Q3 2026 Micron Technology Inc Earnings Call

June 24, 2026

Speaker #1: Ladies and gentlemen.

Speaker #2: Thank you for joining us, and welcome to Micron Technologies' fiscal Q3 2026 financial conference call. After today's prepared remarks, we will host a Q&A session.

Speaker #2: Webcast viewers: please note that you will be able to advance the slides as you view at your own pace. I will now hand the conference over to Sacha Kumar, Corporate Vice President of Investor Relations and Treasury.

Speaker #2: Sacha, please go ahead.

Speaker #3: Thank you. And welcome to Micron Technologies' fiscal Q3 2026 financial conference call. On the call with me today are Sanjay Mehrotra, our Chairman, President, and CEO, and Mark Murphy, our CFO.

Speaker #3: Today's call is being webcast from our Investor Relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website along with the prepared remarks for this call.

Speaker #3: Today's discussion contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance, and our business model, as well as trends and expectations in our business, customers, market, industry, products, and regulatory and other matters.

Speaker #3: These statements are based on our current assumptions and we assume no obligation to update these statements. Please refer to our most recent financial reports on Form 10-K, Forms 10-Q, and other filings.

Speaker #3: With the SEC for more information on the risks and uncertainties, that could cause actual results to differ materially from expectations. Today's discussion of financial results is presented on a non-GAAP financial basis, unless otherwise specified.

Speaker #3: A reconciliation of GAAP to non-GAAP financial measures can be found on our website. I'll now turn the call over to Sanjay.

Speaker #4: Thank you, Satya. Micron delivered an exceptional fiscal Q3. The significant records in revenue, gross margin, and EPS all exceeding the high end of our guidance.

Speaker #4: Demonstrating Micron's position as a leader enabling the AI era, our data center revenue exceeded $25 billion in fiscal Q3, on an annualized run rate of over $100 billion.

Speaker #4: Our data center SSD revenue exceeded $5 billion more than doubling sequentially. DRAM and NAND industry demand continues to significantly exceed industry supply. We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraint, constraints.

Speaker #4: We are excited to announce that we have now signed 16 strategic customer agreements, or SCAs, which we expect will fundamentally transform our business model.

Speaker #4: The memory industry has been structurally transformed by the proliferation of AI. We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time.

Sanjay Mehrotra: Nailing the AI era. Our data center revenue exceeded $25 billion in FQ3, on an annualized run rate of over $100 billion. Our data center SSD revenue exceeded $5 billion, more than doubling sequentially. DRAM and NAND industry demand continues to significantly exceed industry supply. We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments, coupled with structural supply constraints. We are excited to announce that we have now signed 16 Strategic Customer Agreements, or SCAs, which we expect will fundamentally transform our business model. The memory industry has been structurally transformed by the proliferation of AI. We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time.

C.J. Muse: Nailing the AI era. Our data center revenue exceeded $25 billion in FQ3, on an annualized run rate of over $100 billion. Our data center SSD revenue exceeded $5 billion, more than doubling sequentially. DRAM and NAND industry demand continues to significantly exceed industry supply. We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments, coupled with structural supply constraints. We are excited to announce that we have now signed 16 Strategic Customer Agreements, or SCAs, which we expect will fundamentally transform our business model. The memory industry has been structurally transformed by the proliferation of AI. We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time.

Speaker #1: Good evening. The AI era—our data center revenue exceeded $25 billion in fiscal Q3, on an annualized run rate of over $100 billion.

Speaker #4: Data center-driven growth will be increasingly complemented by AI-enabled features in smartphones, high-end PCs, and new consumer devices as well as in automotive, industrial applications, and robotics.

Speaker #1: Our data center SSD revenue exceeded $5 billion, more than doubling sequentially. DRAM and NAND industry demand continues to significantly exceed industry supply. We expect tight conditions to persist beyond calendar 2027.

Speaker #4: Exciting possibilities enabled by robotics and humanoids as well as fully autonomous vehicles portend a robust long-term demand environment for memory and storage. With respect to supply, our customers are recognizing that supply shortages in memory and storage will take considerable time to improve.

Speaker #1: As a result of AI-driven demand across all segments, coupled with structural supply constraints, we are excited to announce that we have now signed 16 strategic customer agreements, or SCAs, which we expect will fundamentally transform our business model.

Speaker #4: Even as we expect industry supply to improve gradually in 2028, we currently do not have line-of-sight as to when memory supply will be able to catch up with increasing demand.

Speaker #1: The memory industry has been structurally transformed by the proliferation of AI. We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time.

Speaker #4: Memory industry supply growth is dependent on significant greenfield fab expansions. These greenfield projects are large, complex, and time-consuming. Further, the pace is constrained by several factors, including long lead time for fab construction across the world, shortage of workers with critical trade skills, complex regulations including permitting, and the need for enhanced energy infrastructure.

Speaker #1: Data center-driven growth will be increasingly complemented by AI-enabled features in smartphones, high-end PCs, and new consumer devices, as well as in automotive, industrial applications, and robotics.

Sanjay Mehrotra: Data center-driven growth will be increasingly complemented by AI-enabled features in smartphones, high-end PCs, and new consumer devices, as well as in automotive, industrial applications, and robotics. Exciting possibilities enabled by robotics and humanoids, as well as fully autonomous vehicles, portend a robust long-term demand environment for memory and storage. With respect to supply, our customers are recognizing that supply shortages in memory and storage will take considerable time to improve. Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand. Memory industry supply growth is dependent on significant greenfield fab expansions. These greenfield projects are large, complex, and time-consuming.

Speaker #1: Exciting possibilities enabled by robotics and humanoids, as well as fully autonomous vehicles, portend a robust long-term demand environment for memory and storage. With respect to supply, our customers are recognizing that supply shortages in memory and storage will take considerable time to improve.

Speaker #4: Meanwhile, memory process technology which is among the most advanced to develop and manufacture in semiconductors is getting more complex with every new node. Technology transitions are driving slower bit growth over time, wafer growth needs are significantly increasing, clean room space and greenfield fab requirements and HBM's growth and increasing trade ratio with every new generation further pressures non-HBM supply.

Speaker #1: Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand.

Speaker #4: In the end, industry suppliers redirecting clean room space from NAND to DRAM and overall limited clean room space constraint NAND bit supply growth. These factors taken together mean supply is structurally constrained in its growth and ability to meet industry demand.

Speaker #1: Memory industry supply growth is dependent on significant greenfield fab expansions. These greenfield projects are large, complex, and time-consuming. Further, the pace is constrained by several factors, including long lead times for fab construction across the world, shortage of workers with critical trade skills, complex regulations including permitting, and the need for enhanced energy infrastructure.

Sanjay Mehrotra: The pace is constrained by several factors, including long lead times for fab construction across the world, shortage of workers with critical trade skills, complex regulations, including permitting, and the need for enhanced energy infrastructure. Meanwhile, memory process technology, which is among the most advanced to develop and manufacture in semiconductors, is getting more complex with every new node. Technology transitions are driving slower bit growth over time. Wafer growth needs are significantly increasing clean room space and greenfield fab requirements. HBM's growth and increasing trade ratio with every new generation further pressures non-HBM supply. In NAND, industry suppliers redirecting clean room space from NAND to DRAM, and overall limited clean room space constrained NAND bit supply growth. These factors, taken together, mean supply is structurally constrained in its growth and ability to meet industry demand, despite our comprehensive efforts to increase supply.

Speaker #4: Despite our comprehensive efforts to increase supply. AI systems are powered by GPU, ASIC, and CPU designs from an increasingly broad set of suppliers. However, they all share one important characteristic: AI system performance is architecturally dependent on memory subsystem performance and capacity.

Speaker #1: Meanwhile, memory process technology—which is among the most advanced to develop and manufacture in semiconductors—is getting more complex with every new node. Technology transitions are driving slower bit growth over time; wafer growth needs are significantly increasing clean room space and greenfield fab requirements; and HBM's growth and increasing trade ratio with every new generation further pressures non-HBM supply.

Speaker #4: This has given rise to more complex memory hierarchy that is providing greater differentiation opportunities for Micron than at any time in our history. It has also elevated the role of memory in the AI world to a strategic asset.

Speaker #1: In NAND, industry suppliers are redirecting clean room space from NAND to DRAM, and overall limited clean room space constrains NAND bit supply growth. These factors, taken together, mean supply is structurally constrained in its growth and ability to meet industry demand.

Speaker #4: Strong long-term demand growth, structurally constrained supply growth, and caused customers to recognize that their product roadmaps rely on access to advanced memory technology and dependable and committed long-term memory supply.

Speaker #4: Micron has been a pioneer in our industry in creating a new class of strategic customer agreements, or SCAs, with very robust terms. We are pleased to announce that we have completed 16 SCAs with customers across the data center consumer and auto market segments.

Speaker #1: Despite our comprehensive efforts to increase supply, AI systems are powered by GPU, ASIC, and CPU designs from an increasingly broad set of suppliers. However, they all share one important characteristic: AI system performance is architecturally dependent on memory subsystem performance and capacity.

Sanjay Mehrotra: AI systems are powered by GPU, ASIC, and CPU designs from an increasingly broad set of suppliers. However, they all share one important characteristic. AI system performance is architecturally dependent on memory subsystem performance and capacity. This has given rise to more complex memory hierarchy that is providing greater differentiation opportunities for Micron than at any time in our history. It has also elevated the role of memory in the AI world to a strategic asset. Strong long-term demand growth, structurally constrained supply growth, and memory's strategic importance have caused customers to recognize that their product roadmaps rely on access to advanced memory technology and dependable and committed long-term memory supply. Micron has been a pioneer in our industry in creating a new class of Strategic Customer Agreements, or SCAs, with very robust terms.

Speaker #4: These SCAs accelerate the transformation of our business model, enhance partnership in technology and innovation, and provide customers with contracted supply assurance. Typically, these agreements have a five-year term from calendar 2026 through the end of calendar 2030.

Speaker #1: This has given rise to a more complex memory hierarchy that is providing greater differentiation opportunities for Micron than at any time in our history. It has also elevated the role of memory in the AI world to a strategic asset.

Speaker #4: Automotive agreements generally have a three-year term. The 16 signed agreements represent roughly 20% of our DRAM volume, and a third of our NAND volume over this period.

Speaker #1: Strong long-term demand growth, structurally constrained supply growth, and memory's strategic importance have caused customers to recognize that their product roadmaps rely on access to advanced memory technology and dependable, committed long-term memory supply.

Speaker #4: These SCAs include four very large customers, and three medium-sized customers. The remaining agreements relate to smaller customers from the automotive industry, and represent our commitment to the importance sector.

Speaker #1: Micron has been a pioneer in our industry in creating a new class of strategic customer agreements, or SCAs, with very robust terms. We are pleased to announce that we have completed 16 SCAs with customers across the data center, consumer, and auto markets. This is a transformation of our business model, enhancing partnership in technology and innovation, and providing customers with contracted supply assurance.

Sanjay Mehrotra: We are pleased to announce that we have completed 16 SCAs with customers across the data center, consumer, and auto market segments. These SCAs accelerate the transformation of our business model, enhance partnership in technology and innovation, and provide customers with contracted supply assurance. Typically, these agreements have a five-year term from calendar 2026 through the end of calendar 2030. Automotive agreements generally have a three-year term. The 16 signed agreements represent roughly 20% of our DRAM volume and a third of our NAND volume over this period. These SCAs include four very large customers and three medium-sized customers. The remaining agreements relate to smaller customers from the automotive industry and represent our commitment to the important sector. When completed, we expect approximately half or more of our company revenue to be under these SCAs with customers across end markets.

Speaker #4: When completed, we expect approximately half or more of our company revenue to be under these SCAs with customers across end markets. Our customer value are US supply plants and this is reflected in our SCAs.

Speaker #4: These SCAs are structured as take-or-pay agreements with binding commitments to purchase specific volumes over this multi-year term. The largest agreements generally have a ceiling price for existing products at the current CQ2 market price, and a floor price through the term of this agreement.

Speaker #1: Typically, these agreements have a five-year term from calendar 2026 through the end of calendar 2030. Automotive agreements generally have a three-year term. The 16 signed agreements represent roughly 20% of our DRAM volume and a third of our NAND volume over this period.

Speaker #4: Several SCAs which account for a modest portion of the SCA-related revenue include either fixed prices or have no price bands associated with them where pricing will be subject to market conditions.

Speaker #1: These SCAs include four very large customers, and three medium-sized customers. The remaining agreements relate to smaller customers from the automotive industry and represent our commitment to this important sector.

Speaker #4: When all planned SCAs are executed, agreements with either fixed prices or price ceilings at or close to current CQ2 market prices are expected to be approximately 40% of our revenue.

