Q3 2025 Micron Technology Inc Post Earnings Analyst Call

June 25, 2025

Mark Murphy: I would add that, you know, we stand at record levels of cash and record levels of liquidity for the company. We're at $15.7 billion of liquidity, including our untapped facility. So, you know, we're in a great position to first continue to invest in the priorities of the business, you know, maintaining our technology leadership, investing in needed capacity in DRAM to serve HBM and other high-value, high-return markets.

Mark Murphy: And then do, you know, return capital shareholders through, you know, our routine dividend, which we hope to grow over time, and then opportunistic repurchase. So, you know, I think, I think we're, we're, the balance sheet is.

Aaron Rakers: And our next question comes from the line of Aaron Rakers from Wells Fargo. Your question, please. Yeah, thanks for taking the question and doing the call. Two, if I can as well. I think, Mark, first of all, I appreciate the gross margin guidance. I think last quarter, we talked a little bit about startup costs and the potential for, you know, underutilization flowing through inventory in the NAND flash business. Obviously, demand dynamics have improved.

Unknown Attendee: I'm just curious, how should we think about those inputs of gross margin over the next couple quarters?

Unknown Attendee: And then I'll just ask my second question right out of the gate. The LPDDR business in the data center side, you know, we've talked for several quarters about you being predominantly the sole provider of those solutions into some of the AI silicon. I guess, how do we think about that business as it, you know, progresses to a billion dollars plus of quarterly revenue? I think you've alluded to in the past as far as, you know, diversity of customer base there. Has that expanded? Do you see a broadening market for that solution in data center?

Mark Murphy: Thank you. Yeah, I'll start Aaron. So, you know, as it relates to under load, you know, utilization related period costs, as you know, we brought those up, I think it was on the December call. And over the past six months, we sort of worked You know, last last call, the March call, we talked about how the structural capacity had come down and that we weren't incurring those period costs, they would end up being absorbed in inventories and pass through. And that's what's happening. We have structurally lower capacity in NAN. You know, the, you know, and those costs all now just just pass through on inventory.

Mark Murphy: The NAND volumes were very strong, so we're benefiting from some more loading there. But still, we're very careful about capacity in that market because that part of the business is the market environment is challenging.

Mark Murphy: So again, we talk about low CapEx levels, careful about node transition, where our bits are going, and premium products in that market, and watching inventories carefully. Inventories improved in NAND actually in the quarter, but they remain less healthy than DRAM, which DRAM we actually expect to be below target by the end of the year.

Mark Murphy: Um, as it relates to, yeah, as it relates to the startup costs that I mentioned last quarter, we do see those, you know, you know, beginning to increase and very modestly now, but, you know, through 26, we'll see some increase related to, as you know, we're building Idaho one, and we'll begin to see those, you know, in 20, you know, beginning to increase in 26. We also see some FX related costs. I mean, everybody knows that the dollar's been weakening. And so we're seeing a bit more of that. But, you know, since we made those comments, the revenue outlook that we have is much higher.

Mark Murphy: So those effects are on the basis point less than what we talked about on the last call. Now, I think, you know, that that'll have me reinforce what's important is, are we growing? And, and, you know, we are positioning our bits in the in the right place. And we're in a market, we serve a market that's growing. And we're getting leverage on on on those costs. And then our price performance is critical. So we've done a great job of, of pricing in this market that's hurting becoming, you know, more constructive.

Mark Murphy: And which is why we have a, you know, a strong guide in the fourth quarter, you know, a 42, and then we feel positive about the trajectory of the business.

Sumit Sadana: In terms of your question about LPDDR in the data center, yeah, we continue to be very excited about our sole source position in that market. It's become quite a large market, and of course, pioneered by one large company in the data center. Of course, as you know, the power consumption in the data center continues to be an important driver of decisions and designs and architectural choices by our customers, and overall availability of power is an important driver of many decisions, including location of these data centers. So certainly the interest in more broadly deploying LPDDRAM in the data center amongst customers of scale continues to be high, and we do expect, based on our interaction with customers as the pioneer of LPDDRAM in the data center in the world, we have multiple interactions going on with customers of different types and scale, and we do expect that LPDDRAM will grow in its penetration in the data center over time, and we are very excited by our position, and we'll be able to leverage that position as that growth unfolds.

Record levels of cash and record levels of liquidity for the company were at $15 7 billion of liquidity, including our untapped facility.

So so you know we're in we're in a great position to first.

Continue to invest in the priorities of the business.

You know maintaining our technology leadership.

Investing in needed capacity in DRAM.

To serve HBM and other high value high return markets.

And then do.

Yeah.

<unk> capital to shareholders through our routine dividend, which we hope to grow over time, and then opportunistic repurchase.

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

So.

You know I think I think we're worth the balance sheet is.

Brian Chin: Your question, please. Good afternoon. Thanks for letting us ask a few questions. I know you indicated on the call and the slides that DDR4 will be a low single digit percent revenue exposure in fiscal second half of twenty five. But is there a way to quantify how much of the 300 basis point sequential higher gross margin guide for fiscal 4Q maybe is attributed to DDR4 pricing? That is a question that we're getting sort of a post call here.

In a great spot now and we have a lot of flexibility and on a covenant basis I would add that we're actually.

Yeah basically.

No leverage on a covenant basis.

Yes.

Thank you.

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

Aaron Rakers: Yes, thanks for taking the question and doing the call two if I can as well I think mark first of all I. Appreciate the gross margin guidance I think last quarter, we talked a little bit about the startup costs and the potential for.

Mark Murphy: Yeah, I would, I'll take that. Yeah, the the D4 pricing is is a, you know, that that market has gotten tight as, as was talked about in our prepared remark. You know, you know, customers are beginning to see increasing shortages for D4. As you mentioned, you know, it's it's a smaller part of our business and on a volume basis getting smaller. You know, the D4 pricing is a positive Q3 results and Q4 guide, but it's, you know, it's one of the many factors contributing to the positive results. It's not a driver of that margin expansion.

Speaker Change: Underutilization flowing through inventory on the NAND flash business.

