue for the storage business unit was $1 $5 billion.
Speaker Change: Up 4% sequentially.
Speaker Change: This growth was primarily driven by an increase in consumer oriented revenue.
Speaker Change: Mobile business unit revenue was $1 6 billion.
Speaker Change: Up 45% sequentially.
Speaker Change: Sequential revenue growth was due to reduced customer inventories and strong demand from DRAM content growth.
Speaker Change: Embedded business unit revenue is $1 2 billion up.
Speaker Change: <unk> up 20% sequentially.
Speaker Change: Supported by growth in industrial and consumer embedded markets.
Mark Murphy: The consolidated gross margin for Fiscal Q3 was 39%. up 110 basis points sequentially and up 250 basis points versus the midpoint of our guide. Gross margins were above the high end of our guidance range. primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer oriented mix.
Speaker Change: The consolidated gross margin for fiscal Q3 was 39%.
Speaker Change: Up 110 basis points sequentially, and up 250 basis points versus the midpoint of our guidance.
Speaker Change: Gross margins were above the high end of our guidance range.
Speaker Change: Primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer oriented mix.
Mark Murphy: Operating expenses in fiscal Q3 were $1.1 billion. Up $87 million quarter over quarter and in line with our guidance range. The increase was primarily driven by higher R&D investments and labor-related costs. We generated operating income of $2.5 billion in fiscal Q3, resulting in an operating margin of 26.8%. up approximately 190 basis points sequentially and up 13 percentage points year-over-year. Fiscal 2-3 taxes were $306 million on an effective tax rate of 12.3%. Lower than our guidance due to the effects of one-time discrete items in the quarter. Non-GAAP diluted earnings per share in Fiscal 2-3 was $1.91.
Speaker Change: Operating expenses in fiscal Q3, or $1 1 billion up.
Speaker Change: Up $87 million quarter over quarter and in line with our guidance range.
Speaker Change: The increase was primarily driven by higher R&D investments and labor related costs.
Speaker Change: We generated operating income of $2 5 billion in fiscal Q3, resulting in an operating margin of 26, 8%.
Speaker Change: Up approximately 190 basis points sequentially and up 13 percentage points year over year.
Speaker Change: Fiscal Q3 taxes were $306 million on an effective tax rate of 12, 3%.
Speaker Change: Our than our guidance due to the effects of one time discrete items in the quarter.
Speaker Change: non-GAAP diluted earnings per share in fiscal Q3 was $1 91.
Mark Murphy: above the high end of the guidance frame. with 22% sequential growth and up over 200% versus the year ago quarter.
Speaker Change: Above the high end of the guidance range.
Speaker Change: With 22% sequential growth and up over 200% versus the year ago quarter.
Mark Murphy: Turning to cash flows and capital spending, in fiscal Q3, our operating cash flows were over $4.6 billion, and our capital expenditures were $2.7 billion. Pre-cash flows in the quarter were over $1.9 billion, the highest quarterly amount in over six years. Ending inventory for fiscal Q3 was $8.7 billion or 139 days. Inventory was down $280 million sequentially. and Inventory Days were down 19 days sequential. driven by strong sequential bit shipment growth in both DRAM and NAND.
Speaker Change: Turning to cash flows and capital spending.
Speaker Change: In fiscal Q3, our operating cash flows were over $4 6 billion.
Speaker Change: And our capital expenditures were $2 7 billion.
Speaker Change: Free cash flows in the quarter were over $1 9 billion.
Speaker Change: Highest quarterly amount in over six years.
Speaker Change: Ending inventory for fiscal Q3 was $8 7 billion or 139 days.
Speaker Change: Inventory was down $280 million sequentially.
Speaker Change: Inventory days were down 19 days sequentially.
Speaker Change: Driven by strong sequential bit shipment growth in both DRAM and NAND.
Mark Murphy: On the balance sheet, we held a record $12.2 billion of cash investments at quarter end and maintained $15.7 billion of liquidity when including our untapped credit During fiscal Q3, we refinanced our $900 million 2027 notes with $1.7 billion in new notes maturing in fiscal years 2033 and 2036. We close the quarter with $15.5 billion of debt, maintaining low net leverage and a weighted average debt maturity of 2032.
Speaker Change: On the balance sheet, we held a record $12 $2 billion of cash and investments at quarter end.
Speaker Change: <unk> maintained $15 $7 billion of liquidity, when including our untapped credit facility.
Speaker Change: During fiscal Q3, we refinanced our $900 million 2027 notes with $1 7 billion in new notes maturing in fiscal years 2033 and 2036.
Speaker Change: We closed the quarter with $15 5 billion of debt.
Speaker Change: Maintaining low net leverage and a weighted average debt maturity of 2032.
Mark Murphy: Now turning to our outlook for the fourth fiscal quarter. We expect our revenue growth to be weighted towards DRAM, supported by robust pricing execution, favorable product For more information, visit www.fema.gov and Continued Cost Improvements, all of which benefit gross margin. Operating expenses for fiscal Q4 are projected to be approximately $1.2 billion. with a sequential increase primarily driven by planned R&D investments in future technology nodes and HBM product development. Our fiscal 2025 capital spending plans remain unchanged at approximately $14 billion. The overwhelming majority of the fiscal 2025 cap. is to support HBM, as well as facility construction, back-end manufacturing, and R&D investment.
Speaker Change: Now turning to our outlook for the fourth fiscal quarter.
Speaker Change: We expect our revenue growth to be weighted towards DRAM supported by robust pricing execution favorable product mix and continued cost improvements all of which benefit gross margins.
Speaker Change: Operating expenses for fiscal Q4 are projected to be approximately $1 2 billion.
Speaker Change: With the sequential increase primarily driven by planned R&D investments in future technology nodes and HBM product development.
Speaker Change: Our fiscal 2025 capital spending plans remain unchanged at approximately $14 billion.
Speaker Change: The overwhelming majority of the fiscal 2025 Capex is to support HBM as well as facility construction backend manufacturing and R&D investments.
Mark Murphy: We expect a fiscal Q4 tax rate of around 13 percent. As previously disclosed, our fiscal 2026 tax rate is expected to be in the high teens percentage range following Singapore's adoption of the global minimum Any impacts that occur due to potential new tariffs are not included in our guidance.
Speaker Change: We expect a fiscal Q4 tax rate of around 13%.
Speaker Change: As previously disclosed our fiscal 2026 tax rate is expected to be in the high teens percentage range. Following Singapore is adoption of the global minimum tax.