Speaker #1: When completed, we expect approximately half or more of our company revenue to be under these SCAs, with customers across end markets. Our customer value is U.S. supply plants, and this is reflected in our SCAs.

Speaker #4: For SCAs which do contain such price bands, pricing is designed to stay within this floor to ceiling level through the course of the term.

Sanjay Mehrotra: Our customer value, our US supply plans, this is reflected in our SCAs. These SCAs are structured as take-or-pay agreements with binding commitments to purchase specific volumes over this multiyear term. The largest agreements generally have a ceiling price for existing products at the current CQ2 market price, and a floor price through the term of this agreement. Several SCAs, which account for a modest portion of the SCA related revenue, include either fixed prices or have no price band associated with them, where pricing will be subject to market conditions. When all planned SCAs are executed, agreements with either fixed prices or price ceilings at or close to current CQ2 market prices are expected to be approximately 40% of our revenue. For SCAs which do contain such price bands, pricing is designed to stay within this floor to ceiling level through the course of the term.

Speaker #1: These SCAs are structured as take-or-pay agreements with binding commitments to purchase specific volumes over this multi-year term. The largest agreements generally have a ceiling price for existing products at the current Q2 market price and a floor price through the term of this agreement.

Speaker #4: This pricing visibility will help our SCA customers across market segments to better manage their business and grow their demand. For our SCAs with price bands, the floor price enables a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.

Speaker #1: Several SCAs, which account for a modest portion of the SCA-related revenue, include either fixed prices or have no price bands associated with them, where pricing will be subject to market conditions.

Speaker #4: 14 of the 16 SCAs that we have signed have accumulative revenue at minimum price per hour contracts of approximately 100 billion dollars over the remaining agreement term.

Speaker #1: When all planned SCAs are executed, agreements with either fixed prices or price ceilings at or close to current Q2 market prices are expected to be approximately 40% of our revenue.

Speaker #4: They also strengthen our long-term financial performance margins and free cash flow expectations with higher visibility and improved stability in our business performance. Under the SCAs, we have signed so far we project to receive cash deposits and related financial commitments of 22 billion dollars.

Speaker #1: For SCAs which do contain such price bands, pricing is designed to stay within this floor-to-ceiling level throughout the course of the term.

Speaker #4: This further demonstrates customer commitment to this new business model. Mark will provide additional details. Our SCAs with customers across data center to consumer devices to auto and industrial applications create a new paradigm for us to strengthen our customer relationships.

Speaker #1: This pricing visibility will help our SCA customers across market segments to better manage their business and grow their demand. For our SCAs with price bands, the floor price enables a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.

Sanjay Mehrotra: This pricing visibility will help our SCA customers across market segments to better manage their business and grow their demand. For our SCAs with price bands, the floor price enables a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle. 14 of the 16 SCAs that we have signed have a cumulative revenue at minimum price per hour contracts of approximately $100 billion over the remaining agreement term. They also strengthen our long-term financial performance, margins, and free cash flow expectations with higher visibility and improved stability in our business performance. Under the SCAs we have signed so far, we project to receive cash deposits and related financial commitments of $22 billion. This further demonstrates customer commitment to this new business model. Mark will provide additional details.

Speaker #4: They provide committed DRAM, including HBM, as appropriate, and NAND supply to our customers over a multi-year time horizon. In a period of significant shortage, this supply visibility is extremely beneficial to our customers.

Speaker #1: 14 of the 16 SCAs that we have signed have cumulative revenue, at minimum price per hour contract, of approximately $100 billion over the remaining agreement term.

Speaker #1: They also strengthen our long-term financial performance, margins, and free cash flow expectations with higher visibility and improved stability in our business performance. Under the SCAs we have signed so far, we project to receive cash deposits and related financial commitments of $22 billion.

Speaker #4: The visibility enables our customers to leverage SCA supply to make progress on their strategic plans drive growth and enable their end consumers to benefit from their products and services.

Speaker #4: We are very appreciative of our customers who have worked with us through this period of tight supply with a strong collaborative spirit to create win-win outcomes for the long term for the entire ecosystem and end consumers.

Speaker #1: This further demonstrates customer commitment to this new business model. Mark will provide additional details. Our SCAs with customers across data center, consumer devices, automotive, and industrial applications create a new paradigm for us to strengthen our customer relationships.

Speaker #4: AI is insatiable appetite for memory bandwidth and capacity with low latency and low power is driving memory architectural choices memory product makeshifts and manufacturing process technology decisions all of which increase the complexity of memory and storage roadmap for the industry.

Sanjay Mehrotra: Our SCAs with customers across data center to consumer devices to auto and industrial applications create a new paradigm for us to strengthen our customer relationships. These provide committed DRAM, including HBM as appropriate, and NAND supply to our customers over a multiyear time horizon. In a period of significant shortage, this supply visibility is extremely beneficial to our customers. The visibility enables our customers to leverage SCA supply to make progress on their strategic plans, drive growth, and enable their end consumers to benefit from their products and services. We are very appreciative of our customers who have worked with us through this period of tight supply with a strong collaborative spirit to create win-win outcomes for the long term for the entire ecosystem and end consumers.

Speaker #1: They provide committed DRAM, including HBM as appropriate, and NAND supply to our customers over a multi-year time horizon. In a period of significant shortage, this supply visibility is extremely beneficial to our customers.

Speaker #4: Micron is building on its technology leadership. Our one gamma DRAM node and G9 NAND node are both ramping well and on track to become the highest volume nodes in Micron's history.

Speaker #1: The visibility enables our customers to leverage SCA supply to make progress on their strategic plans, drive growth, and enable their end consumers to benefit from their products and services.

Speaker #4: Development of our next generation DRAM and NAND nodes are also progressing well and are on track to begin volume production in the second half of calendar 2027.

Speaker #1: We are very appreciative of our customers, who have worked with us through this period of tight supply with a strong collaborative spirit to create win-win outcomes for the long term—for the entire ecosystem and end consumers.

Speaker #4: We are leveraging our leadership DRAM and NAND nodes across our product portfolio. HBM4 12 high volume RAM is tracking twice as fast as HBM3E 12 high, and we have already shipped over 1 billion dollars in HBM4 revenue.

Speaker #1: AI's insatiable appetite for memory bandwidth and capacity with low latency and low power is driving memory architectural choices, memory product makeshifts, and manufacturing process technology decisions, all of which increase the complexity of the memory and storage roadmap for the industry.

Sanjay Mehrotra: AI's insatiable appetite for memory bandwidth and capacity with low latency and low power is driving memory architectural choices, memory product mix shifts, and manufacturing process technology decisions, all of which increase the complexity of memory and storage roadmap for the industry. Micron is building on its technology leadership. Our 1-gamma DRAM node and G9 NAND node are both ramping well and on track to become the highest volume nodes in Micron's history. Development of our next generation DRAM and NAND nodes are also progressing well and are on track to begin volume production in H2 2027. We are leveraging our leadership DRAM and NAND nodes across our product portfolio. HBM4 12-Hi volume ramp is tracking twice as fast as HBM3E 12-Hi, and we have already shipped over $1 billion in HBM4 revenue.

Speaker #4: We expect to reach mature yields on HBM4 12 high significantly faster than HBM3E 12 high. Please see our earnings press release for other highlights across our HBM high capacity DDR and LP server DRAM, data center SSD, PC, smartphone, and automotive product portfolios.

Speaker #1: Micron is building on its technology leadership. Our 1-gamma DRAM node and G9 NAND node are both ramping well and on track to become the highest volume nodes in Micron's history.

Speaker #4: We expect future memory demand will continue to skew towards higher performance and higher value products whose complexity carries higher cost per bit. Transitions like LP5 to LP6, DDR5 to DDR6, and newer generations of HBM all come with rising bit cost.

Speaker #1: Development of our next-generation DRAM and NAND nodes is also progressing well and is on track to begin volume production in the second half of calendar 2027.

Speaker #1: We are leveraging our leadership DRAM and NAND nodes across our product portfolio. HBM4 12-high volume RAM is tracking twice as fast as HBM3E 12-high, and we have already shipped over $1 billion in HBM4 revenue.

Speaker #4: This trend, along with the ramp of significant greenfield capacity in the years ahead, is projected to cause the blended DRAM cost per bit to rise from current levels.

Speaker #4: Our customer SCAs provide for appropriate price premiums for such new products to be negotiated in the future. Turning to our end markets, AI is driving unprecedented growth in data centers with industry data center DRAM and NAND bit shipments in calendar 2026 expected to more than double from two years ago.

Speaker #1: We expect to reach mature yields on HBM4 12-High significantly faster than HBM3E 12-High. Please see our earnings press release for other highlights across our HBM, high-capacity DDR and LP server DRAM, data center SSD, PC, smartphone, and automotive product portfolios.

Sanjay Mehrotra: We expect to reach mature yields on HBM4 12-Hi significantly faster than HBM3E 12-Hi. Please see our earnings press release for other highlights across our HBM, high capacity DDR, and LP server DRAM, data center SSD, PC, smartphone, and automotive product portfolios. We expect future memory demand will continue to skew towards higher performance and higher value products, whose complexity carries higher cost per bit. Transitions like LPDDR5 to LPDDR6, DDR5 to DDR6, and newer generations of HBM all come with rising bit costs. This trend, along with the ramp of significant greenfield capacity in the years ahead, is projected to cause the blended DRAM cost per bit to rise from current levels. Our customer SCAs provide for appropriate price premiums for such new products to be negotiated in the future. Turning to our end markets.

Speaker #4: Agentic AI is a structurally reshaping data center infrastructure extending beyond accelerator-only racks to include CPU racks for the agent control plane and program execution and storage racks for rapidly expanding context store.

Speaker #1: We expect future memory demand will continue to skew toward higher performance and higher value products, whose complexity carries higher cost per bit. Transitions like LP5 to LP6, DDR5 to DDR6, and newer generations of HBM all come with rising bit cost.

Speaker #4: We now expect calendar 2026 industry server units to grow high teens percent above our prior expectations of low double digits driven by mid-teens growth in traditional servers and even stronger growth in servers with AI accelerators.

Speaker #1: This trend, along with the ramp of significant greenfield capacity in the years ahead, is projected to cause the blended DRAM cost per bit to rise from current levels.

Speaker #4: We estimate that this increase in our server unit growth expectation is enabled by a modest reduction in average server DRAM content growth as customers focus on maximizing unit shipments amid a very tight allocation of memory.

Speaker #1: Our customer SCAs provide for appropriate price premiums for such new products to be negotiated in the future. Turning to our end markets, AI is driving unprecedented growth in data centers, with industry data center DRAM and NAND bit shipments in calendar 2026 expected to more than double from two years ago.

Sanjay Mehrotra: In NAND, AI context memory storage and HDD displacement opportunities are expanding the addressable market for SSDs. PC and smartphone industry revenue is expected to grow despite unit volume declines, reflecting resilient demand for high-end devices at higher prices across end device categories. Agentic AI platforms, such as OpenClaw and NVIDIA NeMo, elevate the value of edge devices, enabling improved tokenomics, greater privacy and latency, and more efficient orchestration of AI between the cloud and edge. Over time, we expect the value of on-device AI, combined with pent-up unit replacement demand to drive memory demand growth in PCs and smartphones. In automotive, ADAS remains a powerful driver of content growth. L2+ and above vehicles, which feature progressively increasing levels of autonomy, have over five times the memory and storage content of an average vehicle.

Speaker #4: In NAND, AI context memory storage and HDD displacement opportunities are expanding the addressable market for SSDs. PC and smartphone industry revenue is expected to grow despite unit volume declines reflecting resilient demand for high-end devices at higher prices across end device categories.

Speaker #1: Agentic AI is structurally reshaping data center infrastructure, extending beyond accelerator-only racks to include CPU racks for the agent control plane and program execution, as well as storage racks for the rapidly expanding context store.

Speaker #1: We now expect calendar 2026 industry server units to grow by high teens percent above our prior expectations of low double digits, driven by mid-teens growth in traditional servers and even stronger growth in servers with AI accelerators.

Speaker #4: Agentic AI platforms such as OpenClaw and NemoClaw elevate the value of edge devices enabling improved tokenomics greater privacy and latency and more efficient orchestration of AI between the cloud and edge.

Speaker #4: Over time, we expect the value of on-device AI combined with pent-up unit replacement demand to drive memory demand growth in PCs and smartphones. In automotive, ADAS remains a powerful driver of content growth.

Speaker #1: We estimate that this increase in our server unit growth expectation is enabled by a modest reduction in average server DRAM content growth, as customers focus on maximizing unit shipments amid a very tight allocation of memory.

Speaker #4: L2 Plus and above vehicles which feature progressively increasing levels of autonomy have over five times the memory and storage content of an average vehicle.