Speaker Change: Obviously demand dynamics have improved I'm just curious how should we think about both inputs of gross margin over the next couple of quarters and then I'll just ask my second question right out of the gate.

Speaker Change: The LP DDR business in the datacenter side.

Speaker Change: We've talked for several quarters about you being predominantly the sole provider.

Speaker Change: Of those solutions into some of the AI silicon.

Speaker Change: I guess, how do we think about that business as it progresses to $1 billion plus of quarterly revenue I think you've alluded to in the past as far as <unk>.

Speaker Change: Diversity of customer base. There has that expanded do you see a broadening market for that solution and data center. Thank you.

Unknown Attendee: So I would leave it at that. Yeah, got it. If that's sort of, you know, I know, previously, it's a 10% revenue, could be sort of DDR4. And now it's lower, maybe part of that's because of strengthening another DDR5 and other areas of mix. I guess it's pretty consistent with where your production is, and is going and as well as your finished good inventory in terms of DDR4 being at sort of like a sub 10% kind of exposure.

Speaker Change: Yeah I'll start erinn.

Speaker Change: So.

Speaker Change: As it relates to.

Speaker Change: Under load utilization related <unk> costs is as we brought those up I think it was on the December call.

Speaker Change: Over the past six months, who sort of worked.

Speaker Change: Last last call. The March call, we talked about how the structural capacity had come down and that we werent.

Speaker Change: Incurring those carry costs, they would end up being absorbed and inventories and pass through and that's what's happening we have structurally lower capacity in NAND.

Unknown Attendee: Yeah, just just to clarify, right? I mean, our earlier comment about the 10% of revenue was a combination of DDR4 and LPDDR4. and the comments that Mark made and what we provided in the prepared remarks as well relate to DDR4 only which is a low single-digit percent of our revenue so LPDDR4 and DDR4 is together around 10 percent of revenue DDR4 alone is low single-digit percent of revenue and a lot of the things that you see on the spot market in terms of pricing relate to DDR4 only and that part is you know a very small part of our overall Yeah, maybe just one quick follow up the, you know, it sounds like NICS, you know, less consumer orientation in terms of the bid shipments in fiscal 4Q.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: And those costs all now just just pass through on inventories.

Speaker Change: Yeah the.

Speaker Change: The NAND volumes were.

Speaker Change: Very strong so we're benefiting from some more loading there, but but but still we're very.

Speaker Change: Very careful about.

Speaker Change: Our capacity in that market because that that part of the business as the market environment is challenging. So again, we talk about low capex levels careful about node transition.

Speaker Change: Where our bets are going in.

Speaker Change: Premium products in that market and watching inventories carefully inventories improved in NAND actually in.

Speaker Change: The quarter, but they remain.

Speaker Change: Less healthy than DRAM, which.

Unknown Attendee: Is there any reason not to, I know you want to guide fiscal 1Q, November gross margins per se, but it would seem, you know, seasonal and kind of reasonableness that that NICS should only continue to get less consumer oriented into fiscal 1Q. So that any reason not to think that wouldn't be a bit of a tailwind on top of sort of shipping more 12 high HBM 3E into the fiscal first quarter in terms of gross margins?

Speaker Change: DRAM, we actually expect to be below target.

Speaker Change: The end of the year.

Speaker Change: As it relates to as it relates to the startup costs that I mentioned last quarter.

Speaker Change: We do see those.

Speaker Change: Beginning.

Speaker Change: Beginning to increase and very modestly now, but through 26, we will see some increase related to.

Speaker Change: As you know we're building, Idaho, one and we'll begin to see those.

Mark Murphy: Yeah, Brian, we didn't guide, we're not going to guide first quarter. But to your point in the fourth quarter, we do see, you know, two forms of favorable mix one, you know, at a high level, one is just more DRAM growth, relative to NAND. And so mixing more DRAM, and then and then more data center, relative to consumer. So you've got, you know, those positive mix effects. And then to your point on, you know, what's the trajectory into, into the November quarter, you know, the market, you know, we've talked about our inventories are very lean, you know, we're bit constrained, as we look out to that quarter.

Speaker Change: In 2000.

Speaker Change: Beginning to increase in 2006.

Speaker Change: Also see some FX related costs I mean, everybody knows that the dollar has been weakening and so we're seeing a bit more of that.

Speaker Change: But.

Speaker Change: Since we made those comments so revenue outlook that we have is much higher so those effects are on a basis point less than what we talked about on the last call.

Speaker Change: Now I think that that will have me reinforce what's important is.

Speaker Change: Are we growing and we are positioning our bits in the in the right place.

Speaker Change: And we're here to serve a market that's growing.

Speaker Change: And we're getting leverage on.

Speaker Change: On those costs and then our price performance is critical so we've done a great job of.

Mark Murphy: So we're focused on best pricing decisions. And then, you know, we're, we're, you know, continuing to work for a favorable mix. So that's why on this call, earlier, we said that we can expand gross margins. and November Corp, we believe.

Speaker Change: Pricing in this market thats, turning becoming more constructive and which is why we have a.

Speaker Change: A strong guide in the fourth quarter.

Speaker Change: A 42 and then.

Speaker Change: We feel positive.

Speaker Change: About the trajectory of the business beyond that.

Speaker Change: And in terms of your question about LP.

Krish Sankar: Thank you, and our next question. and the line of Krish Sankar. from TD Coward. Your question, please. Hey, guys, this is Eddie for Krish. Congrats on the strong results. If we go back to June of last year, you guys did give us some color about 2025 demands for HBM. I think you mentioned like a multiple billion dollar opportunity and you gave some color about the pricing, that pricing was being negotiated. But this time you guys chose not to. I wonder, like, are there any specific reasons? Like, are lead times different for HBM? Or is customer behavior different?

Speaker Change: We are in the data center, we continue to be very excited about our sole source position in that market it's become.

Speaker Change: Quite a large market.

Speaker Change: And of course pioneered by one large company.

Speaker Change: The data center of course, as you know the power consumption in the data center continues to be an important driver of decisions and designs and architectural choices.

Speaker Change: All of our customers.

Speaker Change: And overall availability of power is.

Speaker Change: An important.

Speaker Change: Driver of many decisions including location.