Speaker Change: Any impacts that occurred due to potential new tariffs are not included in our guidance.
Mark Murphy: with all these factors in mind. Our non-GAAP guidance for fiscal Q4 is as follows. We expect revenue to be $10.7 billion. plus or minus $300 million. gross margin to be in the range of 42%. plus or minus 100 base and operating expenses to be approximately $1.2 billion plus or minus $20 million. We expect our fiscal Q4 tax rate to be around 13%. based on a share count of approximately 1.15 billion shares. We expect EPS to be $2.50 per share, plus or minus $0.15. With another quarter of shipment growth forecasted in fiscal Q4, we expect to exit fiscal 2025 with tight DRAM inventory.
Speaker Change: With all these factors in mind.
Speaker Change: Our non-GAAP guidance for fiscal Q4 is as follows.
Speaker Change: We expect revenue to be $10 $7 billion plus.
Speaker Change: Plus or minus $300 million.
Speaker Change: Gross margin to be in the range of 42%.
Speaker Change: Plus or minus 100 basis points.
Speaker Change: And operating expenses to be approximately $1 2 billion.
Speaker Change: Plus or minus $20 million.
Speaker Change: We expect our fiscal Q4 tax rate to be around 13%.
Speaker Change: Based on a share count of approximately $1, one 5 billion shares.
Speaker Change: We expect EPS to be $2 50 per share plus.
Speaker Change: Plus or minus 15.
Speaker Change: With another quarter of shipment growth forecasted in fiscal Q4, we expect to exit fiscal 2025 with tight DRAM inventories.
Mark Murphy: significantly reduced NAND inventory. and overall company DIO near our target level.
Speaker Change: <unk> significantly reduced NAND inventories.
Speaker Change: And overall company Dio near our target levels.
Mark Murphy: With low inventories on hand and a constructive demand environment, we will continue to focus on improving pricing and further strengthening our product For more information, visit www.FEMA.gov In fiscal Q3, Micron delivered earnings above the guidance range. Achieve record revenue. and continued ramping our industry-leading HBM. We also began transitioning to a new market segment focused business unit. Starting in Fiscal Q4, we will report revenue, gross margin, and operating margin metrics across these new business units. with strong execution and a differentiated product portfolio. Micron is well positioned to maintain our leadership and to deliver record revenue and significantly improve profitability once again in fiscal Q4 Thank you for joining us today.
Speaker Change: With low inventories on hand, and a constructive demand environment, we will continue to focus on improving pricing and further strengthening our product mix.
Speaker Change: In fiscal Q3 Micron delivered earnings above the guidance range achieved.
Speaker Change: Achieved record revenue.
Speaker Change: And continued ramping our industry leading HBM.
Speaker Change: We also began transitioning to a new market segment focused business unit structure.
Speaker Change: Starting in fiscal Q4, we will report revenue gross margin and operating margin metrics across these new business units.
Speaker Change: With strong execution and a differentiated product portfolio.
Speaker Change: Micron is well positioned to maintain our leadership and to deliver record revenue and significantly improve profitability once again in fiscal Q4.
Speaker Change: Thank you for joining us today, we will now open it up for questions.
Unknown Attendee: We will now open up for questions. certainly As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone.
Speaker Change: Certainly.
Speaker Change: As a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone and our first question comes from the line of Timothy Arcuri from UBS. Your question. Please.
Timothy Arcuri: And our first question comes from the line of Timothy Arcuri from UBS. Your question, please. Thanks a lot. Sanjay, I wanted to ask sort of how you see the HBM TAM scaling with the Accelerator TAM. One thing that's been clear over the past three months or so is that the Accelerator TAM is definitely upsiding and growing a lot. And it seems if I take their projections and I take your HBM projections, it kind of seems like the HBM market is going to remain 15 to 20% of what the overall Accelerator market is. I guess, how do you see the HBM TAM scaling with that market?
Timothy Arcuri: Thanks, Sanjay I wanted to ask sort of how you see the HBM Tim's scaling with the accelerator Tam.
Speaker Change: One thing Thats been clear over the past three months or so is that the accelerated definitely upsetting and growing a lot.
Speaker Change: And it seems if I take their projections and I take your HBM projections.
Speaker Change: It seems like the APM market is going to remain 15% to 20% of what the overall <unk> market is I guess, how do you see the HBM Tien scaling with that market and then is there some sort of limit or like <unk> that we begin to reach in terms of HBM attached to these gpus in these custom asics.
Sanjay Mehrotra: And then is there some sort of limit or like asymmetric that we begin to reach in terms of HBM attached to these GPUs and these custom ASICs? With respect to HBM growth, we certainly see that HBM demand grows in the future. I'll tell you that in this year, if you look at calendar year 25, HBM is growing from last year about 18 billion in revenue to approximately 35 billion in calendar year 25. We see in calendar year 26, if you look at HBM bit demand growth, it will significantly exceed the overall DRAM industry demand growth.
Speaker Change: So with respect to HBM Gorilla III, certainly see that HCM demand grows in the future I will tell you that in.
Speaker Change: This year, if you look at calendar year 'twenty five <unk> is growing from last year of about $18 billion in revenue to approximately 35 billion in calendar year 2005, we see in calendar year 'twenty six if you look at <unk>.
Speaker Change: Demand growth.
Speaker Change: It will significantly exceed the overall.
Speaker Change: DRAM industry demand growth and of course, the transition from <unk> tied to 12 month high in HBM in 'twenty six transition to HBM Ford as well, which is even a higher value product all of that essentially.
Sanjay Mehrotra: And of course, you know, the transition from 8 high to 12 high in HBM in 26, transition to HBM 4 as well, which is even a higher value product. All of that essentially aborts well in terms of the value of HBM and, you know, the overall need for HBM in these accelerator platforms that are, of course, evolving fast. And of course, our customers are very much focused on working with us and looking at their platforms, assessing the mix of 12 high and HBM 4. And then when we look at 27, that goes into HBM 4E.
Speaker Change: Well in terms of the value of HBM and.
Speaker Change: The.
Speaker Change: Overall need for the HBM in these <unk> platforms that are of course evolving fast and of course, our customers are very much focused on working with us.
Speaker Change: And looking at their platforms assessing the mix off 12 high end HBM floor and then when we look at 2007 that goes into HBM forward E 28 starts introducing customization and <unk> as well so the trajectory of HCM in terms of the value proposition in these accelerators.