Speaker #1: In NAND, AI context memory storage and HDD displacement opportunities are expanding the addressable market for SSDs. PC and smartphone industry revenue is expected to grow, despite unit volume declines, reflecting resilient demand for high-end devices at higher prices across end device categories.

Speaker #4: The mix of L2 Plus and above vehicles is more than doubling this year to over 20% and is expected to exceed 40% by 2030.

Speaker #4: Average auto memory and storage content is expected to further increase as mixed shifts towards higher levels of autonomy with progressively higher levels of content.

Speaker #1: Agentic AI platforms such as OpenClaw and NemoClaw elevate the value of edge devices, enabling improved tokenomics, greater privacy and latency, and more efficient orchestration of AI between the cloud and edge.

Speaker #4: In robotics, continued advances in simulations foundation models and integrated hardware and software stacks are accelerating physical AI. This creates a growing content-rich opportunity for high bandwidth, low power memory and storage that powers real-time perception inference and control.

Speaker #1: Over time, we expect the value of on-device AI, combined with pent-up unit replacement demand, to drive memory demand growth in PCs and smartphones. In automotive, ADAS remains a powerful driver of content growth.

Speaker #4: Humanoid robots carry 10 times the amount of memory as an average L2 Plus vehicle and we expect a sustained substantial multi-decade memory demand cycle to begin in the latter part of this decade.

Speaker #1: L2+ and above vehicles, which feature progressively increasing levels of autonomy, have over five times the memory and storage content of an average vehicle.

Speaker #4: Now turning to our market outlook, we now expect supply demand conditions for both DRAM and NAND to remain tight beyond calendar 2027. In DRAM, we expect industry DRAM bit shipments in calendar 2026 to grow in the low to mid-20s percentage range slightly above our prior outlook.

Speaker #1: The mix of L2+ and above vehicles is more than doubling this year to over 20%, and is expected to exceed 40% by 2030. Average auto memory and storage content is expected to further increase as the mix shifts towards higher levels of autonomy with progressively higher levels of content.

Sanjay Mehrotra: The mix of L2+ and above vehicles is more than doubling this year to over 20% and is expected to exceed 40% by 2030. Average auto memory and storage content is expected to further increase as mix shifts towards higher levels of autonomy with progressively higher levels of content. In robotics, continued advances in simulation, foundation models, and integrated hardware and software stacks are accelerating physical AI. This creates a growing content-rich opportunity for high bandwidth, low power memory and storage that powers real-time perception, inference, and control. Humanoid robots carry 10 times the amount of memory as an average L2+ vehicle, and we expect a sustained, substantial, multi-decade memory demand cycle to begin in the latter part of this decade. Now turning to our market outlook. We now expect supply-demand conditions for both DRAM and NAND to remain tight beyond calendar 2027.

Speaker #4: In NAND, we expect industry NAND bit shipments in calendar 2026 to grow approximately 20% unchanged from prior expectations. We expect Micron DRAM supply to grow approximately in line with the industry supply growth while Micron NAND supply grows somewhat less than the industry supply growth in calendar 2026.

Speaker #1: In robotics, continued advancements in simulations, foundation models, and integrated hardware and software stacks are accelerating physical AI. This creates a growing, content-rich opportunity for high-bandwidth, low-power memory and storage that powers real-time perception, inference, and control.

Speaker #1: Humanoid robots carry 10 times the amount of memory as an average L2+ vehicle, and we expect a sustained, substantial, multi-decade memory demand cycle to begin in the latter part of this decade.

Speaker #4: Our SCAs provide enhanced visibility on our long-term demand and provide us greater confidence on our CAPEX and R&D investments. We are focused on maximizing output from our fabs including collaboration with our suppliers to accelerate tool acquisition, fab tool installation and RAM, and tool replacements and upgrades to improve productivity.

Speaker #1: Now turning to our market outlook, we expect supply-demand conditions for both DRAM and NAND to remain tight beyond calendar 2027. In DRAM, we expect industry DRAM bit shipments in calendar 2026 to grow in the low- to mid-20s percentage range, slightly above our prior outlook.

Sanjay Mehrotra: In DRAM, we expect industry DRAM bit shipments in calendar 2026 to grow in the low to mid-20s percentage range, slightly above our prior outlook. In NAND, we expect industry NAND bit shipments in calendar 2026 to grow approximately 20%, unchanged from prior expectations. We expect Micron DRAM supply to grow approximately in line with the industry supply growth, while Micron NAND supply grows somewhat less than the industry supply growth in calendar 2026. Our SCAs provide enhanced visibility on our long-term demand and provide us greater confidence on our CapEx and R&D investment. We are focused on maximizing output from our fabs, including collaboration with our suppliers to accelerate tool acquisition, fab tool installation and ramp, and tool replacements and upgrades to improve productivity. Recently, we concluded a multiyear EUV supply agreement with ASML, supporting our increased adoption of EUV at the 1-delta node and future generations.

Speaker #4: Recently, we concluded a multi-year EUV supply agreement with ASML supporting our increased adoption of EUV at the one delta node and future generations. We are also making good progress on expanding our global manufacturing footprint to increase supply over time.

Speaker #1: In NAND, we expect industry NAND bit shipments in calendar 2026 to grow approximately 20%, unchanged from prior expectations. We expect Micron DRAM supply to grow approximately in line with industry supply growth, while Micron NAND supply grows somewhat less than the industry supply growth in calendar 2026.

Speaker #4: This includes our significant investments in US leading edge DRAM manufacturing with our ID1 and ID2 fabs in Idaho whose construction as well underway as well as the first of our New York fab cluster where we broke ground in January this year.

Speaker #1: Our SCAs provide enhanced visibility on our long-term demand and provide us greater confidence in our capex and R&D investment. We are focused on maximizing output from our fabs, including collaboration with our suppliers to accelerate tool acquisition, fab tool installation and ramp, and tool replacements and upgrades to improve productivity.

Speaker #4: ID1 is on track for first wafer output in mid-calendar 2027 and ID2 in late calendar 2028. We recently launched first production starts of our one alpha DDR4 technology in our Manassas Virginia fab which will add to our capability to support the legacy product needs of our customers in auto, industrial, medical, aerospace, and defense markets.

Speaker #1: Recently, we concluded a multi-year EUV supply agreement with ASML, supporting our increased adoption of EUV at the 1δ node and future generations. We are also making good progress on expanding our global manufacturing footprint to increase supply over time.

Speaker #4: In our newly acquired Tongluo site in Taiwan, we expect to support meaningful product shipments from the existing 300,000 square feet fab in mid-calendar 2027.

Sanjay Mehrotra: We are also making good progress on expanding our global manufacturing footprint to increase supply over time. This includes our significant investment in US leading-edge DRAM manufacturing with our ID.1 and ID.2 fabs in Idaho, whose construction is well underway, as well as the first of our New York fab cluster, where we broke ground in January this year. ID.1 is on track for first wafer output in mid-calendar 2027, and ID.2 in late calendar 2028. We recently launched first production starts of our 1α DDR4 technology in our Manassas, Virginia fab, which will add to our capability to support the legacy product needs of our customers in auto, industrial, medical, aerospace, and defense markets. In our newly acquired Tongluo site in Taiwan, we expect to support meaningful product shipments from the existing 300,000 square feet fab in mid-calendar 2027, about a quarter earlier than our prior expectations.

Speaker #1: This includes our significant investments in U.S. leading-edge DRAM manufacturing with our ID1 and ID2 fabs in Idaho, whose construction is well underway, as well as the first of our New York fab cluster, where we broke ground in January this year.

Speaker #4: About a quarter earlier than our prior expectations. Adding to the existing fab, we have begun construction of a similar size second clean room at this site.

Speaker #4: This clean room will support EUV equipment. Our construction activities and timelines are on track for our other facilities in Japan and Singapore. Complementing our advanced packaging capabilities in Taiwan, our Singapore site will become another center of excellence for advanced packaging.

Speaker #1: ID1 is on track for first wafer output in mid-calendar 2027, and ID2 in late calendar 2028. We recently launched first production starts of our 1-alpha DDR4 technology in our Manassas, Virginia, fab, which will add to our capability to support the legacy product needs of our customers in auto, industrial, medical, aerospace, and defense markets.

Speaker #4: We expect this facility will contribute meaningfully to Micron's HBM packaging capacity beginning in the first half of calendar year 2027. As we make these investments, we will remain disciplined in our approach and will be responsive to the market environment to appropriately align our supply plans.

Speaker #1: In our newly acquired Tongluo site in Taiwan, we expect to support meaningful product shipments from the existing 300,000-square-foot fab in mid-calendar 2027.

Speaker #4: I will now turn it over to Mark for our fiscal Q3 financial results and outlook.

Speaker #1: About a quarter earlier than our prior expectations. Adding to the existing fab, we have begun construction of a similarly sized second clean room at this site. This clean room will support EUV equipment.

Speaker #1: Thank you, Sanjay, and good afternoon everyone. Micron delivered exceptional fiscal Q3 results with revenue, gross margin, and EPS exceeding the high end of our guidance.

Sanjay Mehrotra: Adding to the existing fab, we have begun construction of a similar size second clean room at this site. This clean room will support EUV equipment. Our construction activities and timelines are on track for our other facilities in Japan and Singapore. Complementing our advanced packaging capabilities in Taiwan, our Singapore site will become another center of excellence for advanced packaging. We expect this facility will contribute meaningfully to Micron's HBM packaging capacity beginning in the H1 of calendar year 2027. As we make these investments, we will remain disciplined in our approach and will be responsive to the market environment to appropriately align our supply plans. I will now turn it over to Mark for our fiscal Q3 financial results and outlook.

Speaker #1: Our results and today's outlook underscore the increasing value of memory in the AI era. And the structural strength of our business. As mentioned, we have entered into 16 strategic customer agreements.

Speaker #1: Our construction activities and timelines are on track for our other facilities in Japan and Singapore. Complementing our advanced packaging capabilities in Taiwan, our Singapore site will become another center of excellence for advanced packaging.

Speaker #1: For SCAs with defined price, either fixed or subject to floor and ceiling pricing, in accordance with the revenue accounting standard, we are disclosing remaining performance obligations RPO starting this May quarter.

Speaker #1: We expect this facility will contribute meaningfully to Micron's HBM packaging capacity beginning in the first half of calendar year 2027. As we make these investments, we will remain disciplined in our approach and will be responsive to the market environment to appropriately align our supply plans.

Speaker #1: RPO at the end of fiscal Q3 was over $5 billion. For the SCAs that we have entered into so far, including ones executed after the end of fiscal Q3, RPO is approximately $100 billion.

Speaker #1: I will now turn it over to Mark for our fiscal Q3 financial results and outlook. Thank you, Sanjay, and good afternoon, everyone. Micron delivered exceptional fiscal Q3 results, with revenue, gross margin, and EPS exceeding the high end of our guidance.

Speaker #1: RPO is determined based on minimum committed volumes and minimum pricing. And reflects inherently conservative estimates. RPO is not indicative of the total revenue we expect to recognize in future periods.

Mark Murphy: Thank you, Sanjay, and good afternoon, everyone. Micron delivered exceptional fiscal Q3 results with revenue, gross margin, and EPS exceeding the high end of our guidance. Our results and today's outlook underscore the increasing value of memory in the AI era and the structural strength of our business. As mentioned, we have entered into 16 Strategic Customer Agreements. For SCAs with defined price, either fixed or subject to floor and ceiling pricing, in accordance with the revenue accounting standard, we are disclosing remaining performance obligations, RPO, starting this May quarter. RPO at the end of fiscal Q3 was over $5 billion. For the SCAs that we have entered into so far, including ones executed after the end of fiscal Q3, RPO is approximately $100 billion. RPO is determined based on minimum committed volumes and minimum pricing and reflects inherently conservative estimates.

Speaker #1: Our results and today's outlook underscore the increasing value of memory in the AI era and the structural strength of our business. As mentioned, we have entered into 16 strategic customer agreements.

Speaker #1: As such, we expect revenue to well exceed associated RPOs over the term of the agreements. As Sanjay mentioned, we project to receive cash deposits and related financial commitments of $22 billion under the SCAs we have signed so far.

Speaker #1: For SCAs with defined pricing, either fixed or subject to floor and ceiling pricing, in accordance with the revenue accounting standard, we are disclosing remaining performance obligations (RPO) starting this May quarter.

Speaker #1: The overwhelming majority of these commitments approximately $18 billion will be in the form of cash deposits. When all targeted SCAs are completed, we expect to have substantially higher levels of SCA customer deposits and related commitments.

Speaker #1: RPO at the end of fiscal Q3 was over $5 billion. For the SCAs that we have entered into so far, including ones executed after the end of fiscal Q3, RPO is approximately $100 billion.