Speaker Change: These data centers, so certainly the interest and more broadly deploying LTE DRAM in the data center amongst customers of scale continues to be high and we do expect based on our interaction with customers as the pioneer of.

Krish Sankar: Or the competitive environment? Like, any color would be great. And on that note, I wonder, like, when you guys are expecting to hear from your customer about 2026 demands?

Unknown Attendee: That's it for me.

Sumit Sadana: Thank you. Yeah, so in terms of 2026 HBM, we do expect that HBM bit growth in 26 over 2025 calendar year will be significantly faster than the overall DRAM bit growth. So HBM will continue to outrun the DRAM bit growth.

Speaker Change: LP DRAM in the datacenter in the world.

Speaker Change: We have multiple interactions going on with customers of different types and scale and we do expect that <unk> will grow.

Speaker Change: And its penetration in the data center over time, and we are very excited by our position and be able to leverage that position and that growth.

Sumit Sadana: Now, when it comes to the actual discussions with customers, compared to this time last year, of course, we provided you a lot of details about 2025 expectations and a lot of updates on color every quarter on, you know, what kind of milestones we were reaching on HBM and what kind of capacity ramp and yield improvements and percentage growth rates on quarters. And billion dollar quarter 50% growth after that in FQ3 from that billion dollar quarter in FQ2, etc. billion plus quarter in FQ2. So we have provided you a lot of these data points over the last several quarters because we were still in the process of ramping our capacity and ramping our revenue and ramping our scale in HBM.

Speaker Change: Holds.

Speaker Change: Thank you.

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

Ian Chin: Ian Chin from Stifel. Your question. Please.

Speaker Change: Hi, good afternoon, thanks for letting us ask a few questions.

Speaker Change: I know you indicated on the call and the slides.

Speaker Change: <unk> will be a low single digit percent revenue exposure in fiscal second half of 'twenty five.

Speaker Change: Way to quantify how much of the 300 basis point sequential higher gross margin guide for fiscal <unk>, maybe is attributed to DDR for pricing.

Speaker Change: <unk> that we're getting.

Speaker Change: Sort of a post call here.

Speaker Change: Yeah, I would I will take that.

Speaker Change: Yes.

Speaker Change: The D for pricing is is a.

Sumit Sadana: Of course, HBM is now what a $6 billion run rate business for us based on the last quarter's reported numbers. And so, you know, we are now at a place where we can not only offer customers with our HBM products, world's best technology, most based on our very mature capability in one beta node, but also the best power consumption capabilities. So we have not only that, which we also had last year, but we also now have the capacity in place and the scale in place to be able to meet their growing demand. So we have earned the trust of our customers.

Speaker Change: Yeah that that market has gotten tight is as was talked about in our prepared remarks.

Speaker Change: Yes.

Speaker Change: Customers are beginning to see increasing shortages for <unk> four.

Speaker Change: As you mentioned, it's a smaller part of our business and on a volume basis getting smaller.

Speaker Change: Yeah, the <unk> pricing as a positive Q3 results.

Speaker Change: And Q4 guide, but it's.

Speaker Change: It's one of the many factors contributing to the positive results, it's not a driver of that margin expansion.

Speaker Change: So I would leave it at that.

Speaker Change: Got it got it that's sort of I know previously you said, 10% revenue.

Sumit Sadana: We have terrific engagements with all of the major HBM consumers in the world.

Speaker Change: It could be sort of DDR four.

Sumit Sadana: And we are deeply embedded in their roadmaps, not just for HBM4, which we have just sampled, but also for HBM4E where we have multi-year R&D engagements to do co-design work that relate to the custom-based dive that HBM4E will have. So, we are very excited about the growth opportunity, we are very confident about our place in the competitive landscape. We are very happy and glad to see the contributions of our team on the execution front, from ramping the high quality output to getting the financial benefits of growing this business in our portfolio.

Speaker Change: And now it's lower maybe part of that is because of strengthening another five in other areas.

Speaker Change: A mix.

Speaker Change: I guess it was pretty consistent with where your production is and is going as well as your finished good inventory in terms of the PDR for being in sort of like a sub 10%.

Speaker Change: Kind of exposure.

Speaker Change: Yeah, just just to clarify right I mean, our.

Speaker Change: Your comment about the 10% of revenue was a combination of DDR for LP DDR four.

Speaker Change: And <unk>.

Mark: The comments that Mark made in what can be provided in the prepared remarks as well.

Speaker Change: To DDR for only which is a low single digit percentage of our revenue.

Speaker Change: <unk> and PDL for the Navy Air Force together around 10% of revenue DDR four alone is low single digit percentage of revenue and a lot of the things that you see on the spot market in terms of pricing relate to DDR four only and that path is.

Sumit Sadana: In terms of the discussions with the customers, our customers are going through a lot of rapid transitions, we are going from 8 high to 12 high, that is in progress right now on HBM3E. HBM4 has been sampled to them by us and they are considering the timing of their platform transitions that will leverage HBM4. And they're still, most of our customers are still in the process of finalizing their plans for 2026 in terms of the transition timelines of their key platforms, which will then determine the mix of products they have to purchase. And HBM products, as you know, come with very different type of lead times than the rest of the business.

Speaker Change: No.

Speaker Change: A small part of our overall business.

Speaker Change: Got it maybe just one quick follow up.

Speaker Change: Yes.

Speaker Change: It sounds like mix less consumer orientation in terms of the bit shipments in fiscal <unk>.

Speaker Change: Is there any reason not to I know you want to guide fiscal <unk> November gross margins per se, but it.

Speaker Change: It would seem.

Speaker Change: Seasonal kind of reasonable Miss that that mix should only continue to get less consumer oriented into fiscal <unk>.

Speaker Change: Any reason not to think that wouldn't be a bit of a tailwind on top of sort of shipping more <unk> H.

Sumit Sadana: We like to ensure that when we start these wafers, we have very good visibility to the demand and good agreement and understanding with our customers on what volumes they will take and what time frame. And consequently, our customers have a higher bar in terms of providing those forecasts to us, a higher bar of fidelity of quality of those forecasts. And so they have to go through the assessment of what their platform transition timings will be, what their volumes by product will be. And that business, as it has scaled, has become much more complex due to its scale.