Sanjay Mehrotra: 28 starts introducing customization in HBM as well. So the trajectory of HBM in terms of the value proposition in these accelerators continues to be strong and healthy. And of course, we are well positioned. As we shared with you, we have already begun to sample our HBM 4 products. And, you know, again, we plan to maintain our leadership with respect to specifications here. And we have certainly demonstrated a capacity ramp up as well. So we remain excited about HBM. We see this as clearly a strong growth driver as well as value driver for our business. Thanks a lot Sanjay.
Speaker Change: Continuous to be strong and healthy and of course, we are well positioned as we shared with you we have already begun to sample <unk> four.
Speaker Change: Products in these.
Speaker Change: Plan to maintain our leadership with respect to specific locations here and we have certainly demonstrated our capacity ramp up as well. So we remain excited about HBM do you see this as a clear leader.
Speaker Change: A strong growth driver as well as value driver.
Speaker Change: For our business.
Speaker Change: Thanks, a lot.
Sanjay Mehrotra: Thank you.
Vivek Arya: And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. Thanks for taking my question. I wanted to talk about gross margins. So first, what is driving the upside sequentially? And then is this the new baseline for gross margins?
Speaker Change: Thank you and our next question comes from the line of Vivek Arya from Bank of America Securities. Your question. Please.
Vivek Arya: Thanks for taking my question I wanted to talk about gross margin. So first what is driving the upside sequentially.
Speaker Change: And then is this the new baseline for gross margins and then what would be kind of the puts and takes as we look at the next few quarters beyond Q4. Thank you.
Mark Murphy: And then what would be kind of the puts and takes as we look at the next few quarters beyond Yeah, Vivek, it's it's Mark. So in the in the third quarter, I think maybe start with with what happened in gross margin in the third quarter, we had a, you know, we had a strong Sequential volume growth in the quarter. But first is the guide. The defining factor was we had, you know, prices were down as they said in the opening comments. But we had better than expected pricing that drove the margin improvement versus expectations. You know, I'll add too that we had good cost performance.
Mark Murphy: Yeah, Vivek, it's mark.
Speaker Change: So in the third quarter I think maybe start list with what happened in gross margin in the third quarter, we had a.
Speaker Change: Yes, we had a strong.
Speaker Change: Sequential volume growth in the quarter, but versus the guide.
Speaker Change: The defining factor was we had prices were down as I said in the opening comments, but we had better than expected.
Speaker Change: Pricing that drove.
Speaker Change: The margin improvement versus expectations.
Speaker Change: Yeah, I'll add to that we had good cost performance.
Speaker Change: And.
Mark Murphy: and all, but but certainly the price was was better than we had expected. Now, that carries on into, you know, rebaselining on the fourth quarter. So, you know, we provided, you know, an indication of the fourth quarter before when the market was in transition. And we said at that time that the inventory outlook that we would, you know, was improving when it had weakened a bit late last year. And, you know, we had intended to work to inflect price. And, you know, and as you know, a few weeks later, the situation with that Liberation Day tariffs, the environment got got a bit more challenging.
Speaker Change: And all but.
Speaker Change: But certainly the price was was better than we had expected.
Speaker Change: Now that carries on into.
Speaker Change: Rebase lining on the fourth quarter so.
Speaker Change: Yes, we provided.
Speaker Change: An indication of the fourth quarter before when the market was in transition and we said at that time that that the inventory outlook.
Speaker Change: That we would.
Speaker Change: It was improving.
Speaker Change: When it weakened a bit late last year.
Speaker Change: And.
Speaker Change: Yes, we had intended to work to inflect price.
Speaker Change: And.
Speaker Change: And as you know.
Speaker Change: A few weeks later the situation with that.
Speaker Change: Liberation day.
Speaker Change: Tariffs the environment got got a bit more.
Mark Murphy: Yeah, the condition of the market is, is, you know, better than expected since then. And it's strengthened through the quarter, you saw that outperformance. and then we've executed well. And so what you see here from this re-baseline of the business, you see us add to that through favorable mix Q3 to Q4. That's more DRAM growth than NAND. So you have favorable mix there and then more data center than consumer-oriented mix which was weighing down the margins in the third quarter. So. Yeah, so it's again, it's a, it's a, you know, it's a it's a continued good market backdrop, we're going to continue to focus on pricing.
Speaker Change: Challenging.
Speaker Change: Yes, the condition of the market is.
Speaker Change: Better than expected since then and it's strengthened through the quarter you saw that outperformance.
Speaker Change: And then we've executed well.
Speaker Change: And so what you see here from this re baseline of the business.
Speaker Change: You see yes.
Speaker Change: Add to that through favorable mix Q3 to Q4.
Speaker Change: Thats more DRAM growth in NAND. So you have favorable mix, there and then more data center.
Speaker Change: Then consumer oriented mix, which was weighing down the margins in the in the third quarter.
Speaker Change: So.
Speaker Change: Yes, so it's again, it's a it's a yes.
Speaker Change: It's a continued.
Speaker Change: Good market backdrop, we're going to continue to focus on pricing.
Mark Murphy: But third quarter to fourth quarter, we have favorable mix effects that is helping drive margins up to the current guide of 42%.
Speaker Change: But third quarter to fourth quarter, we have favorable mix effects.
Speaker Change: That is helping drive margins up to the current guide of 42%.
Mark Murphy: Anything beyond this, Mark? Any, you know, puts and takes as we look at the next several quarters? Is this kind of the new baseline? Or is it going to be entirely dependent on the direction of You know, we're not going to provide Q1 guidance. You know, we are positive on the trajectory of the business. The market environment does remain constructive, particularly in DRAM versus NAND. You know, again, we're focused on pricing and making sure to put our bits in the right places. You know, as we said in the prepared remarks, our inventories are very tight.
Speaker Change: And anything beyond this mark any.
Speaker Change: Puts and takes as we look at the next several quarters does this kind of a new baseline or is it going to be entirely dependent on that.
Speaker Change: Sure.
Speaker Change: Pricing.
Speaker Change: Yes.
Speaker Change: Not going to provide Q1 guidance.
Speaker Change: We are positive on the trajectory of the business the market environment does remain constructive, particularly.
Speaker Change: In DRAM versus NAND.
Speaker Change: Yes, again, we're focused on pricing and.
Speaker Change: Making sure to put our bets in the right places.
Speaker Change: As we said in the prepared remarks, our inventories are very tight.