Speaker #1: These customer deposits will show up on our balance sheet more in fiscal Q4. The cash flows associated with customer deposits appear in financing related cash flows.

Speaker #1: RPO is determined based on minimum committed volumes and minimum pricing, and reflects inherently conservative estimates. RPO is not indicative of the total revenue we expect to recognize in future periods.

Speaker #1: And will not affect our free cash flow. This cash will be returned to customers over time towards a latter half of the agreement term.

Mark Murphy: RPO is not indicative of the total revenue we expect to recognize in future periods. As such, we expect revenue to well exceed associated RPOs over the term of the agreements. As Sanjay mentioned, we project to receive cash deposits and related financial commitments of $22 billion under the SCAs we have signed so far. The overwhelming majority of these commitments, approximately $18 billion, will be in the form of cash deposits. When all targeted SCAs are completed, we expect to have substantially higher levels of SCA customer deposits and related commitments. These customer deposits will show up on our balance sheet more in fiscal Q4. The cash flows associated with customer deposits appear in financing-related cash flows and will not affect our free cash flow. This cash will be returned to customers over time towards the latter half of the agreement term.

Speaker #1: We are excited with our progress in signing these SCAs which will strengthen our long-term financial performance and drive enduring robust ROI for the company over time.

Speaker #1: Total fiscal Q3 revenue was $41.5 billion. Up $74% sequentially and up $346% year over year. Representing our fifth consecutive quarterly revenue record. The $17.6 billion sequential increase is the largest in our history.

Speaker #1: The overwhelming majority of these commitments, approximately $18 billion, will be in the form of cash deposits. When all targeted SCAs are completed, we expect to have substantially higher levels of SCA customer deposits and related commitments.

Speaker #1: Eclipsing last quarter's $10.2 billion record. Fiscal Q3 DRAM revenue was a record $31.3 billion. Up $343% year over year. And represented $76% of total revenue.

Speaker #1: These customer deposits will show up on our balance sheet more in fiscal Q4. The cash flows associated with customer deposits appear in financing-related cash flows and will not affect our free cash flow.

Speaker #1: Sequentially, DRAM revenue increased $67%. BIT shipments were up low single digit percentage range. Prices increased in the low 60s percentage range driven by tight industry conditions and favorable mix.

Speaker #1: This cash will be returned to customers over time toward the latter half of the agreement term. We are excited by our progress in signing these SCAs, which will strengthen our long-term financial performance and drive enduring, robust ROI for the company over time.

Mark Murphy: We are excited with our progress in signing these SCAs, which will strengthen our long-term financial performance and drive enduring, robust ROI for the company over time. Total fiscal Q3 revenue was $41.5 billion, up 74% sequentially and up 346% year over year, representing our fifth consecutive quarterly revenue record. The $17.6 billion sequential increase is the largest in our history, eclipsing last quarter's $10.2 billion record. Fiscal Q3 DRAM revenue was a record $31.3 billion, up 343% year over year, and represented 76% of total revenue. Sequentially, DRAM revenue increased 67%. Bit shipments were up low single-digit percentage range. Prices increased in the low 60s percentage range, driven by tight industry conditions and favorable mix. Fiscal Q3 NAND revenue was a record $9.9 billion, up 361% year over year and represented 24% of total revenue. Sequentially, NAND revenue increased 99%. Bit shipments increased in the mid-single digit percentage range.

Speaker #1: Fiscal Q3 NAND revenue was a record $9.9 billion. Up $361% year over year and represented $24% of total revenue. Sequentially, NAND revenue increased $99%.

Speaker #1: Total fiscal Q3 revenue was $41.5 billion, up 74% sequentially and up 346% year over year, representing our fifth consecutive quarterly revenue record. The $17.6 billion sequential increase is the largest in our history, eclipsing last quarter's $10.2 billion record.

Speaker #1: BIT shipments increased in the mid single digit percentage range. Prices increased in the mid 80s percentage range driven by tight NAND industry conditions and a favorable mix.

Speaker #1: The consolidated gross margin for fiscal Q3 was $84.9%. Up 10 percentage points sequentially. This improvement was driven primarily by higher pricing. And also benefited from continuing strong execution and favorable mix.

Speaker #1: Fiscal Q3 DRAM revenue was a record $31.3 billion, up 343% year over year, and represented 76% of total revenue. Sequentially, DRAM revenue increased 67%.

Speaker #1: Bit shipments were up in the low single-digit percentage range. Prices increased in the low-60% range, driven by tight industry conditions and a favorable mix.

Speaker #1: Fiscal Q3 gross margin more than doubled from a year ago and was a new company record. Now, turning to quarterly financial performance by business unit.

Speaker #1: Fiscal Q3 NAND revenue was a record $9.9 billion, up 361% year over year, and represented 24% of total revenue. Sequentially, NAND revenue increased 99%.

Speaker #1: Cloud memory business unit revenue was a record $13.8 billion. And represented 33% of total company revenue. CMBU revenue was up $78% sequentially. Driven by higher pricing and BIT shipments.

Speaker #1: BIT shipments increased in the mid-single-digit percentage range. Prices increased in the mid-80s percentage range, driven by tight NAND industry conditions and a favorable mix.

Speaker #1: CMBU gross margins were 83%. Up 9 percentage points sequentially. Driven by higher pricing. Core data center business unit revenue was a record $11.5 billion.

Mark Murphy: Prices increased in the mid-80s percentage range, driven by tight NAND industry conditions and a favorable mix. The consolidated gross margin for fiscal Q3 was 84.9%, up 10 percentage points sequentially. This improvement was driven primarily by higher pricing and also benefited from continuing strong execution and favorable mix. Fiscal Q3 gross margin more than doubled from a year ago and was a new company record. Now, turning to quarterly financial performance by business unit. Cloud Memory Business Unit revenue was a record $13.8 billion and represented 33% of total company revenue. CMBU revenue was up 78% sequentially, driven by higher pricing and bit shipments. CMBU gross margins were 83%, up nine percentage points sequentially, driven by higher pricing. Core Data Center Business Unit revenue was a record $11.5 billion and represented 28% of total company revenue.

Speaker #1: The consolidated gross margin for fiscal Q3 was 84.9%, up 10 percentage points sequentially. This improvement was driven primarily by higher pricing, and also benefited from continuing strong execution and favorable mix.

Speaker #1: And represented 28% of total company revenue. CDBU revenue was up $103% sequentially. Driven by higher pricing and a favorable mix. CDBU gross margins were $87%.

Speaker #1: Up 12 percentage points sequentially. Driven by higher pricing. Mobile and client business unit revenue was a record $11.5 billion. And represented 28% of total company revenue.

Speaker #1: Fiscal Q3 gross margin more than doubled from a year ago and was a new company record. Now, turning to quarterly financial performance by business unit.

Speaker #1: MCBU revenue was up $49% sequentially. Driven by higher pricing. Partially offset by lower BIT shipments. MCBU gross margins were $87%. Up 9 percentage points sequentially.

Speaker #1: Cloud Memory Business Unit (CMBU) revenue was a record $13.8 billion and represented 33% of total company revenue. CMBU revenue was up 78% sequentially, driven by higher pricing and bit shipments.

Speaker #1: Driven primarily by higher pricing and helped by favorable mix. Automotive and embedded business unit revenue was a record $4.6 billion. And represented 11% of total company revenue.

Speaker #1: CMBU gross margins were 83%, up 9 percentage points sequentially, driven by higher pricing. Core Data Center Business Unit revenue was a record $11.5 billion.

Speaker #1: And represented 28% of total company revenue. CDBU revenue was up 103% sequentially, driven by higher pricing and a favorable mix. CDBU gross margins were 87%.

Speaker #1: AEBU revenue was up 71% sequentially. Driven by higher pricing and higher BIT shipments. ABU gross margins were $79%. Up 11 percentage points sequentially. Driven by higher pricing and favorable mix.

Mark Murphy: CDBU revenue was up 103% sequentially, driven by higher pricing and a favorable mix. CDBU gross margins were 87%, up 12 percentage points sequentially, driven by higher pricing. Mobile and Client Business Unit revenue was a record $11.5 billion and represented 28% of total company revenue. MCBU revenue was up 49% sequentially, driven by higher pricing, partially offset by lower bit shipments. MCBU gross margins were 87%, up 9 percentage points sequentially, driven primarily by higher pricing and helped by favorable mix. Automotive and Embedded Business Unit revenue was a record $4.6 billion and represented 11% of total company revenue. AEBU revenue was up 71% sequentially, driven by higher pricing and higher bit shipments. AEBU gross margins were 79%, up 11 percentage points sequentially, driven by higher pricing and favorable mix. Operating expenses in fiscal Q3 were $1.5 billion, up $97 million quarter-over-quarter.

Speaker #1: Up 12 percentage points sequentially, driven by higher pricing. Mobile and Client Business Unit revenue was a record $11.5 billion and represented 28% of total company revenue.

Speaker #1: Operating expenses and fiscal Q3 were $1.5 billion. Up $97 million. Quarter over quarter. The sequential increase was due to higher variable compensation expense from the strong performance of the business.

Speaker #1: MCBU revenue was up 49% sequentially, driven by higher pricing and partially offset by lower bit shipments. MCBU gross margins were 87%, up 9 percentage points sequentially.

Speaker #1: We generated operating income of $33.7 billion in fiscal Q3. Resulting in an operating margin of $81.2%. Up 12 percentage points sequentially. And $54 percentage points year over year.

Speaker #1: Driven primarily by higher pricing and helped by favorable mix. Automotive and Embedded Business Unit revenue was a record $4.6 billion and represented 11% of total company revenue.

Speaker #1: Fiscal Q3 taxes were $5.1 billion. On an effective tax rate of $14.9%. Non-GAAP diluted earnings per share in fiscal Q3 was $25.11. Up $106% sequentially.

Speaker #1: AEBU revenue was up 71% sequentially, driven by higher pricing and higher bit shipments. ABU gross margins were 79%, up 11 percentage points sequentially, driven by higher pricing and a favorable mix.

Speaker #1: Turning to cash flow and capital expenditures. In fiscal Q3, operating cash flows were $25.4 billion. Capital expenditures were $7.1 billion. Resulting in free cash flow of $18.3 billion.

Speaker #1: Operating expenses in fiscal Q3 were $1.5 billion, up $97 million quarter over quarter. The sequential increase was due to higher variable compensation expense from the strong performance of the business.

Mark Murphy: The sequential increase was due to higher variable compensation expense from the strong performance of the business. We generated operating income of $33.7 billion in fiscal Q3, resulting in an operating margin of 81.2%, up 12 percentage points sequentially and 54 percentage points year-over-year. Fiscal Q3 taxes were $5.1 billion on an effective tax rate of 14.9%. Non-GAAP diluted EPS in fiscal Q3 was $25.11, up 106% sequentially. Turning to cash flow and capital expenditures. In fiscal Q3, operating cash flows were $25.4 billion. Capital expenditures were $7.1 billion, resulting in free cash flow of $18.3 billion. Fiscal Q3 free cash flow was a quarterly record for the company. Ending inventory for fiscal Q3 was $8.6 billion with days of inventory at 120. DRAM inventories are very tight and below 120 days. We reached record levels of cash and investments of $30.2 billion at quarter end.

Speaker #1: Fiscal Q3 free cash flow was a quarterly record for the company. Ending inventory for fiscal Q3 was $8.6 billion. With days of inventory at $120.

Speaker #1: We generated operating income of $33.7 billion in fiscal Q3, resulting in an operating margin of 81.2%. That’s up 12 percentage points sequentially, and 54 percentage points year over year.

Speaker #1: DRAM inventories are very tight and below $120 days. We reached record levels of cash investments of $30.2 billion at quarter end. During fiscal Q3, we reduced debt by $4.4 billion.

Speaker #1: Fiscal Q3 taxes were $5.1 billion, on an effective tax rate of 14.9%. Non-GAAP diluted earnings per share in fiscal Q3 was $25.11, up 106% sequentially.

Speaker #1: Including a cash tender offer that reduced senior notes by $4.3 billion. The weighted average maturity on our outstanding debt is April 2035. We closed the quarter with $5.7 billion of debt and a net cash balance of $24.4 billion.

Speaker #1: Turning to cash flow and capital expenditures. In fiscal Q3, operating cash flows were $25.4 billion. Capital expenditures were $7.1 billion, resulting in free cash flow of $18.3 billion.

Speaker #1: This fiscal year, we received upgrades from all three major credit rating agencies. Including an upgrade to BBB Plus. On the strength of our technology and product position.

Speaker #1: Fiscal Q3 free cash flow was a quarterly record for the company. Ending inventory for fiscal Q3 was $8.6 billion, with days of inventory at 120.