Speaker Change: <unk> into the fiscal first quarter in terms of gross margin.

Brian: And Brian We Didnt guide, we're not going to guide first quarter, but.

Speaker Change: To your point in the fourth quarter.

Brian: We do see yes.

Speaker Change: Two forms of favorable mix one at a high level one is just more DRAM.

Speaker Change: Gross.

Speaker Change: Relative to NAND, and so mixing more DRAM and then and then more data center.

Speaker Change: Relative to consumer so.

Speaker Change: You've got those positive mix effects and then to your point on.

Sumit Sadana: And we are just going through those discussions with those customers. And as and when these agreements, as and when we have the full visibility to all of these numbers and the agreements will fall in place, then we have confidence that we will end up with a terrific trajectory of our HPM business.

Speaker Change: What's that.

Speaker Change: Trajectory into <unk>.

Speaker Change: And to the November quarter.

Speaker Change: The market, we've talked about our inventories are very lean.

Speaker Change: We're bad constrained.

Speaker Change: As we look out to that quarter.

Speaker Change: So we're focused on the best pricing.

Speaker Change: The decisions.

Speaker Change: And then.

CJ Muse: Thank you, Sumit. Thank you. And our next question comes from the line of CJ Muse from Cantor Fitzgerald. Your question, please. Yeah, thank you for taking the question. I was hoping you could hit on, I guess, where you think you are seeing tariff-related pull-ins, and if you can kind of comment between both DRM and NAND, and kind of consumer, non-consumer, and you did take up your DRM BitOutlook for the year. Can you also discuss what's driving the uptick there? Thanks so much.

Speaker Change: We're.

Speaker Change: Continuing to work for a favorable mix. So that's why on this call earlier, we said that.

Speaker Change: We can.

Speaker Change: Expand gross margins.

Speaker Change: In November.

Speaker Change: November quarter, we believe.

Speaker Change: Great. Thank you.

Speaker Change: Thank you and our next question.

Speaker Change: Comes from the line of Christian <unk>.

Speaker Change: From TD Cowen your question please.

Eddie: Hey, guys. This is Eddie.

Speaker Change: For Chris Congrats on the strong results.

Speaker Change: If you go back to June of last year, you guys did give us some color about 2025 demand for H b.

Mark Murphy: Yeah, I think I had mentioned earlier in the call, I'll take your second part of the question first. I've mentioned in the earlier part of the call that the improvement in the DRAM outlook for the calendar year 2025 has nothing to do with any kind of status-related movement that may have occurred for some customers. It has a lot to do with the fact that we continue to see robust demand driven by AI in the data center. This is not just HBM demand, but all data center-related DRAM demand. We are seeing improvements from the CQ1 levels of data center SSD type of demand there as well.

Speaker Change: I think you mentioned like a multiple billion dollar opportunity and.

Speaker Change: You gave some color about.

Speaker Change: The pricing.

Speaker Change: Net pricing was being negotiated but this time you guys chose not to I wonder like are there any specific regions like our lead times different for HBM or.

Speaker Change: As customer behavior different or the competitive environment any color would be great.

Speaker Change: On that note I wonder like when do you guys are expecting to hear from your customer about 'twenty 'twenty six demand.

Speaker Change: Is it for me thank you.

Speaker Change: Yeah. So in terms of <unk> 26 HBM.

Mark Murphy: But really, the other area of improvement beyond the data center and DRAM has come from our improved view of what's happening in the industrial and broad distribution markets. These markets have not grown much for many quarters. And you've seen that view across the semiconductor industry. But now, these markets seem to be improving their growth trajectory and forming up their growth forecast. So that's helping 2025 view of DRAM growth.

Speaker Change: We do expect that HBM bit growth and 26% with plenty plenty fives calendar year will be.

Speaker Change: Significantly faster than the overall.

Speaker Change: DRAM bit growth so HBM.

Speaker Change: You too.

Speaker Change: Outcome, the DRAM bit growth.

Speaker Change: When it comes to the actual discussions with customers.

Speaker Change: Compared to this time last year.

Speaker Change: Of course, we provided you a lot of details about.

Speaker Change: 2025 expectations and lot of updates on color every quarter on what kind of milestones, we were reaching an HBM and what kind of.

Mark Murphy: Now, as it relates to the tariffs and what some customers may have done, first, I just wanted to reiterate that whatever impact tariffs may have had on customer order patterns, we think that overall impact is fairly modest in our SQ3 numbers. And we actually are not too concerned about what the tariff-related impact has been, because our customers aggregate demand signals for the remainder of calendar 2025 continue to be healthy. And so we feel like we are in a constructive demand environment for the next, for the remaining part of calendar 25. And of course, there is uncertainty related to tariffs and whatever may hence happen to the macro environment.

Speaker Change: Capacity ramp and yield improvements in percentage growth rates on quarters.

Speaker Change:

Speaker Change: Billion dollar quarter over 50% growth off the bat in FQ3.

Speaker Change: That 5 billion quarter in Q2 et cetera, but in first quarter in Q2. So we haven't provided a lot of these data points over the last.

Speaker Change: Several quarters, because we were still in the process of ramping our capacity and ramping our revenue and ramping our scaled and HBM.

Speaker Change: Of course, HBM is now over $6 billion run rate business for us based on the last quarter's reported numbers and so.

Speaker Change: We are now at a place where we can not only offer customers without HBM products.

Speaker Change: World's best Technology, most based on our very mature.

Mark Murphy: And we are mindful of that uncertainty. But we also know that we are one of the most agile businesses out there in responding to any changes that may occur. So with that said. The tariff-related movement from certain customers may have mainly been to stage inventory of their own finished goods in different parts and different geographies, but, and that may have created some need for memory products in terms of, you know, pull-in effect. But again, the overall impact, fairly modest.

Speaker Change: Capability and one beta node.

Speaker Change: But also.

Speaker Change: The best power consumption capabilities. So we have not only that which we also have last year, but we also now have the capacity in place and the scale in place to be able to meet their growing demand. So we have.