Mark Murphy: Particularly on leading edge, and then now even pockets of, you know, some of the legacy and DRAM. So, you know, we're going to have, you know, some bit constraints going into first quarter. But, you know, we're going to mix to DRAM, you know, higher value DRAM and higher value NAND products. And so we think gross margins can be up. Thank you.
Speaker Change: Particularly on leading edge and then now even pockets of.
Speaker Change: Some of the legacy in DRAM.
Speaker Change: So.
Speaker Change: We're going to have.
Speaker Change: Yes.
Speaker Change: Some bet constraints going into end of first quarter.
Speaker Change: But we're going to mix to DRAM.
Speaker Change: Higher value DRAM and to higher value NAND products.
Speaker Change: And so we think gross margins can be up.
Speaker Change: Thank you.
CJ Muse: And our next question comes from the line of CJ Muse from Cantor Fitzgerald. Your question, please. Yeah, good afternoon. Thank you for taking the question. I was hoping to revisit your comments on HBM. So, you know, you're talking 23-24% market share. And it sounds like you're now calling not exiting the year, but sometime in the second half. So that's coming in better.
Speaker Change: Thank you and our next question comes from the line of C. J Muse from Cantor Fitzgerald. Your question. Please.
Speaker Change: Yes, good afternoon, and thank you for taking the question I was hoping to revisit your comments on HBM. So youre talking 23, 24% market share and it sounds like you're now calling not exiting the year, but sometime in the second half so that's coming in better and so I guess first question is should we be.
Sanjay Mehrotra: And so I guess, you know, first question is, should we be thinking that that number is kind of a 2-2-2-3, depending, I guess, on seasonality of the $35 billion number? And then perhaps more importantly, as you think about HBM growth in calendar 26, how should we be thinking about the contributions to that growth, both from BITS as well as higher ASPs as you go to next generation products? Thanks so much.
Speaker Change: Be thinking that that number is kind of a two to three depending I guess on seasonality of the $35 billion number and then perhaps more importantly, as you think about <unk> growth in calendar 2006, how should we be thinking about the contributions to that growth both from <unk> as well as higher.
Speaker Change: Asps as you go to next generation products. Thanks, so much.
Sanjay Mehrotra: Vijay, I didn't quite understand the question around 2223, what exactly did you say there? Just trying to understand how you talked about getting to your DRAM market share, which I think you said 23, 24 percent for the HBM market. And your previous comments were exiting the year. Now you're saying sometime in the second half. So trying to get an idea of kind of what that revenue number looks like. You know, we are already at, you know, if you look at our performance, you know, based on FQ3, you know, we are already at more than 6 billion run rate here, you know, with our HBM.
Speaker Change: P J I didn't quite understand the question around two to three what exactly did you say there.
Speaker Change: Just trying to understand.
Speaker Change: You talked about getting to your DRAM market share, which I think you said $23 24%.
Speaker Change: For the HPA market in your previous comments, we're exiting the year now youre, saying sometime in the second half so trying to get an idea of kind of what that revenue number looks like.
Speaker Change: We had already at.
Speaker Change: If you look at our performance.
Speaker Change: Based on Q3.
Speaker Change: <unk> added more than $6 billion run rate here with of HBM, and certainly continuing to ramp up the HTML fluids shifting production.
Sanjay Mehrotra: And certainly continuing to ramp up our HBM output, shifting production to 12 high HBM as well. So, yes, it could be that, you know, compared to what we said before, in terms of toward the end of the calendar year, we expect to get to our HBM share in line with our DNAM share. So, versus that, it could be that we do end up getting to our industry share for – in line with industry share for HBM share earlier than that. So, it could be. And that's really absolutely based on our very, very strong execution. And strong execution in terms of output, in terms of yield ramp.
Speaker Change: Production to 12 high HBM as well so yes, it could be that compared to what we said before in terms of.
Speaker Change: Towards the end of the <unk>.
Speaker Change: Calendar year, we expect to get to HBM share in line with R&D and DRAM sure. So first is that it could be that if you do end up getting into our <unk>.
Speaker Change: Industry share fully in line with industry share for the HBM sure earlier than that so it could be and Thats really absolutely based on a very very strong execution.
Speaker Change: And.
Speaker Change: Strong execution in terms of output in terms of unit ramp IV noted that our 12 higher yield ramp is actually growing faster.
Sanjay Mehrotra: We noted that our 12 high yield ramp is actually going faster than our 8 high yield ramp. Of course, with – built on all the learning that we have had, the team has done an excellent job with capacity ramp as well. All of that is contributing to our strong performance on HBM. So, I'm extremely pleased with where we are.
Speaker Change: Then a tie in ramp of course built on all of the learning that we've had.
Speaker Change: The team has done an excellent job with capacity ramp as well all of that is contributing to our strong performance.
Speaker Change: On <unk> I'm extremely pleased with where we are and extremely pleased with not just execution today and our ability to ramp up the yield.
Sanjay Mehrotra: And extremely pleased with not just execution today and our ability to ramp up yield and Thank you. Thank you.
Speaker Change: Capacity successfully and build and the process just with the customers, but very pleased with the roadmap ahead for us for the <unk> as well. So I mean these are things that will obviously play an important role in calendar year 2006, as we work closely with the customers to understand Glu overall mix.
Speaker Change: Requirements for 2026.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yes.
Thomas O'malley: And our next question comes from the line of Thomas O'Malley from Barclays. Your question, please. Hey guys, thanks for taking the questions. Two here. So my first on the on the HVM side, you're obviously reaching your share target a little bit earlier. Going into next year, are you guys ready to talk about what you think that your normalized share will be? Obviously, there's difficulties with some of your competitors getting qualified. If that continues into next year, do you guys have a view of if you're able to increase capacity? And if you are, what that share may look like?
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Thomas O'malley from Barclays. Your question. Please.
Thomas O'malley: Hey, guys. Thanks for taking my questions. Two here. So my first on the on the HCM side, Youre, obviously, reaching your share target a little bit earlier going into next year are you guys ready to talk about what you think that your normalized share will be obviously, there's difficulties with some of your competitors getting qualified if that continues into next year do you guys have a view of if you're able to it.
Thomas O'malley: Increased capacity and if you are what that May look like and then two on the NAND side, where does utilization stand today, and obviously youre going through some transitions right now.
Sanjay Mehrotra: And then two, on the NAND side, where does utilization stand today?