Speaker #1: Financial outlook. And strong balance sheet. Our balance sheet has never been stronger. And we project it to strengthen further even as we increase investment in technology and needed capacity.

Speaker #1: DRAM inventories are very tight and below 120 days. We reached record levels of cash investments of $30.2 billion at quarter end. During fiscal Q3, we reduced debt by $4.4 billion.

Speaker #1: Now turning to guidance. We expect fiscal Q4 revenue to be a record $50 billion. Plus or minus $1 billion. Gross margin to be approximately $86%.

Mark Murphy: During fiscal Q3, we reduced debt by $4.4 billion, including a cash tender offer that reduced senior notes by $4.3 billion. The weighted average maturity on our outstanding debt is April 2035. We closed the quarter with $5.7 billion of debt and a net cash balance of $24.4 billion. This fiscal year, we received upgrades from all three major credit rating agencies, including an upgrade to BBB+ on the strength of our technology and product position, financial outlook, and strong balance sheet. Our balance sheet has never been stronger, and we project it to strengthen further even as we increase investment in technology and needed capacity. Now, turning to guidance. We expect fiscal Q4 revenue to be a record $50 billion, ±$1 billion, gross margin to be approximately 86%, and operating expenses to be approximately $1.65 billion.

Speaker #1: And operating expenses to be approximately $1.65 billion. Based on a share count of approximately 1.15 billion shares. We expect EPS to be a record $31 per share.

Speaker #1: This fiscal year, we received upgrades from all three major credit rating agencies, including an upgrade to BBB Plus, on the strength of our technology and product position.

Speaker #1: Plus or minus $1. Our fiscal Q4 gross margin outlook reflects a meaningful moderation in the rate of price increases. We project operating expenses to increase by approximately $1 billion in fiscal 2027.

Speaker #1: Financial outlook and strong balance sheet. Our balance sheet has never been stronger, and we project it to strengthen further, even as we increase investment in technology and needed capacity.

Speaker #1: As we expand R&D to support an unprecedented set of opportunities in memory and storage. We expect operating expense increases to be weighted to the second half.

Speaker #1: Now, turning to guidance. We expect fiscal Q4 revenue to be a record $50 billion, plus or minus $1 billion. Gross margin is expected to be approximately 86%.

Speaker #1: We expect a fiscal Q4 and fiscal 2026 tax rate of around 15%. Micron continues to invest in the discipline manner across our global footprint to address customer demand.

Speaker #1: And operating expenses to be approximately $1.65 billion. Based on a share count of approximately 1.15 billion shares, we expect EPS to be a record $31 per share.

Speaker #1: As a reminder, our capex is net of anticipated government incentives. In fiscal Q4, we project capex of around $10 billion. Bringing full year fiscal 2026 capital spending to approximately $27 billion.

Mark Murphy: Based on a share count of approximately 1.15 billion shares, we expect EPS to be a record $31 per share, ±$1. Our fiscal Q4 gross margin outlook reflects a meaningful moderation in the rate of price increases. We project operating expenses to increase by approximately $1 billion in fiscal 2027 as we expand R&D to support an unprecedented set of opportunities in memory and storage. We expect operating expense increases to be weighted to the H2. We expect a fiscal Q4 and fiscal 2026 tax rate of around 15%. Micron continues to invest in a disciplined manner across our global footprint to address customer demand. As a reminder, our CapEx is net of anticipated government incentives. In fiscal Q4, we project CapEx of around $10 billion, bringing full year fiscal 2026 capital spending to approximately $27 billion.

Speaker #1: Plus or minus a dollar. Our fiscal Q4 gross margin outlook reflects a meaningful moderation in the rate of price increases. We project operating expenses to increase by approximately $1 billion in fiscal 2027.

Speaker #1: We expect quarterly capex in fiscal 2027 to be above fiscal Q4 levels. With more than half the increase year over year in fiscal 2027 from construction capex.

Speaker #1: As we expand R&D to support an unprecedented set of opportunities in memory and storage, we expect operating expense increases to be weighted to the second half.

Speaker #1: As we pull in clean room capacity required to address long-term demand. We forecast free cash flow to increase substantially again in fiscal Q4. From December 9th, 2026, the second anniversary of the signature of our definitive CHIPS agreements.

Speaker #1: We expect a fiscal Q4 and fiscal 2026 tax rate of around 15%. Micron continues to invest in a disciplined manner across our global footprint.

Speaker #1: We intend to increase our capital return. Over time, we expect to return 100% of our excess cash to shareholders. Any impacts that may occur due to trade or geopolitical developments are not included in our guidance.

Speaker #1: To address customer demand. As a reminder, our capex is net of anticipated government incentives. In fiscal Q4, we project capex of around $10 billion.

Speaker #1: Bringing full-year fiscal 2026 capital spending to approximately $27 billion. We expect quarterly capex in fiscal 2027 to be above fiscal Q4 levels, with more than half the year-over-year increase in fiscal 2027 coming from construction capex.

Speaker #1: I'll now turn it over to Sanjay to close.

Speaker #2: Thank you, Mark. AI has elevated the value of memory. Micron is collaborating closely with our customers and suppliers across technology, product, manufacturing, and commercial teams in this tight industry environment.

Mark Murphy: We expect quarterly CapEx in fiscal 2027 to be above FQ4 levels, with more than half the increase year over year in fiscal 2027 from construction CapEx as we pull in clean room capacity required to address long-term demand. We forecast free cash flow to increase substantially again in FQ4. From 9 December 2026, the second anniversary of the signature of our definitive CHIPS agreements, we intend to increase our capital return. Over time, we expect to return 100% of our excess cash to shareholders. Any impacts that may occur due to trade or geopolitical developments are not included in our guidance. I'll now turn it over to Sanjay to close.

Speaker #2: Strategic customer agreements are ushering in an exciting era for Micron. We expect these SCAs to significantly enhance the durability and predictability of Micron's strong financial performance.

Speaker #1: As we pull in clean room capacity required to address long-term demand, we forecast free cash flow to increase substantially again in fiscal Q4.

Speaker #2: Accelerating the transformation of our business model. I'm thankful to Micron's team members worldwide whose relentless focus on execution on all fronts has positioned Micron as a leader in this new AI era.

Speaker #1: From December 9, 2026, the second anniversary of the signature of our definitive CHIPS agreements, we intend to increase our capital return. Over time, we expect to return 100% of our excess cash to shareholders.

Speaker #2: As we continue to advance our mission to accelerate intelligence to enrich life for all. We will now open for questions.

Speaker #1: Any impacts that may occur due to trade or geopolitical developments are not included in our guidance. I'll now turn it over to Sanjay to close.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Sanjay Mehrotra: Thank you, Mark. AI has elevated the value of memory. Micron is collaborating closely with our customers and suppliers across technology, product, manufacturing, and commercial teams in this tight industry environment. Strategic customer agreements are ushering in an exciting era for Micron. We expect these SCAs to significantly enhance the durability and predictability of Micron's strong financial performance, accelerating the transformation of our business model. I'm thankful to Micron's team members worldwide, whose relentless focus on execution on all fronts has positioned Micron as a leader in this new AI era, as we continue to advance our mission to accelerate intelligence to enrich life for all. We will now open for questions.

Speaker #3: To withdraw your question, press star one again. Your first question comes from the line of Timothy Arcuri, with UBS. Your line is open. Please go ahead.

Speaker #4: Hi. Sanjay, I'm so I think we're all trying to figure out how much is locked in in kind of a floor price. Scenario over the next five years.

Speaker #2: Accelerating the transformation of our business model. I'm thankful to Micron's team members worldwide, whose relentless focus on execution on all fronts has positioned Micron as a leader in this new AI era.

Speaker #4: And there were two things you said. You said that 14 of the 16 SCAs have $100 billion in cumulative revenue. So that sort of says like $20 billion a year at like a floor price, which is way below the run rate that you just guided.

Speaker #2: As we continue to advance our mission to accelerate intelligence to enrich life for all, we will now open for questions.

Speaker #4: So that says that not that much would be covered at a floor price. But then you also said that 40% of revenue will be moving inside of these SCAs.

Speaker #4: So can you maybe double click on all that and sort of help us in like a floor price scenario? Can you help us think about how much of revenue per year would be guaranteed?

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Your first question comes from the line of Timothy Arcuri with UBS. Your line is open. Please go ahead.

Speaker #2: As we indicated, that under these SCAs that have been completed so far, at the floor price, the revenue is projected to be $100 billion.

Speaker #3: To withdraw your question, press star one again. Your first question comes from the line of Timothy Arcuri with UBS. Your line is open—please go ahead.

Speaker #2: But again, as Mark noted, in his remarks, I mean, we expect revenue to be much higher than that. Note that at the floor price, that our profitability levels at the gross margins at the pro floor prices are higher than peak margins at any time in the past.

Speaker #4: Hi, Sanjay. I'm—so, I think we're all trying to figure out how much is locked in, in kind of a floor price scenario over the next five years.

Timothy Arcuri: Hi. Sanjay, I think we're all trying to figure out how much is locked in in kind of a floor price scenario over the next five years, and there were two things you said. You said that 14 of the 16 SCAs have $100 billion in cumulative revenue. That sort of says, like, $20 billion a year at, like, a floor price, which is way below the run rate that you just guided. That says that not that much would be covered at a floor price. Then you also said that 40% of revenue will be moving inside of these SCAs. Can you maybe double-click on all that and sort of help us in, like, a floor price scenario? Can you help us think about how much of revenue per year would be guaranteed?

Speaker #4: And there were two things you said. You said that 14 of the 16 SCAs have $100 billion in cumulative revenue. So that sort of says like $20 billion a year at, like, a floor price, which is way below the, you know, run rate that you just guided.

Speaker #2: And so overall, about 20% of DRAM and about 30% of our NAND volume is covered in these SCAs so far. So that amounts to about $25% of our revenue that you can project over the term of these agreements.

Speaker #4: So that says that not that much would be covered at a, you know, floor price. But then you also said that 40% of revenue will be moving inside of these SCAs.

Speaker #4: So can you maybe, you know, double-click on all that and sort of help us in a, like, floor price scenario? You know, can you help us think about how much of, you know, revenue per year would be guaranteed?

Speaker #2: So again, RPO at the floor price is to be reported as an accounting measure. But we fully expect that the revenue will be much higher than that.

Speaker #2: As we indicated, under these SCAs that have been completed so far, at the floor price, the revenue is projected to be $100 billion.

Sanjay Mehrotra: As we indicated that under these SCAs that have been completed so far, at the floor price, the revenue is projected to be $100 billion. Again, as Mark noted in his remarks, we expect revenue to be much higher than that. Note that at the floor price, our profitability levels, the gross margins at the floor prices are higher than peak margins at any time in the past. Overall, about 20% of DRAM and about 30% of our NAND volume is covered in these SCAs so far. That amounts to about 25% of our revenue that you can project over the term of these agreements. Again, RPO at the floor price is to be reported as an accounting measure, but we fully expect that the revenue will be much higher than that.

Speaker #4: Got it. And then with respect to just how these layer in, Mark, how much of the August quarter revenue, for example, will be flowing under an SCA?

Speaker #2: But again, as Mark noted in his remarks, we expect revenue to be much higher than that. Note that at the floor price, our profitability levels at the gross margins at the pro floor prices are higher than peak margins at any time in the past.

Speaker #4: I'm just trying to figure out how to layer that into the model. And when you get to like a full run rate where like by next fiscal Q4, we'll you be at sort of a full run rate, what's being covered.

Speaker #4: Under these SCAs, can you help us sort of feather that in?

Speaker #2: And so, overall, about 20% of DRAM and about 30% of our NAND volume is covered in these SCAs so far. So, that amounts to about 25% of our revenue that you can project over the term of these agreements.

Speaker #2: Yeah, Tim. So you'll see a disclosure in the Q. Which will disclose the next 12 months revenue associated with each set of agreements that have an RPO.

Speaker #2: So for example, for those that close within Q3, you'll see an RPO of $5 billion over $5 billion. And you'll see a next 12 months associated with that of about $1.8 billion.

Speaker #2: So again, you know, RPO at the floor price is to be reported as an accounting measure, but we fully expect that the revenue will be much higher than that.

Speaker #4: Got it. And then, with respect to just how these layer in, Mark, how much of the August quarter revenue, for example, will be flowing under an SCA?

Timothy Arcuri: Got it. With respect to just how these layer in, Mark, how much of the August quarter revenue, for example, will be flowing under an SCA? I'm just trying to figure how to layer that into the model, and when you get to a full run rate where, by next fiscal Q4, will you be at sort of a full run rate of what's being covered under these SCAs? Can you help us sort of feather that in?