Speaker Change: On the trust of our customers, we have that effect engagements with all of the major HBM consumers in the world.

Speaker Change: And b are deeply embedded in their roadmaps not just for <unk> for which we have just sample, but also for H beam for ebay we have multiyear.

Speaker Change: R&D engagements to do co design work.

Unknown Attendee: And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone.

Speaker Change: That relate to the customer.

Speaker Change: Custom base died that H B M E will have.

Vijay Rakesh: And our next question comes from the line of Vijay Rakesh. From Lizzo, your question please. Yeah, hi, just a quick follow up. When you look at your HBM4, I think you guys mentioned the CMOS logic die. Can you talk to how that compares to, I think some of your peers have talked about FinFET as well, and how that could drive higher ASPs on your HBM4, I guess, versus HBM3. Thanks. Yeah, the HPM for cost. and price is expected to be higher than hbm3 we do expect that the product itself has remarkably better specs you know as you have seen from our press release as well on hbm4 so in terms of value that it creates at the system level is also very robust value for our customers but we do expect that the pricing on hbm4 on a per bit basis will be higher than that of hbm3 3e And so we definitely will look forward to the tailwind from that growth as well.

Speaker Change: So.

Speaker Change: We are very excited about the growth opportunity, we are very confident about our place.

Speaker Change: In the competitive landscape bofa.

Speaker Change: Happy and glad to see the contributions of our team on the execution front from ramping the high quality output too.

Speaker Change: Getting the financial benefits of.

Speaker Change: Growing this business and are in our portfolio.

Speaker Change: In terms of the discussions with the customers our customers are going through a lot of rapid transitions, we're going from eight to 12 high that is in progress right now on <unk> III.

Speaker Change: HBM four has been samples to them.

Speaker Change: By us and they are considering the timing of their.

Speaker Change: Platform transitions that will leverage <unk> for <unk>.

Speaker Change: And they're still most of our customers are still in the process of finalizing their plans for <unk> <unk> six in terms of.

Speaker Change: The transition timelines of their key platforms, which will then determine the mix of products they have to purchase.

Speaker Change: And HBM products as you know come with very different type of lead times and the rest of the business.

Speaker Change: We like.

Speaker Change: Like to ensure that.

Speaker Change: We saw these wafers, we have very good visibility to the demand.

Vijay Rakesh: Vijay, I think Sanjay made this point on the call, and maybe everyone knows this, but the JEDEC standard die size for HBM4 is larger than it is for HBM3E for all players. So that's why the trade ratio, the cost with HBM4 will be higher. And just to reiterate, we're building our HBM4 on our now two years old, one beta technology, very, very proven, very strong performing product. And similarly, our logic die is going to be built internally. So the integration between the memory and the logic is also proven from our HBM3E processes and the advanced packaging process where we're leveraging all the learning.

Speaker Change: And good.

Speaker Change: Agreement and understanding with our customers on what volumes, they will take and what timeframe.

Speaker Change: And consequently, our customers have a higher bar in terms of providing those forecast to us a higher bar of fidelity of quality of those forecasts.

Speaker Change: And so they have to go through the assessment of.

Speaker Change: What the platform transition timing will be what their volumes by product will be and that business. As it has scale has become much more complex due to its scale and.

Speaker Change: And we are just going through those discussions with those customers and and as and when.

Speaker Change: These agreements.

Speaker Change: As and when we had the visit their full visibility to all of these numbers and the agreements will fall in place and we have confidence that.

Vijay Rakesh: So we feel very good about the roadmap decisions that we've made relative to HBM4 in order to intersect the market as soon as our customers are ready with a terrific performing product as well.

Speaker Change: We will end up is terrific trajectory of our HCM business.

Speaker Change: That's very helpful. Thank you.

Unknown Attendee: And just one quick last one on this, on the pull-in, I'm sorry to beat a dead horse. I know you said, still seeing second half strong data center, but any, is there any pull-in from Q1 into 4Q or, you know, is that, and we should be, we should be concerned about that and how, can you frame that a little bit? Thanks. Yeah, we think that any kind of pull-in activity in aggregate, whether it is Q3, FQ3, FQ4, is modest amount of impact. And we continue to feel that the overall demand environment beyond the FQ4 time horizon, which is the rest of the calendar year beyond FQ4, remains in a steady place in terms of our customer signal.

Speaker Change: Sure.

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. Thank you for taking the question I was hoping you could hit on I guess, where do you think you are seeing tariff related pull ins and if you can kind of come in between both DRAM and NAND in kind of consumer non consumer.

Speaker Change: You did take up your DRAM bit outlook.

Speaker Change: A year.

Speaker Change: Can you also discuss what's driving the uptick there. Thanks so much.

Speaker Change: Yeah, I think I had mentioned earlier in the call I'll take your second part of the question first I had mentioned in the earlier part of the call.

Speaker Change: The improvement in the DRAM outlook.

Speaker Change: For the calendar year 2020, fives has nothing to do with any kind of that is related movement that may have occurred or some customers.

Mark Murphy: This is part of the reason why we also feel good about driving the pricing of our products. Our inventories are in a good place. We expect the pricing to improve in FQ4. And again, we don't see that as just a... very much. Tariff related or pull in related effect. It's more of a overall market environment impact. And that's why we've also provided you a view of The Elam Bit Growth and Calendar 25, which is now improved versus what we mentioned to you just a quarter ago.

Speaker Change: It has a lot to do with the fact that we continue to see robust demand driven by AI in the data center.

Speaker Change: This is not just HBM demand, but all data center related DRAM demand youre seeing improvements from the Q1 levels of datacenter SSD type of demand there as well but.

Speaker Change: Really the other area of improvement beyond the data center.

Speaker Change: And DRAM has come from our improved view of what's happening in the industrial and broad distribution markets.

Speaker Change: These markets have not grown much and for many quarters.

Timothy Arcuri: Thank you. And our next question comes from the line at Timothy Arcuri from UBS. Your question, please. Thanks. I'm trying to figure out just the price, the pricing modeling, modeling on HBM. So nearly half of the dollar revenue growth in DRAM came from HBM, where we know that the prices, you know, many multiples of non HBM, most would, I don't know, you know, most would say it's probably four and a half to like 5x. So I get that the HBM ASP, or sorry, that the non HBM ASP would have come down because of the mix to consumer.