Sanjay Mehrotra: And obviously, you're going through some bit transitions right now, in terminally, which has allowed you to So as I said, we are very pleased that we are executing well, and with what we told you several quarters ago in terms of our share objectives with HBM, that we are going to be able to achieve that goal for this year in second half of 26. Now our HBM is really at scale. It has, you know, healthy shares, and we are successfully delivering. So, you know, going forward, of course, this becomes like part of our overall product portfolio.
Thomas O'malley: Internally, which has allowed you to kind of.
Thomas O'malley: Keeping things offline.
Thomas O'malley: As you move into next year, what is your plan for utilization is that going to be market dependent or at some point do you need to start bringing on utilization just from the fact that there is a gross margin headwind. Thank you.
Thomas O'malley: So as I said, we are very pleased that have yet executing well and with what we told you several quarters ago in terms of our shared objectives with HBM that we are going to be able to achieve.
Thomas O'malley: Our goal for this year and second half of 'twenty safe now to HBM is really at scale. It has.
Thomas O'malley: Healthy shares and we added successfully delivering.
Thomas O'malley: So going forward of course, this becomes like part of our overall product portfolio and just like we manage the rest of the portfolio with respect to total lie on Ottawa and profitability and of course, HBM really positions us very well with respect to our profitability objectives.
Sanjay Mehrotra: And just like we manage the rest of the portfolio with respect to total eye on ROI and profitability, and, of course, HBM really positions us very well with respect to our profitability objectives, we will, of course, continue to manage the mix of our products in the portfolio, including that of HBM, including, you know, the share that sometimes can move around in different parts of the end market segments that we address. So I think, you know, that's how you have to look at it. Overall, really very pleased with our HBM products, 12 high as well as HBM 4, built with our well-proven One Beta technology, which also gives us cost-effective benefits, and, of course, the packaging technology well established.
Thomas O'malley: We will of course continue to manage the mix of our products in the portfolio, including that of HBM, including the share that sometimes can move around in different parts of the end market segments that we address.
Thomas O'malley: So I think that's how you have to look at it overall.
Thomas O'malley: It really very pleased with odd HBM products.
Thomas O'malley: <unk> high as well as HBM four beltway about well proven <unk> technology, which also gives us cost effective benefits and of course, the packaging technology, well established and company of course has been investing in and expanding.
Sanjay Mehrotra: And company, of course, has been investing in expanding our HBM backend capacity as well. You know, we have talked about investments in Singapore. bringing assembly and packaging capacity there in line, starting production, targeting that for 2027 time frame. And I'll tell you that HBM, given that it uses our well-proven One Beta technology, is really fungible capacity with the rest of the portfolio as well. So this gives us, you know, plenty of flexibility in terms of managing our business and extremely focused on really meeting customers' requirements and continuing to deliver and enhance our product capabilities to meet their growing requirements.
Thomas O'malley: Our HBM backend kipp.
Thomas O'malley: Capacity as well.
Thomas O'malley: If you have talked about investments in Singapore.
Thomas O'malley: Assembly and packaging capacity there in line starting production in targeting that for 2027 timeframe and I will tell you that the HBM given that it uses our well proven one beta technology.
Thomas O'malley: Really fungible capacity with the rest of the portfolio as well. So this gives us.
Thomas O'malley: Plenty of flexibility in terms of managing.
Thomas O'malley: Our business and extremely focused on really meeting customers' requirements and continuing to deliver and enhance.
Thomas O'malley: Our product capabilities to meet their growing requirements.
Sanjay Mehrotra: And your second question around NAND in terms of utilizations. So we have said before that, you know, toward the end of fiscal 25, our NAND overall capacity would be down versus end of fiscal 24 by about 10%. And that's a structural reduction in capacity. And of course, as we have discussed before, that structural reduction was implemented to achieve capital-efficient next node transition for us, like G9 node transition. So as that capacity has come down, of course, our underutilization has come down as well. Although part of NAND continues to remain underutilized, I must note here that, of course, leading edge of NAND is fully utilized.
Thomas O'malley: And your second question around NAND in terms of Utilizations. So we have said before that.
Thomas O'malley: Towards the end of fiscal 'twenty, five or NAND overall capacity.
Thomas O'malley: Would be down versus end of fiscal 'twenty, four by about 10% and Thats a structural reduction in capacity and of course as we have discussed before that structural reduction was implemented to achieve capital efficient.
Thomas O'malley:
Thomas O'malley: Next node transition for us like <unk> nine nor to transition so as that capacity has come down of course out under utilization has come down as well, although part of NAND continues to remain under utilized I must note here that of course, leading edge.
Thomas O'malley: Of NAND is fully utilized.
Thomas O'malley: Okay.
Thomas O'malley: Thank you Sanjay.
Unknown Attendee: Thank you.
Harlan Sur: And our next question comes from the line of Harlan Sur from J.P. Morgan. Your question, please. Hey, good afternoon. Thanks for taking my question.
Speaker Change: Thank you and our next question comes from the line of Heartland sur from Jpmorgan. Your question. Please.
Speaker Change: Hey, good afternoon. Thanks for taking my question, if I rewind back one year ago. During our June earnings call. You guys did pay back then that you were sold out on your HCM supply in calendar 'twenty five in that <unk>.
Harlan Sur: And if I rewind back one year ago, doing your June earnings call, you guys did say back then that you were sold out on your HBM supply through calendar 25. And that majority of that committed supply was locked in from a pricing perspective.
Thomas O'malley: <unk> of that committed supply was locked in from a pricing perspective.
Sanjay Mehrotra: One year later, you know, where are you on your negotiations for your calendar 26 HBM supply and pricing discussions, the team supply outlook for next year fully committed to or, or maybe a better way to frame it, right? Because I know that the HBM 3E and HBM 412 high qualification cycles might be taking a bit longer, but maybe the other way to frame it is if you look at your customers calendar 26 forecasted demand for HBM, is it exceeding your forecasted supply capability? You know, with respect to HBM in 2025, yes, very pleased that what we told you back a year ago, we are continuing to deliver on that, as I said earlier.
Speaker Change: One year later, where are you on your negotiations for calendar 'twenty six HTM supply.
Speaker Change: On pricing discussion the team supply outlook for next year are fully committed to our.
Thomas O'malley: Or maybe a better way to frame that right because I know that the <unk> and HTM <unk> qualification cycles might be taking a bit longer.
Thomas O'malley: Maybe another way to saying it is if you look at your customers' calendar 2006 forecasted demand for HCM is it exceeding your forecasted supply capability.
Thomas O'malley: With respect to HBM in 2025, yes, very pleased that what we told you back a year ago. We have continued to deliver on that as I said earlier and yes. Our HBM is sold out for 2025.