Speaker #2: And yeah, that is because those are some of the smaller agreements that Sanjay mentioned. Automotive agreements. Now, in the fourth quarter, as Sanjay mentioned, you will see an RPO reported on the 16 or on 14 of the 16 agreements.

Speaker #4: I'm just trying to figure out how to layer that into the model. And when you get to a full run rate, like by next fiscal Q4, will you be at sort of a full run rate?

Speaker #4: If you know what's being covered, you know, under these SCAs, can you help us sort of feather that in?

Speaker #2: That is going to be about $100 billion. And there will be an associated next 12 months associated with those that will be disclosed in the K.

Speaker #2: Yeah. Tim, so you'll see a disclosure in the Q, which will disclose the next 12 months' revenue associated with each set of agreements that have an RPO.

Mark Murphy: Tim, you'll see a disclosure in the Q, which will disclose the next 12 months revenue associated with each set of agreements that have an RPO. For example, for those that closed within Q3, you'll see an RPO of over $5 billion, and you'll see a next 12 months associated with that of about $1.8 billion. That is because those are some of the smaller agreements that Sanjay mentioned, automotive agreements. Now, in Q4, as Sanjay mentioned, you will see an RPO reported on 14 of the 16 agreements. That is going to be about $100 billion. There will be an associated next 12 months associated with those that will be disclosed in the K. You will be able to see roughly how these are feathering in.

Speaker #2: So you will be able to see roughly how these are feathering in. And keep in mind this RPO number, it is a minimally contractually enforceable amount for the intersection of volume and price.

Speaker #2: So, for example, for those that close within Q3, you'll see an RPO of over $5 billion, and you'll see a next 12 months associated with that of about $1.8 billion.

Speaker #2: So you're looking, Tim, at a minimum number. And that's important to keep in mind. And we were clear that it doesn't reflect what we think will happen.

Speaker #2: And then also, each quarter, this RPO number will change. It will change based on contracts that are added in. It may change on additional volume commitments, with the determined price.

Speaker #2: And you know that is that is because those are some of the smaller agreements that Sanjay mentioned you know automotive agreements. Now in the fourth quarter as as Sanjay mentioned you will see an RPO reported you know on the 16 agre or on 14 of the 16 agreements.

Speaker #2: It will change based on shipments and how that RPO is declined after that performance obligation is met. So you'll be getting a lot of additional reporting.

Speaker #2: That is going to be about $100 billion. And there will be an associated disclosure with those that will be disclosed in the K. So you will be able to see roughly how these are feathering in.

Speaker #2: This is all under ASC 606. I know it's something that we it's not a heavy standard. Typically in some of our reporting, but this feature of RPO, you will see.

Speaker #2: And, you know, keep in mind this RPO number—you know, it is a minimally, contractually enforceable amount for the intersection of volume and price.

Mark Murphy: Keep in mind, this RPO number, it is a minimally contractually enforceable amount for the intersection of volume and price. You're looking, Tim, at a minimum number, and that's important to keep in mind, and we were clear that it doesn't reflect what we think will happen. Also, each quarter, this RPO number will change. It will change based on contracts that are added in. It may change on additional volume commitments with the determined price. It will change based on shipments and how that RPO declines after that performance obligation is met. You'll be getting a lot of additional reporting. This is all under ASC 606. I know it's something that is not a heavy standard typically in some of our reporting, but this feature of RPO, you will see.

Speaker #2: I also want to emphasize, as Sanjay mentioned, that even at the floor price, and eventually we anticipate about 40% of our revenue being under this sort of RPO-related commitments.

Speaker #2: So you're looking, Tim, at a minimum number. And that's important to keep in mind. And we were clear that it doesn't reflect what we think will happen.

Speaker #2: That even under the floor on the floor price, we expect the margins to be significantly above prior peak margins.

Speaker #2: And then also, each quarter, you know, this RPO number will change. It will change based on contracts that are added in. It may change on additional volume commitments.

Speaker #4: Okay. Thank you both.

Speaker #2: With the determined price, it will change based on shipments and how that RPO is declined after that performance obligation is met. So, you'll be getting a lot of additional reporting.

Speaker #3: Your next question comes from the line of Joseph Moore with Morgan Stanley. Your line is open. Please go ahead.

Speaker #4: I also wanted to ask about the LPAs. Can you talk about the role of the cash deposit? Should we think of that as being sort of a escrow collateral account where if people cancel, you would have access to cash?

Speaker #2: This is all under ASC 606. I know it's something that we, you know, it's not a heavy standard typically in some of our reporting.

Speaker #2: But this, this feature of RPO you will see. I also want to emphasize, as Sanjay mentioned, that even at the floor price, and eventually, we anticipate about 40% of our revenue being under this sort of RPO-related commitments.

Speaker #4: Like if it's not revenue, like sort of what is the point of the deposit? And what is the relationship of those deposits with the RPO if there is one?

Mark Murphy: I also want to emphasize, as Sanjay mentioned, that even at the floor price, eventually we anticipate about 40% of our revenue being under this sort of RPO related commitments, that even on the floor price, we expect the margins to be significantly above prior peak margins.

Speaker #2: Yeah. Joe, on the deposits, so we mentioned that we have 22 billion of deposits and financial commitments associated with the agreement signed to date as of this call.

Speaker #2: That even under the floor, on the floor price, we expect the margins to be significantly above prior peak margins.

Speaker #4: Okay. Thank you both.

Speaker #2: $18 billion approximately of that is cash deposits. We'll receive those deposits. We received about $500 million, $400 plus million in the third quarter. We'll receive about another $10 billion in the fourth quarter.

Timothy Arcuri: Okay. Thank you both.

Speaker #3: Your next question comes from the line of Joseph Moore with Morgan Stanley. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Joseph Moore with Morgan Stanley. Your line is open. Please go ahead.

Speaker #4: I also wanted to ask about the LTAs. Can you talk about the role of the cash deposits? Should we think of that as being sort of an escrow collateral account, where if people cancel, you would have access to the cash?

Joseph Moore: I also wanted to ask about the LTAs. Can you talk about the role of the cash deposit? Should we think of that as being sort of an escrow collateral account, where if people cancel, you would have access to cash? If it's not revenue, what is the point of the deposit, and what is the relationship of those deposits with the RPO, if there is one?

Speaker #2: And you will these will be seen cash deposits. They'll be seen in financing cash flows. They will not affect free cash flow. They will be they are held by us.

Speaker #4: Like, if it's not revenue, what is the point of the deposit? And what is the relationship of those deposits with the RPO, if there is one?

Speaker #2: Yeah. Joe on the on the deposits. So you know we mentioned that you know that we that we have 22 billion of deposits and financial commitments associated with the agreement signed to date as of this call.

Mark Murphy: Yeah. Joe, on the deposits, we mentioned that we have $22 billion of deposits and financial commitments associated with the agreements signed to date as of this call. Approximately $18 billion of that is cash deposits. We'll receive those deposits. We received about $400 plus million in Q3. We'll receive about another $10 billion in Q4. These will be seen, cash deposits, they'll be seen in financing cash flows. They will not affect free cash flow. They are held by us during the performance commitments of the agreements, and as those agreements are satisfied, those deposits will be returned over time, but heavily weighted to the back half of the agreements. The difference between the $22 billion and the $18 billion, roughly the $4 billion of others, is letters of credit.

Speaker #2: During the performance commitments of the agreements. And as those agreements are satisfied, those deposits will be returned over time. But heavily weighted to the back half of the agreements.

Speaker #2: The difference between the $22 billion and the $18, so roughly the $4 billion of others is letters for credit.

Speaker #2: $18 billion approximately of that is cash deposits. We'll receive those deposits. You know we received you know about $500 million $400 plus million in the third quarter.

Speaker #4: Okay. But what is the role I mean, what happens to that cash? It seems like they're putting a deposit and then they get the deposit back.

Speaker #2: We'll receive about another $10 billion in the fourth quarter. And you will, you know, these will be seen as cash deposits. They'll be seen in financing cash flows.

Speaker #4: What is the reason for them to commit that cash? Is that something where there's a take or pay that that cash is related to?

Speaker #4: It's not a prepayment. Just can you help us understand that?

Speaker #2: Yeah, thanks, Joe. It's not a prepayment. It's a separate commitment by the customers. And a reflection of the fact that we have a binding agreement.

Speaker #2: They will not affect free cash flow. They will be held by us during the performance commitments of the agreements. And as those agreements are satisfied, those deposits will be returned over time.

Speaker #2: And. These are take or pay agreements. And we hold the cash and it's a reflection of our shared commitment to perform under these agreements.

Speaker #2: But heavily weighted to the back half of the agreements. The difference between the, you know, $22 billion and the $18 billion, so roughly the $4 billion—$4 billion of that is letters of credit.

Speaker #2: Now, this is good for my cron, of course. These agreements and that we get visibility on our demand. It's committed volume. That we can be confident about making our investments large capital investments.

Speaker #4: Okay. But what is the role—I mean, what happens to that cash? You know, it seems like they're putting a deposit down and then they get the deposit back.

Joseph Moore: Okay. What is the role? What happens to that cash? It seems like they're putting a deposit, they get the deposit back. What is the reason for them to commit that cash? Is that something where there's a take or pay that that cash is related to? It's not a prepayment. Just can you help us understand that?

Speaker #2: Closer technology relationship. It's good for the customers because they have supply assurance. They have leading technology. So in our view, it's a win-win. And very, very happy with the nature of the agreements.

Speaker #4: You know, is—what is the reason for them to commit that cash? Is that something where there's a take-or-pay that that cash is related to?

Speaker #4: You know it's not a prepayment. Can you just help us understand that?

Speaker #2: Yeah. Thanks Joe. It's it's not a prepayment. It's a separate commitment by the customers. And a and a and a reflection of the fact that we have a binding agreement.

Speaker #2: And the impact they have on the business and indication of a transformed business model, my cron.

Mark Murphy: Yeah. Thanks, Joe. It's not a prepayment. It's a separate commitment by the customers and a reflection of the fact that we have a binding agreement. These are take or pay agreements. We hold the cash, it's a reflection of our shared commitment to perform under these agreements. Now, this is good for Micron, of course, these agreements, in that we get visibility on our demand. It's committed volume that we can be confident about making our investments, large capital investments, a closer technology relationship. It's good for the customers because they have supply assurance. They have the leading technology. In our view, it's a win-win, we are very happy with the nature of the agreements and the impact they have on the business and indication of a transformed business model at Micron.

Speaker #4: Very helpful. Thanks for all the disclosure on this. It's really helped a lot. Thanks.

Speaker #2: And these are take-or-pay agreements, and, you know, we hold the cash, and it's a reflection of our shared commitment to, you know, perform under these agreements.

Speaker #3: Your next question comes from the line of CJ Mews with Canter Fitzgerald. Your line is open. Please go ahead.

Speaker #4: Yep. Good afternoon. Thank you for taking the question. Maybe I'll just follow up on Joe's question. Mark, when you think about these cash deposits, do you view that as fungible cash and used for capex?

Speaker #2: Now you know this is this is good for Micron of course. These agreements. And that we get visibility on our demand. It's committed volume.

Speaker #4: And I guess as part of that, when you contemplate capital returns, particularly after December 14th kind of CHIPS Act end date, do you will you include kind of that cash that you received in your gross cash flows and your thoughts around capital returns?

Speaker #2: That way, we can be confident about making our investments—large capital investments. Closer technology relationships are good for the customers because they have supply assurance.

Speaker #4: Or is that something given that you will have to return it eventually that would cause you to think steady state you'll need to hold more gross cash, although sequel?

Speaker #2: They have leading technology, so in our view it's a win-win. And, you know, we're very, very happy with the nature of the agreements and the impact they have on the business.

Speaker #2: CJ, it's unrestricted.

Speaker #2: An indication of a transformed business model at Micron.

Speaker #4: But does it change your thoughts around gross cash that you feel comfortable holding on your books?

Speaker #4: Very helpful. Thanks for all the disclosure on this. It really helps a lot. Thanks.

Joseph Moore: Very helpful. Thanks for all the disclosure on this. It really helps a lot. Thanks.

Speaker #2: Not in the near term. I think we of course are going to have what we view as adequate liquidity to support the operation of the business.

Speaker #3: Your next question comes from the line of CJ Mews with Cantor Fitzgerald. Your line is open, please go ahead.

Operator: Your next question comes from the line of C.J. Muse with Cantor Fitzgerald. Your line is open. Please go ahead.

Speaker #4: Yikes. Good afternoon. Thank you for taking the question. Maybe I'll just follow up on Joe's question, Mark. You know, when you think about these cash deposits...