Mark Murphy: And you've seen that view across the semiconductor industry, but now these markets seem to be.

Speaker Change: Improving their growth trajectory, forming up their growth forecast, so that's helping 2025.

Speaker Change: View of DRAM growth.

Speaker Change: Now as it relates to the Fabless.

Speaker Change: And what some customers may have done first I just wanted to reiterate that.

Speaker Change: Whatever impact Paris may.

Speaker Change: May have had on customer order patterns, we think that overall impact is fairly modest.

Timothy Arcuri: But why, why would the HBM ASP have come down? Because it, because it had to come down a lot for, you know, you know, overall DRAM pricing to be down if half of the dollar growth came from HBM. Pricing had to be down on HBM. So why, why would that have been the case? Is this like product transition related? And I guess I'm just asking, you know, like, is the pricing noisy on a sequential basis? Yeah, Yeah, I mean, the the HBM pricing is not noisy, and it's not going up and down in the way you're describing.

Mark Murphy: In our FQ3 numbers and we actually.

Speaker Change: I'm not too concerned about.

Speaker Change: What the data related.

Speaker Change: The impact has been because of <unk>.

Speaker Change: Customer our customers aggregate demand signals for the remainder of calendar 2025 continued to be healthy and so we feel like we are in a constructive demand environment.

Speaker Change: For.

Speaker Change: The next.

Speaker Change: For the remaining part of calendar 'twenty five.

Mark Murphy: Um, I think We, if you look at our results, and particularly I'll point you to the growth in our mobile business, which has been very significant The price points in mobile tend to be quite low compared to data center. And so definitely, when you look at the overall mix, and the mobile businesses are pretty sizable business, it's not a trivial business, it's a large part of the time as well. And so when you look at the overall effect, on a like for like basis, we have improved pricing, but we have growth in HPM happening, but we also have fairly significant Increase in Consumer-Oriented Mix in FQ3.

Speaker Change: And of course, there is uncertainty related to that is.

Speaker Change: And whatever my hands happened to the macro environment and.

Speaker Change: And we're mindful of that uncertainty, but we also know that.

Speaker Change: Do you have one of the most agile businesses out there and responding to any changes that may occur so with that said.

Speaker Change: The data related movement from certain customers may have mainly been to stage inventory of their own finished goods in different parts and different geographies.

Speaker Change: But and that May have created some need for.

Speaker Change: Memory products in terms of.

Speaker Change: No pull in effect, but again the overall.

Speaker Change: Impact fairly modest.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone and our next question comes from the line of Vijay Rakesh.

Mark Murphy: We had highlighted, when we provided guidance for FQ3 last quarter, we highlighted to you that we would be having a significant increase in our consumer mix. And that is That has been driven by the fact that, you know, it took several quarters for the inventories and client and smartphones to get to healthy levels after being heavy in inventory in the second half of calendar 2024. And we were shipping into these markets on the consumer side at a very low rate compared to the ship-out rate on these markets because of that inventory level. So when that inventory level became normalized, our growth rate in FB3 has gone down.

Speaker Change: From Mizuho your question please.

Speaker Change: Yeah, Hi, just a quick follow up on when you look at.

Speaker Change: It should be on for I think.

Speaker Change: You guys mentioned, the Cmos logic dye can you talk to how.

Speaker Change: How that compares to I think you saw your peers have talked about finfet that as well.

Speaker Change: And how that could drive higher asps on your screen for I guess this is going to be thanks.

Speaker Change: Okay.

Speaker Change: Yeah, the HBM for cost.

Speaker Change: And price is expected to be higher.

Speaker Change: Dan HBM three we do expect that.

Speaker Change: The product itself has remarkably better specs as you have seen from our press release as well.

Mark Murphy: Suddenly jumped in a lot of these consumer end markets, which carry lower price points. So even though we have had very steady pricing on the HBM front, and like for like pricing increases, the mixed change has been so sharp that it has caused the impacts on the high level pricing that we were observing in the market.

Speaker Change: <unk> so in terms of value that it creates at the system level.

Speaker Change: Also.

Speaker Change: Very robust value for our customers, but we do expect that the.

Speaker Change: Pricing on hbm's quarter on a per bit basis.

Speaker Change: Be higher than that of HB and three <unk>.

Mark Murphy: Right, so then, so the overload, so the message is that HBM price was still up, it's that the non-HBM price was down such that the blended ASP was down low single digits. That's the message, correct? Yeah, I mean, the the message is that the HBM pricing is steady. And the pricing we have on the DRAM side, like for like, has improved sequentially. And it's really the mixed change on the consumer side that has done this. Now, you know, we spoke about this on the DRAM side, but of course, on the NAND side, we have some different dynamics, including the fact that the market environment is not as healthy as it is on the DRAM side, it's a more challenging environment on the NAND side.

Speaker Change: <unk>.

Speaker Change: And so we definitely will.

Speaker Change: Look forward to the tailwind from from that growth as well.

Speaker Change: Sean who made this twice as many I think that you made this point on the on the call and maybe this is everyone knows this but the <unk> standard.

Speaker Change: Die size for H B M. Four is larger than it is for HBM three for all players. So that's why the the trade ratio the cost with HBO for will be will be.

Speaker Change: Higher.

Speaker Change: And just to reiterate we're building our H B M. Four on our now two years old one beta technology very very proven very strong performing product and were.

Speaker Change: Similarly, our logic dye is gonna be built internally so the integration between the memory and logic is also proven from R. H P. M. <unk> processors in the advanced packaging process, where we're leveraging all the learnings. So we feel very good about the roadmap decisions that we've made relative to H b M for an order to intersect the market as soon as our.

Mark Murphy: And so the NAND dynamics are different. But I just wanted to make sure that I clarify that the DRAM dynamics are very Totally, totally great. And then just one last quick one, just on the cost. So cost had to be down a lot in both DRIN and NANA had to be down like mid single digits in both. Definitely better than what I would have thought. Why was that? I know, Mark, you talked about these NAN headwinds, but it seems like they weren't anywhere near as bad as what you thought they'd be. So how did the cost work so that they were down so much?