Sanjay Mehrotra: And yes, our HBM is sold out for 2025. And as I mentioned earlier, we are working closely with our customers as their platforms, AI-accelerated platforms, you know, both with GPUs, as well as with ASICs, are continuing to evolve and move fast. And, you know, they themselves are working on overall their supply chain requirements and product mix with respect to HBM 3E-12 High, as well as HBM 4. So we continue to work with the customers in those.
Thomas O'malley: And as I mentioned earlier, we are working closely with our customers as their platforms AI accelerator platforms.
Thomas O'malley: Both with Gpus as well as with ESA is continuing to evolve and move fast and they themselves are working on overall their supply chain requirements and product mix with respect to HBM three he drove high as well as HBM for so we continue to work with the customers in those and we are still.
Sanjay Mehrotra: And, you know, we are still in the middle of 2025 and for 2026. As I said earlier, we see, you know, with respect to bid-to-demand growth, strong trend in 2026, bid-to-demand growth for HBM, significantly exceeding D-RAM demand growth. And of course, we have a strong product roadmap and we are working on continuing. As we said, we sampled HBM 4, focused on getting these products qualified with the customers. And HBM 3E-12 High is already in volume productions and doing very well with our yield ramp there as well. So very much focused on addressing the 2026 needs for the customers and executing well and remaining extremely focused on our execution for 2026.
Thomas O'malley: In the middle of 'twenty, five and for 2026 as I said earlier, we see.
Thomas O'malley: With respect to bit to demand growth strong trend in 2026 bit demand growth for the HBM Cigna.
Thomas O'malley: Significantly exceeding DRAM demand growth and of course, we have a strong product roadmap and we are working on continuing as we said we sample the HBM floor focus on getting these products qualified with the customers and <unk>.
Thomas O'malley: <unk> <unk> drove high is already in volume production and doing very well with <unk> as well so very much focused on addressing the 26 needs for the customers and.
Thomas O'malley: Executing well and remain extremely focused on our execution for 2026.
Sanjay Mehrotra: Thanks Sanjay. Thank you.
Speaker Change: Thanks Sanjay.
Joseph Moore: And our next question comes from the line of Joseph Moore from Morgan Stanley. Your question, please. Thank you. Bye.
Speaker Change: Thank you and our next question comes from the line of Joseph Moore from Morgan Stanley. Your question. Please.
Joseph Moore: Okay. Thank you.
Mark Murphy: I wonder if you could talk in terms of your long-term CapEx plans and, you know, sort of 35% of revenue levels, is that kind of a reasonable guideline to think about for fiscal 26? Or are you thinking because of the opportunity here, you need to invest ahead of that? Thank you. Yeah, Joe, I mean, we have a generational tech transition opportunity in front of us that Micron is exceptionally well positioned for. And, you know, we've talked about inventory levels for some time now, getting leaner, especially, you know, being very tight on leading edge. And with the silicon requirements of HBM, and the trade ratio, you know, we need to build greenfield capacity.
Speaker Change: I Wonder if you could talk in terms of.
Speaker Change: Your long term Capex plans.
Speaker Change: Sort of.
Speaker Change: 35% of revenue levels is that kind of a reasonable guideline to think about for fiscal 'twenty six or our.
Speaker Change: Are you thinking because of the opportunity here you need to invest ahead of that thank you.
Speaker Change: Yes, Joe.
Speaker Change: We have a generational type transition.
Speaker Change: Opportunity in front of us at Micron is exceptionally well positioned for and we've.
Speaker Change: Talked about inventory levels for some time now.
Speaker Change: <unk> leaner, especially being very tight on leading edge and with the silicon requirements HBM and the trade ratio.
Speaker Change: Yes, we need to build greenfield capacity. So that's that's underway if you look at our Capex forecast.
Mark Murphy: So that's, that's underway. If if you look at our capex forecast, you know, we, we, you know, we, we had a little bit lower capex than we expected in the quarter at 2.7. But you'll see by the guide that we're going to see that capex increase in the fourth quarter. So we, we stuck with our approximately 14 billion number. I think as we go forward, you know, we're continuing to build out the greenfield capacity. And there'll be equipment installs, on, on, on the new nodes. You know, there's, there's grants involved in construction. So the, so the timing of that spend can be a bit lumpy.
Speaker Change: Yes, we are.
Speaker Change: Yes.
Speaker Change: We had a little bit lower capex than we expected in the quarter at $2 seven that youll see by the guide that we're going to see that.
Speaker Change: Capex increased in the fourth quarter. So we.
Speaker Change: Stuck with our approximately $14 billion number.
Speaker Change: As we go forward, we are continuing to build out that greenfield capacity in there.
Speaker Change: Equipment installs.
Speaker Change: On the new nodes.
Speaker Change: There is theres grants involved in construction so the.
Speaker Change: So the timing of that spend can be a bit lumpy, but.
Mark Murphy: But, but, you know, we, we anticipate generating free cash flow in the fourth quarter. And, you know, you, you will see, you know, we'll just continue to build out, build our capacity.
Speaker Change: But we anticipate generating free cash flow in the fourth quarter.
Speaker Change: Yes, you will see.
Speaker Change: Yeah.
Speaker Change: We'll just continue to build out.
Mark Murphy: I do want to note that, you know, we, we continue to make steps to improve the balance sheet further in the quarter. You know, we're down net debt now down to 3 billion. We, we further reduce maturities in the short end of the maturity schedule, taking out the $900 million, 27 notes and, and issuing 1.75 further out. And, you know, we continue to be in a great position with a balance sheet to, you know, invest in the business, make sure we maintain technology leadership, and then, you know, return capital to shareholders through dividend and opportunistic buyback.
Speaker Change: Capacity.
Speaker Change: I do want to note that.
Speaker Change: We continue that.
Speaker Change: Steps to improve the balance sheet further in the quarter.
Speaker Change: Yes.
Speaker Change: Down net net debt now down Thats $3 billion.
Speaker Change: We.
Speaker Change: We further reduced maturities in the short end of the maturity.
Speaker Change: Schedule taken out the $900 million 27 notes and issuing $1 75 further out and we continue to be in a great position.
Speaker Change: With a flexible balance sheet too.
Speaker Change: The best in the business.
Speaker Change: Make sure we maintain technology leadership and then.
Speaker Change: Returning capital to shareholders through dividends and opportunistic buyback.
Mark Murphy: Great, thank you. Great work. Thank you.