C.J. Muse: Yeah. Good afternoon. Thank you for taking the question. Maybe to just follow up on Joe's question, Mark. When you think about these cash deposits, do you view that as fungible cash and used for CapEx? I guess as part of that, when you contemplate capital returns, particularly after 14 December, kind of CHIPS Act end date, will you include that cash that you received in your gross cash thoughts and your thoughts around capital returns, or is that something, given that you will have to return it eventually, that would cause you to think steady state, you'll need to hold more gross cash, all else equal?

Speaker #2: That would include over time returning the deposits as customers and my cron perform on the contracts. And so that of course is important. But and then we would hold liquidity to satisfy what investments we believe are important for the business.

Speaker #4: Do you do you view that as fungible cash and and used for for CapEx. And and I guess as part of that when you contemplate capital returns particularly you know after December 14th kind of Chips Act end date.

Speaker #4: Do you, will you include kind of that cash that you received in your gross cash flows? And your thoughts around capital returns— or is that something, given that you will have to return it eventually, that would cause you to think steady state?

Speaker #2: We've got a lot of we've got large projects underway to provide supply and also R&D programs. So and again, I'll emphasize that the customers as I mentioned earlier, they will get this return deposit back in the latter half of the agreement.

Speaker #4: You'll need to hold more gross cash, although sequel.

Speaker #2: CJ it's unrestricted.

Mark Murphy: C.J., it's unrestricted.

Speaker #4: But does it change your thoughts around the gross cash that you need, that you feel comfortable holding, you know, on your books?

C.J. Muse: Does it change your thoughts around gross cash that you feel comfortable holding on your books?

Speaker #2: Not in the near term. I think we, you know, we of course are going to have what we view as adequate liquidity to support the operation of the business.

Mark Murphy: Not in the near term. I think we, of course, are going to have What we view is adequate liquidity to support the operation of the business. That would include, over time, returning the deposits as customers and Micron perform on the contracts. That, of course, is important. We would hold liquidity to satisfy what investments we believe are important for the business. We've got large projects underway to provide supply and also R&D programs. Again, I'll emphasize that the customers, as I mentioned earlier, they will get this return deposit back in the latter half of the agreement.

Speaker #4: Perfect. And then maybe as a follow-up on HBM revenues, could you kind of share how you're thinking about both your market share and perhaps total revenues into calendar 26?

Speaker #2: That would include, over time, returning the deposits as customers and Micron perform on the contracts. And so, that, of course, is important.

Speaker #4: And is there an expectation into calendar 27 that you can bridge margins there closer to what you're getting on D5? Or is that a place that will be permanently below that D5 level?

Speaker #2: But you know, and then we would hold liquidity to satisfy what investments we believe are important for the business. You know, we've got a lot of—you know, we've got large projects underway to provide supply.

Speaker #4: Thanks so much.

Speaker #2: So with respect to HBM, first of all, very, very pleased with our HBM4 product and my cron's shipments. Already, of HBM4, of over $1 billion.

Speaker #2: And also, you know, R&D programs. So, and you know, and again, I'll emphasize that, you know, the customers, you know, as I mentioned earlier, they will get this return deposit back in the latter half—latter half of the agreement.

Speaker #2: HBM market share we strategically are choosing it to be close to our DRAM share. And this is important because of the trade ratio of HBM, it consumes, as you know, significant amount of wafers.

Speaker #2: And puts pressure on non-HBM supply in the industry. So targeting our HBM share close to our DRAM share strategically enables us to supply our diversified end markets, customers across all end markets, data center, consumer, automotive, industrial, the markets that need non-HBM supply.

Speaker #4: Perfect. And then maybe as a follow-up on HBM revenues, could you kind of share how you're thinking about both your market share and perhaps total revenues into calendar '26?

C.J. Muse: Perfect. Maybe as a follow-up on HBM revenues, could you share how you're thinking about both your market share and perhaps total revenues into calendar 2026? Is there an expectation into calendar 2027 that you can bridge margins that are closer to what you're getting on DDR5? Or is that a place that will be permanently below that DDR5 level? Thanks so much.

Speaker #4: And, you know, is there an expectation into calendar '27 that you can bridge margins there closer to what you're getting on D5? Or is that a place that will be, you know, permanently below, you know, that D5 level?

Speaker #2: Regarding your question on pricing for next year, we are really not commenting on pricing. But certainly, HBM is a product where my cron has a strong leadership position.

Speaker #4: Thanks so much.

Speaker #2: So, with respect to HBM, first of all, we are very, very pleased with our HBM4 product and Micron's shipments—already, shipments of HBM4 of over $1 billion.

Sanjay Mehrotra: With respect to HBM, first of all, very, very pleased with our HBM4 product and Micron's shipments already of HBM4 of over $1 billion. HBM's market share, we strategically are choosing it to be close to our DRAM share. This is important because of the trade ratio of HBM. It consumes, as you know, a significant amount of wafers and puts pressure on non-HBM supply in the industry. Targeting our HBM share close to our DRAM share strategically enables us to supply our diversified end markets, customers across all end markets, data center, consumer, automotive, industrial, the markets that need non-HBM supplies. Regarding your question on pricing for next year, we are really not commenting on pricing, but certainly HBM is a product where Micron has a strong leadership position.

Speaker #2: We have demonstrated tremendous success now with HBM3E8 high, HBM3E12 high, and now with HBM4 and a strong roadmap ahead. A strong confidence in our ability to execute to that.

Speaker #2: HBM market share—we are strategically choosing for it to be close to our DRAM share. And this is important because of the trade ratio of HBM.

Speaker #2: It consumes, as you know, a significant amount of wafers and puts pressure on non-HBM supply in the industry. So, targeting our HBM share close to our DRAM share strategically enables us to supply our diversified end markets.

Speaker #2: And it is a higher price product compared to non-HBM on a per bit basis. And it is a product that is critically important for the entire AI ecosystem from data center to edge.

Speaker #2: So strategically, it has a very important product for us. And it is a product that does provide strong ROI as well.

Speaker #2: Customers across all end markets—data center, consumer, automotive, and industrial—are the markets that need non-HBM supplies. Regarding your question on pricing for next year...

Speaker #4: Thank you.

Speaker #3: Your next question comes from the line of Vivek Arya with Bank of America Securities. Your line is open. Please go ahead.

Speaker #2: We are really not commenting on pricing, but certainly, HBM is a product where Micron has a strong leadership position. We have demonstrated tremendous success now with HBM3E and high.

Speaker #4: Thanks for taking my question. For the first one, Sanjay, you mentioned, I think, four large and three medium-sized customer agreements. And I'm curious, how many of them are related to the data center?

Sanjay Mehrotra: We have demonstrated tremendous success now with HBM3E 8-Hi, HBM3E 12-Hi, and now with HBM4 and a strong roadmap ahead of strong confidence in our ability to execute to that. It is a highest priced product compared to non-HBM on a per bit basis. It is a product that is critically important for the entire AI ecosystem from data center to edge. Strategically, it is a very important product for us, and it is a product that does provide strong ROI as well.

Speaker #4: Should we expect more data center-related announcements? And the $100 billion does that align with the large and medium size? Or does it align with the smaller size customers?

Speaker #2: HBM3E12 high. And now with HBM4 and a strong road map ahead. Of you know strong confidence in our ability to execute to that. And it will it is a higher price product.

Speaker #4: I guess I'm still trying to figure out what is the typical SCA with the data center customer. Have you given enough breadcrumbs for us to figure out what a data center SCA looks like over the next few years?

Speaker #2: You know, compared to non-HBM on a per-bit basis. And it is a product that is critically important for the entire AI ecosystem, from data center to edge.

Speaker #2: So, strategically, it is a very important product for us, and it is a product that does provide strong ROI as well.

Speaker #2: So our large customers, include data center, and the large and medium customers that you mentioned, and of course, including our smaller customers, they do go across data center consumer and automotive markets.

Speaker #4: Thank you.

C.J. Muse: Thank you.

Speaker #3: Your next question comes from the line of Vivek Arya with Bank of America Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Vivek Arya with Bank of America Securities. Your line is open. Please go ahead.

Speaker #2: And we have provided you color on the large agreements have of course generally have ceiling price, have a price band which has a floor as well as a ceiling.

Speaker #4: Thanks for taking my question. For the first one, Sanjay, you mentioned, I think, four large and three medium-sized customer agreements. I'm curious how many of them are related to the data center.

Vivek Arya: Thanks for taking my question. For the first one, Sanjay, you mentioned, I think four large and three medium-sized customer agreements. I am curious how many of them are related to the data center. Should we expect more data center related announcements? The $100 billion, does that align with the large and medium size, or does it align with the smaller size customers? I guess I am still trying to figure out what is a typical SCA with the data center customer like. Have you given enough breadcrumbs for us to figure out what a data center SCA looks like over the next few years?

Speaker #4: Should we expect more data center-related announcements? And the $100 billion—does that align with the large and medium-sized customers, or does it align with the smaller-sized customers?

Speaker #2: And the ceiling is established at the CQ2 price levels. And of course, that CQ2 price levels are reflected in our FQ3 results as well as FQ4 guidance.

Speaker #4: I guess I'm still trying to figure out what is the typical SCA with the data center customer. Like, have you given enough breadcrumbs for us to figure out what a data center SCA looks like?

Speaker #2: And they provide for unprecedented levels of profitability. And those price bands also provide for floor prices. Where the gross margins are well above the peaks at any past cycle in companies' history.

Speaker #4: Over the next few years.

Speaker #2: So our large customers include, you know, data center and the large and medium customers that you mentioned, and of course, including our smaller customers.

Sanjay Mehrotra: Our large customers include data center and the large and medium customers that you mentioned, of course, including our smaller customers, they do go across data center, consumer, and automotive markets. We have provided you color on the large agreements have, of course, generally have a ceiling price, have a price band which has a floor as well as a ceiling, and the ceiling is established at the CQ2 price levels. Of course, you know that CQ2 price levels are reflected in our FQ3 results as well as FQ4 guidance, and they provide for unprecedented levels of profitability. Those price bands also provide for floor prices, where the gross margins are well above the peaks at any past cycle in company's history.

Speaker #2: And the large agreements, that we mentioned, these are multi-year agreements. And they provide us tremendous visibility to demand customer commitments. And they of course come with the financial commitments including cash deposits that mark elaborated on further.

Speaker #2: They do go across data center, consumer, and automotive markets. And we have provided you color on the large agreements, which of course, you know, generally have ceiling prices.

Speaker #2: We have a price band which has a floor as well as a ceiling, and the ceiling is established at the Q2 price levels. And, of course, you know that Q2 price levels are reflected in our Q3 results.

Speaker #2: Earlier.

Speaker #4: Thanks. And from a follow-up, Mark on gross margins, 86%, does it kind of hang out here for a while? Is there a ceiling? And then as these SCAs start to kick in, should we assume some kind of normalization to between the mid-80s where you're now versus I think the prior peak was in the low 60s.

Speaker #2: As well as FQ4 guidance. And they provide for unprecedented levels of profitability. And those price bands also provide for floor prices, which, where the gross margins are well above the peaks at any past cycle in the company’s history.

Speaker #4: So as your long-term investors build their models for 27, 28, et cetera, should they be assuming a normalized gross margin range somewhere in the mid-70s, right?

Speaker #4: Kind of the range between where you are today versus the prior peaks. If you could just hold our hands on how to think about gross margins beyond this 86% in the near term and then longer term, what is the right way to think about how these gross margins unfold?

Speaker #2: And the large agreements that we mentioned, you know, these are multi-year agreements. They provide us tremendous visibility to demand and customer commitments.

Sanjay Mehrotra: The large agreements that we mentioned, these are multi-year agreements, and they provide us tremendous visibility to demand customer commitments, and they, of course, come with the financial commitments, including cash deposits that Mark elaborated on earlier.

Speaker #4: Thank you.

Speaker #2: Yeah. So Vivek, we're not providing guidance beyond the fourth quarter. But we are at margin levels that as we've talked about before, incremental price yields less in gross margin expansion.

Speaker #2: And they, of course, come with the financial commitments, including cash deposits that Mark elaborated on further earlier.

Speaker #4: Thanks. And from a follow up. Mark on on gross margins you know eighty six percent. Does it kind of hang out here for a while.

Vivek Arya: Thanks. For my follow-up, Mark, on gross margins, 86%, does it kind of hang out here for a while? Is there a ceiling? As these SCAs start to kick in, should we assume some kind of normalization to between the mid-80s, where you are now, versus, I think the prior peak was in the low 60s. As your long-term investors build their models for 2027, 2028, et cetera, should they be assuming a normalized gross margin range somewhere in the mid-70s, right? Kind of the range between where you are today versus the prior peaks. If you could just hold our hands on how to think about gross margins beyond this 86% of the near term, and then longer term, what is the right way to think about how these gross margins unfold? Thank you.