Speaker Change: Customers are ready with a terrific performing product.

Speaker Change: As well.

Speaker Change: And just one quick last one.

Speaker Change: On this on the pull in I'm, sorry to beat a dead horse.

Speaker Change: No you said.

Speaker Change: Still seeing sick enough strong data thinking about any.

Speaker Change: Is there any pull in from Q1 into Q.

Speaker Change: Is that.

Speaker Change: You shouldn't be we shouldn't be concerned about that.

Mark Murphy: Yeah. Marking it out. Yeah, I, I would just say, Tim, that, you know, I mean, mix, mix affects costs, as you know. And so, yeah, there's, there's some of those, those effects. You know, I think just on costs, overall. Our business is changing. With, you know, our focus on the higher performance part of the market. Sometimes, you know, that has some higher costs associated with it, but it's higher margin. And, you know, And so we get a higher value out of that. You know, and again, the mix is really affecting the cost. So you'll see us move away from, you know, traditionally what we would do is.

Speaker Change: Can you frame that a little bit thanks.

Speaker Change: Yeah, we think that any kind of pull in activity in aggregate, whether it is Q3 FQ3 FQ4.

Amar: Is it modest Amar.

Speaker Change: <unk> of impact.

Speaker Change: And we continue to feel that the.

Speaker Change: Overall demand environment.

Speaker Change: <unk> four time horizon, which is the rest of the calendar year beyond that for Q4.

Speaker Change: <unk> remains in a healthy place in terms of our customer signals.

Speaker Change: This is part of the reason why we also feel good about driving the pricing.

Speaker Change: Our products our inventories are in a good place we expect the pricing to improve in Q4 and again.

Speaker Change: We don't see that as just.

Speaker Change:

Speaker Change: Very much.

Speaker Change: That is related to Poland related effect, it's modest.

Speaker Change: Overall market environment.

Speaker Change: And back then that's why we have also provided you a view.

Speaker Change: DRAM bit growth in calendar 'twenty fives.

Speaker Change: Between now.

Mark Murphy: grill into the cost detail at Reed every call because it's becoming a harder metric to follow with the with the improving mix that we are driving in the business. Yeah, and Tim, I'll just add a little, I mean, you know, mentioned on the call that our, you know, HBM 12 high yields are doing better than, you know, our initial HBM 8 high ramp was a year ago at this time and better than our expectations. So that's overall HBM, you know, maybe a little better than our expectations last quarter. And there were, you know, certain other areas that Mark and Sanjay both commented on a little bit that, you know, our cost performance Operations is better, but as Mark mentioned, a lot of it is due to the mix as well.

Speaker Change: Improved versus what we mentioned to you.

Speaker Change: This was a quarter ago.

Speaker Change: Sounds good thank you.

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

Speaker Change: Thanks.

Speaker Change: I'm trying to figure out.

Speaker Change: Just the price the pricing modeling modeling on H B M. So nearly half of the dollar revenue growth in DRAM came from H B M, where we know that the.

Speaker Change: Prices many multiples of non HBM most of it I don't know most would say, it's probably $4 five to like buybacks. So I get that the H BMA asps.

Speaker Change: Sorry that the non H PMA ASP would it come down because of the mix of the consumer.

Speaker Change: Why why would the HBM asps have come down because it because it had to come down a lot for.

Speaker Change: Overall, DRAM pricing to be down half of the dollar growth came from H B M pricing had to be done at H B M. So what.

Unknown Attendee: Okay.

Unknown Attendee: Thank you so much.

Unknown Attendee: Thank you.

Unknown Attendee: And for our final question today... comes from the one. of Chris Daley from Citi. Your question please.

Speaker Change: Why would that had been the case is this like product transition related and I guess I'm just asking.

Speaker Change: Like is the pricing noisy on a sequential basis, yes.

Unknown Attendee: Hi there. Yeah, this is James filling in for Chris. Just had one question. Last, you know, I think it was probably about a conference a couple months ago, but you said the August quarter gross margins could be, you know, flattest to slightly up compared to this quarter. Was there any major change with that other than, you know, some pricing and you know, you talked about the data center mix, but just wanted to dig on that.

Speaker Change: Yeah. Thanks.

Speaker Change: No I mean, the the HBM pricing is not noisy and it's not going up and down and the way you are describing.

Speaker Change: I think we.

Speaker Change: <unk>.

Speaker Change: If you look at our results and particularly I'd point you to the.

Mark Murphy: Thanks. Yeah, I, I think I covered this on the main main call that, you know, when we provide that guidance, it was in a period of a period of transition. Yeah, we didn't know that inventory outlook was was improving. You know, and we indicated on that call, we intended to, you know, work to inflect price. Um, yeah, the conditions of the market are just better than we expected when we gave that guidance. And, you know, our performance, particularly on price, relative to what we thought the market would bear, was better. And then that's carrying, you know, into into the fourth quarter.

Speaker Change: Growth in our mobile business.

Speaker Change: Which has been very significant.

Speaker Change: The price points and model tends to be.

Speaker Change: Quite low compared to data center.

Speaker Change: So.

Speaker Change: Definitely when you look at the overall mix in the mobile business is a pretty sizable business if not for the business. It's a large part of the Tam as well.

Speaker Change: So when you look at the overall effect.

Speaker Change: On a like for like basis, we have improved pricing, but we have growth in HBM happening, but we also have fairly significant.

Speaker Change: Increase in consumer oriented banks and that's Q3, we had highlighted then.

Mark Murphy: Now, so you reset the baseline, you know, we did 39 versus our guide of of 36.5. And so from that baseline of 39, we're seeing still up a constructive market environment, particularly in DRAM, or especially in And, and then we're, we're, yeah, so we're, we're still focused on price. But the 39 to 42 guide is also, you know, the majority of that is driven by favorable mix effects.

Speaker Change: We provided guidance for FQ3 last quarter, we highlighted to you that.

Speaker Change: Would be having a significant increase.

Speaker Change: And our.

Speaker Change: Consumer makes sense that is.