Speaker Change: Great. Thank you.
Krish Sankar: And our next question comes from the line of Krish Sankar from TD Cowen. Your question please. Hi, thanks for taking my question.
Speaker Change: Thank you and our next question comes from the line of Chris Tinker from TD Cowen Your question. Please.
Speaker Change: Yes, hi, thanks for taking my question.
Sanjay Mehrotra: I have two questions for Sanjay, or two-part question. One is, when you look into HBM4, given the double IO count and through silicon vias, what kind of trade ratio should we expect for HBM4? And also, when you look at, broadly speaking, is there a difference in HBM bits and margin profile between selling to GPU versus ASIC customers?
Speaker Change: Two questions for Sanjay two part question. One is when you look into <unk>, given the double low iron content through silicon via us what kind of trade ratio should we expect for H B Fuller.
Speaker Change: And also when you look at.
Speaker Change: Broadly speaking is there a difference in HBM bits in margin profile between selling to GPU versus ASIC customers. Thank you.
Sanjay Mehrotra: Thank you. With respect to HBM-4, its trade ratio is greater than 3. For HBM-3E, previously we have shared that trade ratio is approximately 3, and HBM-4 has a higher trade ratio than 3. It has a larger die size, and of course, as you noted, it has higher performance. We shared 60% higher performance, given the high bandwidth interface that this has, and HBM-4E will have a ratio that would be even greater. So, as we have shared with you in the past, that as we are going from HBM-3E to 4 to 4E, the trade ratio is going from about 3 towards 4 in that time frame.
Speaker Change: With respect to HCM for its traded issue is greater than three four <unk> previously we have shared the trade issue is approximately three <unk> four has a higher.
Trades issue than three it has a larger die size.
Speaker Change: And of course as you noted it has.
Speaker Change: The highest performance, we shared 60% higher performance given the high bandwidth interfaces.
Speaker Change: And.
Speaker Change: HBM Ford E will have an issue that would be even greater.
Speaker Change: As we have shared with you in the past that as we are going from <unk> to 4% to 40 <unk>. The trade issue from about three toward four in that timeframe. So of course.
Sanjay Mehrotra: So, of course, this puts – HBM trade ratio and the growth of HBM absolutely puts a pressure on the non-HBM supply in the industry as well. And with respect to your question on the margin difference for GPU versus ASIC, of course, HBM commands high value, whether it's in GPU accelerators or ASIC-based accelerators, and that value proposition is only growing. When you look ahead over the years, the content with the future generation GPUs or ASIC platforms that will be out there of HBM continues to – is expected to continue to increase as well. We have shared with you in the past that going from about 200 to 288 gigabytes in GPU accelerators today, as well as in the ASIC-based accelerators in that range, going to higher levels as we go from 8 high to 12 high capacity.
Speaker Change: This puts.
Speaker Change: <unk> payout ratio in this volatile for HCM absolutely puts.
Speaker Change: On the non <unk> supply in the industry as well.
Speaker Change: And with respect to your question on the margin difference for GPU versus the effect of.
Speaker Change: Of course, HBM commands higher value, whether it's in GPU accelerators, or Esa based accelerators and <unk>.
Speaker Change: That value proposition is only growing when you look ahead over the years the content with the future generation GPU as audit platforms that could be out there of HBM continues to.
Speaker Change: <unk> is expected to continue to increase as well.
Speaker Change: Shared with you in the past that going from about 200 to 288 gigabytes.
Speaker Change: And GPU accelerators today as well as the ASIC based accelerators in that range going to higher levels as we go from <unk> to 12 high.
Speaker Change: Capacity so we.
Sanjay Mehrotra: So, we don't – so, value proposition is strong, both for GPU accelerators as well as ASIC accelerators, and, of course, we don't get into the specifics or differentiating the two here.
Speaker Change: We don't so value proposition is strong both for GPU accelerators as well as FX.
Speaker Change: Accelerators and of course, we don't get into the specifics are differentiating the two here.
Sanjay Mehrotra: Thanks Sanjay.
Speaker Change: Thanks Sanjay.
Sanjay Mehrotra: Thank you.
Chris Caso: And our next question comes from the line of Chris Caso from Wolf Research. Your question, please. Yes, thank you. Just a clarification on one of the things you said in the repair remarks, you talked about, there may have been some tariff related pull ins by certain customers.
Speaker Change: Thank you and our next question comes from the line of Chris Caso from Wolfe Research. Your question. Please.
Speaker Change: Yes. Thank you just a clarification on one of the things you said in the prepared remarks, you talked about there may have been some tariff related pull ins by by certain customers.
Sanjay Mehrotra: You know, I think overall, your comments suggest that you, at least my interpretation is that you think that the customer inventory levels are getting a bit cleaned up here. Could you clarify the remarks a little bit, put it in context of what you expect that means for customer inventory levels? And you know, how that kind of affects your view? Of bit demand in the second? As we said, customer inventory levels have been healthy overall across our end markets. Some customers may have some level of tariff-related pull-ins. We think the impact of that is relatively modest here, and customers definitely continue to signal a constructive demand environment for the remainder of the calendar year.
Speaker Change: I think overall your comments suggest that you at least my interpretation is that you would think that the customer inventory levels are getting a bit cleaned up here could you clarify the remarks, a little bit put it in context of what you expect.
Speaker Change: That means for customer inventory levels, and how that kind of affect your view of bit demand in the second half.
Speaker Change: As we said customer inventory levels have been healthy overall across our end markets.
Speaker Change: Some customers.
Speaker Change: They have some level of tariff related Poland's we think the impact of that is relatively modest here and customers definitely continue to signal a constructive demand environment for the remainder of the calendar year and of course, the demand trends are driven bias champagne.
Sanjay Mehrotra: And of course, the demand trends are driven by strength in AI-driven data center demand, demand coming back in the automotive, industrial resumption of growth there, as well as distribution channels. And as we have discussed, smartphone and PCs, really, as AI penetration increases, the content and key stories there are intact for AI smartphones, as well as PC. We provided some details in our script there. So, we see a constructive demand environment, as our customers discussed with us. And again, the effect of the pull-in is relatively modest here.
Speaker Change: AI driven data center demand.
Speaker Change: Demand coming back in the automotive industrial and resumption of growth there as well as distribution channels and as we have discussed smartphone and Pcs.
Speaker Change: Really as penetration increases the content increase story, there intact for AI smartphones as well as <unk> provided some details in our script there.
Speaker Change: Or will we see a constructive demand environment as our customers.