Speaker #4: Is there a ceiling? And then, as these SCAs start to kick in, should we assume some kind of normalization to between, you know, the mid-80s where you are now versus—I think the prior peak was in the low 60s?

Speaker #2: So while the but having said that, we do see as we mentioned, we updated our view on market conditions that we expect the market to remain tight beyond 2027.

Speaker #4: So as you know, as your long-term investors build their models for '27, '28, etcetera, should they be assuming a normalized gross margin range somewhere in the mid-seventies, right?

Speaker #2: We also have we're at a point where memory is very much appreciated for the strategic asset that it is. The value that it brings to improving AI intelligence and more and higher performance memory is needed.

Speaker #4: Kind of the range between where you are today versus the prior peaks—if you could just, you know, hold our hands on how to think about gross margins beyond this 86% in the near term.

Speaker #4: And then, longer term, what is the right way to think about how these gross margins unfold? Thank you.

Speaker #2: And so our continued deployment of bits to data center and edge device higher performance applications is going to be helpful as price moderates and price growth moderates and we move to optimize the placement of our bits.

Speaker #2: Yeah. So, Vivek, we're not providing guidance beyond the fourth quarter. But we are at margin levels that, you know, as we've talked about before.

Mark Murphy: Yeah. Vivek, we're not providing guidance beyond the Q4. We are at margin levels that, as we've talked about before, incremental price yields less in gross margin expansion. Having said that, we do see, as we mentioned, we updated our view on market conditions, that we expect the market to remain tight, beyond 2027. We're at a point where memory is very much appreciated for the strategic asset that it is, the value that it brings to improving AI intelligence and more and higher performance memory is needed. Our continued deployment of bits to data center and edge device, higher performance applications, is going to be helpful, as price moderates and price growth moderates and we move to optimize the placement of our bits, with customers, including those that we have done these SCAs with.

Speaker #2: Incremental price yields less in gross margin expansion. So, while the... you know, but having said that, we do see, as we mentioned, we updated our view on market conditions.

Speaker #2: With customers including those that we do these have done these SCAs with. And then also as we've talked about, we will get additional volume starting mid-year materially beginning mid-year 27 that will grow into 28.

Speaker #2: That we expect the market to remain tight beyond 2027. You know we also have you know we're at a point where memory is very much appreciated for the strategic asset that it is.

Speaker #2: And we will have some startup costs there, but we will get absorption is at those ramps occur. And so over time, we'll get that operating leverage.

Speaker #2: The value that it brings to improving AI intelligence. And you know more and higher performance memory is needed. And so you know our continued deployment of bits to you know data center and edge device higher performance applications.

Speaker #2: So I think we feel great about the trajectory of the business. Micron's technology position, world-class product portfolio, you can see we're operating very well.

Speaker #2: It's going to be helpful as price moderates and price growth moderates, and we move to optimize the placement of our bits with customers, including those that we have done these SCAs with.

Speaker #2: And all those are supportive of continuing to deliver a strong financial performance.

Speaker #4: Thank you.

Speaker #3: Your final question comes from the line of Krish Sankar with TD Cowan. Your line is open. Please go ahead.

Speaker #2: And then also, as we've talked about, we will get additional volume starting mid-year, materially. Beginning mid-year '27, it will grow into '28.

Mark Murphy: Also, as we've talked about, we will get additional volume, starting mid-year, materially, beginning mid-year 2027, that will grow into 2028. We will have some startup costs there, we will get absorption as those ramps occur. Over time, we'll get that operating leverage. I think we feel great about the trajectory of the business, Micron's technology position, world-class product portfolio. You can see we're operating very well and all those are supportive of continuing to deliver a strong financial performance.

Speaker #4: Yeah. Hi. Thanks for the question. I told them Sanjay or Mark congrats on the great results. On the floor pricing for the LTAs, you said about the prior peak, your prior peak gross margin was somewhere in the low 60, 62% range.

Speaker #2: And you know we will you know we will have some start up costs there. But we will get you know absorption is at is those ramps occur.

Speaker #4: If I try to plug in what a 64 gigabyte server DRAM is, I can get like a $700 price for it compared to 1,500 today.

Speaker #2: And so, over time, you know we'll get that operating leverage. You know, so I think we feel great about the trajectory of the business.

Speaker #4: Which kind of puts you at like 10 to 12 dollars a gigabyte as the floor. And a mid-20 dollars a gigabyte for the current price.

Speaker #4: Is that the range we should think about for these LTAs? I low teams to mid-20s dollars a gigabyte is kind of like the range of LTAs for the pricing.

Speaker #2: Micron's technology position world class product portfolio. You can see we're operating very well. And all those are supportive of you know continuing to deliver a strong financial performance.

Speaker #2: So Krish, we're not going to get into specific pricing discussions, but I just want to note again that I said that the gross margins at the floor will be well beyond the peaks.

Speaker #4: Thank you.

Vivek Arya: Thank you.

Speaker #1: Your final question comes from the line of Krish Sankar with TD Cowen. Your line is open. Please go ahead.

Operator: Your final question comes from the line of Krish Sankar with TD Cowen. Your line is open. Please go ahead.

Speaker #2: That we experienced the highs that we experienced in the past cycle. So well beyond those, right? But we are not going to obviously get into the specifics related to the pricing.

Speaker #4: Yeah. Hi, thanks for the question. I told them, Sanjay or Mark, congrats on the great results. On the floor pricing for the LTAs, you said about the prior peak.

Krish Sankar: Yeah, hi. Thanks for taking my question. I have two of them, Sanjay or Mark. Congrats on the great results. On the floor pricing for the LTAs, you said about the prior peak, your prior peak gross margin was somewhere in the low 60% to 62% range. If I try to plug in what a 64 GB server DRAM is, I can get like a $700 price for it compared to $1,500 today, which kind of puts you at like $10 to 12 a gigabyte as the floor and a mid-$20 a gigabyte for the current price. Is that the range we should think about, for these LTAs, i.e. low teens to mid-$20 a gigabyte is the range of LTAs for the pricing?

Speaker #2: Bottom line is, these SCAs really help provide visibility, strength, and durability of demand for us. And they absolutely fundamentally accelerate our financial performance and financial the business transformation here.

Speaker #4: You know your prior peak gross margin was somewhere in the low sixty, sixty-two percent range. If I try to plug in what a sixty-four gigabyte server DRAM is...

Speaker #4: You know, I can get like a $700 price for it, compared to $1,500 today, which kind of puts you at, like, $10 to $12 a gigabyte as the floor.

Speaker #4: And a mid-twenty dollars a gigabyte for the current price. Is that the range we should think about for these LTAs, i.e., low teens to mid-twenties dollars a gigabyte is kind of like the range of LTAs for the pricing?

Speaker #4: Got it. Very helpful, Sanjay. And just a quick follow-up. You kind of mentioned how DRAM bits should grow low to mid-20s. NAND probably in the 20% range this year.

Speaker #4: And clearly we are undersupplied on both. Is there a way to quantify what happens in 2027? Is there a way to say is the undersupply going to be double what it is this year in 2027?

Speaker #2: So, Krish, we're not going to get into specific pricing discussions. But I just want to note again that I said that the gross margins, at the floor, will be well beyond the peaks.

Sanjay Mehrotra: Krish, we're not going to get into specific pricing discussions, but I just want to note again that I said that the gross margins at the floor will be well beyond the peak that we experienced, the highs that we experienced in the past cycle, well beyond those, right? We are not going to obviously get into the specifics related to the pricing. Bottom line is, these SCAs really help provide visibility, strength, and durability of demand for us, and they absolutely, fundamentally, accelerate our financial performance and the business transformation here.

Speaker #4: Or how to think about the supply-demand imbalance in 2027?

Speaker #2: We see 2027 overall tight. We have said we see tightness continuing beyond 2027. Working hard to bring up supply, but we have shared with you that it takes a long time to bring up the additional capacity that is needed to support the customer demands.

Speaker #2: That we experienced the highs that we experienced in the past cycle. So well beyond those. Right. But we are not going to obviously get into the specifics related to the pricing.

Speaker #2: Bottom line is, you know, these SCAs really help provide visibility, strength, and durability of demand for us. And they absolutely fundamentally accelerate our financial performance and the business transformation here.

Speaker #2: The additional wafer capacity. And of course, technology transitions and the less bit gain that they give for Node as well as the HBM trade ratio put tremendous pressure on the overall supply growth as well.

Speaker #2: So supply even in 2028, when supply begins to improve, gradually we see that the demand will continue to be on a robust trajectory as well because these AI trends are very long-term trends.

Speaker #4: Got it. Very helpful, Sanjay. And just a quick follow-up—you kind of mentioned how DRAM bits should grow in the low to mid-twenties, and NAND probably in the 20% range this year.

Krish Sankar: Got it. Very helpful, Sanjay. Just a quick follow-up. You kind of mentioned how DRAM bits should grow low to mid-20%, NAND probably in the 20% range this year. Clearly we are undersupplied on both. Is there a way to quantify what happens in 2027? Is there a way to say, is the undersupply going to be double what it is this year in 2027? How to think about the supply-demand imbalance in 2027?

Speaker #4: And clearly, we are undersupplied on both. Is there a way to quantify what happens in 2027? Is there a way to say, is the undersupply going to be double what it is this year?

Speaker #2: AI is still in very, very early innings. The whole token economics needs more memory. AI system performance is really very much limited by memory capacity and memory performance, memory bandwidth.

Speaker #4: In twenty twenty seven or how to think about the supply demand imbalance in twenty twenty seven.

Speaker #2: You know, we see 2027 overall tight. We have said we see tightness continuing beyond 2027. You know, working hard to bring up supply.

Sanjay Mehrotra: We see 2027 overall tight. We have said we see tightness continuing beyond 2027. Working hard to bring up supply, we have shared with you that it takes a long time to bring up the additional capacity that is needed to support the customer demand, the additional wafer capacity, and of course technology transitions and the less bit gain that they give per node, as well as the HBM trade ratio, put tremendous pressure on the overall supply growth as well. Supply, even in 2028, when supply begins to improve gradually, we see that the demands will continue to be on a robust trajectory as well, because these AI trends are very long-term trends. AI is still in very early innings. The whole token economics needs more memory. AI system performance is really very much limited by memory capacity and memory performance, memory bandwidth.

Speaker #2: So the demand for memory is as the compute demand grows and our customers look at tremendous transformation opportunity that is ahead of them, this and continue to make investments like they have never made before to build this infrastructure.

Speaker #2: But we have shared with you that it takes a long time to bring up the additional capacity that is needed to support customer demands.

Speaker #2: The additional wafer capacity—and, of course, technology transitions and the lower bit gain that they give for node—as well as the HBM trade ratio, put tremendous pressure on the overall supply growth as well.

Speaker #2: The demand trajectory is extremely strong. Memory is at the center of it and is a strategic asset. And access to memory supply is obviously a critical priority as you can see in the multi-year agreements that our customers have concluded with us.

Speaker #2: So supply and even in twenty twenty eight when supply begins to improve gradually. We see that the demand will continue to be on a robust trajectory as well.

Speaker #2: I mean, those agreements reflect the confidence in the growth of the demand. So we are working hard to bring up supply, but we see tightness persisting beyond 2027.

Speaker #2: Because these AI trends are very long-term trends. AI is still in very, very early innings. The whole token economics needs more memory. AI system performance is really very much limited by memory capacity and memory performance—memory bandwidth.

Speaker #4: Thanks a lot, Sanjay. Really appreciate it.

Speaker #2: So, you know, the demand for memory is— as the compute demand grows, and our customers look at the tremendous transformation opportunity that is ahead of them.

Sanjay Mehrotra: The demand for memory, as the compute demand grows and our customers look at a tremendous transformation opportunity that is ahead of them, and continue to make investments like they have never made before to build this infrastructure, the demand trajectory is extremely strong. Memory is at the center of it, this is a strategic asset, and access to memory supply is obviously a critical priority, as you can see in the multi-year agreements that our customers have concluded with us. Those agreements reflect the confidence in the growth of the demand. We are working hard to bring up supply, but we see tightness persisting beyond 2027.

Speaker #2: As you know, they continue to make investments like never before to build this infrastructure. The demand trajectory is extremely strong. Memory is at the center of it.

Speaker #2: And this is a strategic asset. Access to memory supply is obviously a critical priority, as you can see in the multi-year agreements that our customers have concluded with us.

Speaker #2: I mean, those agreements reflect the confidence in the growth of demand. So, we are working hard to bring up supply, but we see tightness persisting beyond 2027.

Speaker #4: Thanks a lot, Sanjay. Really appreciate it.

Krish Sankar: Thanks a lot, Sanjay. Really appreciate it.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q3 2026 Micron Technology Inc Earnings Call

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