Speaker Change: That has been driven by the fact that it too.

Speaker Change: Took several quarters for the inventories and climbed and smartphones to get.

Speaker Change: To healthy levels after being.

Speaker Change: Heavy in inventory in the second half of calendar 2024.

Speaker Change: And we were shipping into these.

Mark Murphy: So . more DRAM growth relative to band. And if we cut by markets, more data center, then, then consumer oriented.

Speaker Change: Markets on the consumer side at very low rates compared to the ship out rate from these markets because of that inventory levels. So that that inventory level became normalized our growth rate and thats. The three has.

Speaker Change: Suddenly jumped.

Speaker Change: And a lot of these consumer end markets, which carry lower price points. So even though we have had.

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. Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. © The Ultimate Parody Site! Copyright © 2020 Mooji Media Ltd. All Rights Reserved. Copyright © 2020, New Thinking Allowed Foundation Thank you for standing by. Earnings Analyst Call.

Speaker Change: Very steady pricing on the HBM front.

Speaker Change: And like for like pricing increases.

Speaker Change: The mix change has been so short that it is costly acts on the high level price index observing in the numbers.

Speaker Change: Right. So then so the overload sort of messages that H B M price was still up it's that the nine HBM price was down such that the blended ASP was down low single digits. That's the message correct.

Speaker Change: Yes, I mean, the message is that the HBM pricing is steady.

Speaker Change: And the pricing we have on the DRAM side like for like has improved sequentially.

Speaker Change: And it's really the mix change on the consumer side that has that has done this now.

Speaker Change: We spoke about this.

Speaker Change: On the.

Speaker Change: DRAM side, but of course on the NAND side, we have.

Speaker Change: Some different dynamics, including the fact that the market environment.

Speaker Change: <unk> is not as healthy as it is on the DRAM side, a more challenging environment on the NAND side and so the main dynamics.

Speaker Change: Different.

Speaker Change: But I just wanted to make sure that I clarify that the DRAM dynamics are very healthy.

Speaker Change: Totally totally great and then just one last quick one just on the cost so cost had to be down a lot in both DRAM and NAND there had to be down mid single digits in both.

Speaker Change: Definitely better than what I would've thought.

Speaker Change: Why was that I know Mark you talked about these headwinds, but it seems like they weren't anywhere near as bad as what you thought they would be so.

Speaker Change: How do the cost work so that they were down so much.

Speaker Change: Yeah and Alex.

Speaker Change: Some color.

Speaker Change: Yeah.

Speaker Change: I would just say Tim that you know I mean mix mix effects costs as you know.

Speaker Change: And so.

Speaker Change: Yeah.

Speaker Change: Theres summit knows those effects.

Speaker Change: I think just on costs.

Speaker Change: Overall.

Speaker Change: Front end back bad cost reductions HBM in DRAM and NAND are yes. They are generally on track.

Speaker Change: With the front end cost reduction ranges that we've talked about before so I think that's.

Speaker Change: Yeah, if you're looking to model things going forward I think that that's something to keep in mind. Our business is changing to this mix issue our business is changing.

Speaker Change: With our focus on the higher performance part of the market, sometimes that has some <unk>.

Speaker Change: Costs associated with it but it's higher margin.

Speaker Change: And yeah.

Speaker Change: And so we get into higher value out of that.

Speaker Change: Yeah, and again the mixes is really affecting the cost so youll see us move away from.

Speaker Change: Traditionally what we would do as you know.

Speaker Change: Drill into the cost detail every ever.

Speaker Change: Every call because it's becoming.

Speaker Change: Harder metric to follow with that with the improving mix that we are.

Speaker Change: Driving in the business.

Speaker Change: Okay.

Speaker Change: And you can come up with.

Speaker Change: You mentioned on the call that our HBM 12 high yields are doing better than.

Speaker Change: Our initial.

Speaker Change: Atrium debate high ramp was a year ago at this time.

Speaker Change: Other than our expectations.

Speaker Change: Overall H P M.

Speaker Change: Give me a little bit better.

Speaker Change: But our expectations last quarter and there were certain other areas that market and some people have commented on a little bit that cost performance was off.

Speaker Change: Operations better book as Mark mentioned, a lot of it is due to mix.

Speaker Change: Cool okay. Thank you so much.

Speaker Change: Thank you and for our final question today.

Speaker Change: It comes from the line.

Speaker Change: Of Christina Lee from Citi. Your question. Please.

Speaker Change: Hi, there yeah. This is James filling in for Chris Just had one question last you know I think it was probably about a conference a couple months ago, but you said the August quarter gross margins could be flattish.

Speaker Change: Flattish to slightly up compared to this quarter was there any major changes in that other than some pricing and you talked about the data center mix, but just wanted to dig out of that thanks.

Speaker Change: Yeah.

Speaker Change: I think I covered this on the main main call that when we provide that guidance. It was in a period as a period of transition.

Speaker Change: We didn't know that inventory outlook was was improving.

Speaker Change: And we indicated on that call we intended.

Speaker Change: Work to inflect price.

Speaker Change: Yeah, the conditions of the market or just better than we expected when we gave that guidance.

Speaker Change: And.

Speaker Change: Our performance.

Speaker Change: Typically on price relative to.

Speaker Change: What we thought the market would bear.

Speaker Change: Better and then that's carrying.

Speaker Change: Enter into the fourth quarter.

Speaker Change: Now so you reset the baseline yeah, we did 39 versus our guidance.

Speaker Change: 36 five.

Speaker Change: So from that baseline of 39, we're seeing still up a constructive market environment, particularly in DRAM or especially in DRAM.

Mark Murphy: And that work wear.

Speaker Change: Yeah, So we're still focused on price, but the.

Speaker Change: <unk> 39 to 42 guide.

Speaker Change: <unk> is also.

Speaker Change: The majority of that is driven by favorable mix effects. So.

Speaker Change: More DRAM growth relative to <unk>.

Speaker Change: And as if we cut by markets more data center.

Speaker Change: Then.

Mark Murphy: Then consumer oriented mix.

Mark Murphy: Thank you.

Mark Murphy: 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.

Unknown Attendee: Okay.