Speaker Change: With us and again the effect of the pull in is relatively modest.
Sanjay Mehrotra: Our growth in Q3, as well as our exceptional record for FQ4 guidance is really driven by Micron's strong execution in the growing market for AI. Thank you.
Speaker Change: Our growth.
Speaker Change: In Q3 as well as ours.
Speaker Change: Yeah.
Speaker Change: Exceptional.
Speaker Change: Record afford FQ4 guidance.
Speaker Change: It's really driven by micron's strong execution and the growing market for AI.
Speaker Change: Okay. Thank you.
Sanjay Mehrotra: And our final question for today comes from the line of Vijay Rakesh from Mizzou. Your question please. Hi Sanjay and Mark, just a quick question on the HBM4, just wondering how the qualification is progressing and if you continue to see that similar power performance leadership that you guys have had on HBM3E, do you see that continuing on the HBM4 side as well? Thanks. So we have, you know, provided early units to our customers, we have sampled the products to our multiple customers with HBM4, really very pleased with the execution and all the specs that we see our HBM4 delivering, as I mentioned, not only performance, but we plan to continue to focus on that power, strong power position that we, which is critically important in AI applications that we have established with our HBM portfolio as well.
Speaker Change: Thank you and our final question for today comes from the line of Vijay Rakesh from Mizuho. Your question. Please.
Mark Murphy: Yeah, Hi, it's Andy and Mark just a quick question on the <unk>.
Paul: Paul I was just wondering how the qualification is progressing.
Paul: I see.
Paul: You're going to see that similar to our performance leadership that you.
Speaker Change: Guys, who had on <unk> do you see that continuing on the core side as well.
Paul: <unk>.
Paul: So we have.
Paul: Provided early units to our customers who have sampled the products.
Paul: Two are multiple customers with HP and for really very pleased with the execution and.
Paul: All of the specs that we see I'll, let HBM for delivering as I mentioned, not only performance, but we plan to continue to focus on that power our strong power position that which is critically important in AI applications that we have established with our <unk> portfolio as well so of course the qualifications of cuts.
Sanjay Mehrotra: So of course, the qualifications, the customer qualifications are ahead of us, and we will be ready to meet customers' demand in 2026 timeframe. So HBM in terms of volume ramp is a 2026 product, meeting the timeline requirements of customers with their next generation platform that will be implementing the HBM4 products.
Speaker Change: Qualifications are ahead of us and we will be ready to meet customers' demand in 2026 timeframe. So HBM in terms of volume ramp is at 2026 Prada.
Speaker Change: Product meeting.
Speaker Change: The timeline requirements of customers with their next generation platforms that we'll be implementing the HBM four products.
Sanjay Mehrotra: I want to again remind you that HBM4 uses our well-proven, cost-effective One Beta technology node. And of course, it has internal advanced CMOS logic die, internally developed and internally manufactured advanced CMOS logic die, which positions us well as well. And all of our experience of HBM3E ramp up, we're going from HBM3E8 high to HBM3E12 high, we told you that that ramp is going extremely well with our yields ahead of our plans, output ahead of our plans, as well as...
Speaker Change: Again to remind you that HBM floor users are well proven cost effective one beta technology node.
Speaker Change: Of course, it has internal advanced.
Speaker Change: Moss logic dye internally developed and internally manufactured advanced Cmos logic die.
Speaker Change: Which positions us well as well and all of our experience of <unk> ramp up and we are going from <unk> to <unk> going from Saudi going from HB, HB and three a AA tie to HBM CE 12 high we told you that that ramp is growing.
Speaker Change: <unk> going extremely well without yields ahead of our planned output ahead of our plans as well as.
Speaker Change: Yields faster than the ramp that we are experiencing a tie all of that gives us confidence and positions us well for the <unk> ramp as well so we feel very very good about our.
Speaker Change: Overall.
Speaker Change: Capabilities to address the HB in four markets in 2026.
Sanjay Mehrotra: Got it. And on the SSD side, just quickly, with your focus on AI servers, are you seeing an actuated pull-through on the AI server side for SSDs as well? Thanks. So, you know, we had mentioned on the data center side in SSDs in late Q4 of calendar 24, as well as early part of calendar 25, you know, there had been some inventory digestion for the data center SSDs, given that prior to this period that I just mentioned, there was a very strong demand growth for SSDs. And as we look ahead, we think second half of calendar 25 will be better than the first half of 24.
Speaker Change: Got it.
Speaker Change: <unk> just quickly.
Speaker Change: Focus on AI sellers are you seeing in that.
Speaker Change: <unk> pull through on the Isos faithful ssds as well thanks.
Speaker Change: So.
Speaker Change: We had mentioned on the datacenter side in Ssds in late Q4 of <unk>.
Speaker Change: Calendar 'twenty four as well as.
Speaker Change: Early part of calendar 'twenty five there had been some inventory digestion for the data center Ssds given that prior to this period that I. Just mentioned there was a very strong demand growth for Suvs and.
Speaker Change: As we look ahead, we think second half of calendar 'twenty five we'll be there.
Speaker Change: Better than first half of 2004, I mean first half of 2005, which was impacted by some of that inventory digestion as well and our data center ssds are well positioned with.
Sanjay Mehrotra: I mean, first half of 25, which was impacted by some of that inventory digestion as well. And our data center SSDs are well positioned with some of these recently announced accelerator platforms as well. And that, of course, will be contributing toward the data center SSD future growth as well. We are very pleased with our record data center SSD share as achieved in CQ1 for the third party reports. And we are now a clear number two brand in terms of market share at the end of CQ1. So, we plan to continue to leverage our SSD portfolio to continue to focus on shifting the mix of the products toward higher value parts of the NAND market.
Speaker Change: Some of these.
Speaker Change: Recently announced accelerator platforms as well and that of course will be contributing towards the data center. This is the future.
Speaker Change: Both as well as we are.
Speaker Change: We're very pleased with our record datacenter SSD share as achieved in CQ1 for the third party reports and we are now clear number two brand.
Speaker Change: In terms of market share.
Speaker Change: End of <unk>, one so we plan to continue to leverage.
Speaker Change: Our.
Speaker Change: As the portfolio to continue to focus on shifting the mix of the products the word hybrid higher value parts of the NAND market.
Sanjay Mehrotra: Great, thank you. Thank you.
Speaker Change: Great. Thank you.
Unknown Attendee: This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.
Speaker Change: Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation you may now disconnect. Good day.
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Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.