Micron Technology (MU) 29 Sep 222022 Q4 Earnings call transcript

Thank you for standing by, and welcome to Micron's Fiscal Fourth Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. And now, I'd like to introduce your host for today's program Farhan Ahmad, Vice President, Investor Relations. sir. ahead, go Please

welcome call. Technology's and XXXX fourth financial conference to you, fiscal Micron quarter Thank

call me CFO. the site CEO; being On with from at and President Mehrotra, webcast and Mark and investors.micron.com, our including Murphy, slides. Investor our our Today's audio is today call Relations are Sanjay

conferences, our financial discussion financial our on We website attending. GAAP In may with quarter for information remarks on to the detailing has non-GAAP unless of results which measures throughout posted presented financial quarterly company, basis Today's micron.com is financial you addition, be for non-GAAP A the our we found visit the may the on press most on specified. been current information on a prepared this results website. release reconciliation the be along otherwise to call. the website the encourage including at the of

Twitter follow You MicronTech. at also us can on

and regarding may statements expected to the results These today forward-looking and demand are discussing reminder, matters to and actual matters. results that uncertainties market Form the are a risks materially As including we other to forward-looking the our future with supply, refer the our statements you of differ cause we for file most subject that made includes We documents statements a XX-Q may affect from today. XX-K recent discussion risks and SEC, the results. our

cannot reasonable, achievements. believe in future that are forward-looking we levels guarantee we of Although, the reflected performance expectations results, statements activity, or the

the to the to results. conform statements under no actual over forward-looking any duty Sanjay. turn statements now are to to of We update I'll these call

our in with record profitability of environment DRAM the year, markets. cash annual flow, free Good revenue and ramped our In Farhan. and industry-leading afternoon, networking part portfolio evidenced during by mobile, shareholders. end delivered despite a NAND you, everyone. of the significantly nodes X-alpha the portfolio in fiscal as our year. latter to we amount record XXX-layer XXXX strengthened auto, across solid XXXX, Thank challenging the in revenue industrial returned cash record and We product and Micron

in contributed in gains client in SSDs business. share Our data record center our to consolidated and revenue and NAND also SSDs

GDDRXX. high-bandwidth We also HBMXe and new categories product like memory ramped

In number the as quality. industry recognized addition, in of customers a record Micron leader product

Our inventory by weakening fiscal results financial QX markets. rapidly end demand were consumer significant across impacted and all adjustments customer

reducing decisively this supply to We growth fiscal environment, to fabs. our responding decreasing cuts are by through by utilization weak XXXX CapEx significant in and

relationships, of memory and industry cycle manufacturing a long-term for confident strong portfolio balance leadership, position technology navigate on solid deep us to supply-demand the reduced are long-term sheet for balance with this will as industry customer demand footing growth. the put combined that and industry company diverse supply growth product growth a strong and down We the be drivers result restored, Micron's memory.

Our reductions fiscal layers. DRAM In company nodes led node XXX-layer a production XXX-layer XXXX. than NAND, our industry-leading in enter again XXX volume with X-alpha to and fiscal the on first in NAND becoming drove introducing more the strong we cost industry QX,

calendar and of electric end will the reduction vehicles cloud ramp long-term volume. node they X-beta intelligence, in storage. cost demand XG the connectivity Artificial begin when the our strong offered robust in ramp to track drivers are with us on the high computing, by remain and manufacturing node provide XXXX. node memory ubiquitous also DRAM by of NAND XXX-layer We DRAM and X-beta Both for

disparities memory between we the to new reduce wafer discussed in that support to Asia. we Act previously capacity. and the The half second exist DRAM add help and and beyond, need demand cost manufacturing will Science recently passed decade to the As the have memory CHIPS U.S. of will

efficiency jobs, leading-edge in in through billion announced our across the time to to Act, simplifying R&D tens transfer the Boise fab manufacturing we create our as headquarters global decade. two will multiple further this of and of Act U.S. leading-edge with resiliency planning leading manufacturing, including one the chain through month, investments CHIPS our intent benefits of supply for fab are diversify in to chosen expect of DRAM $XX footprint. the that and existing decade American new that co-location invest site, in contingent site invest Boise, the strengthen on billion the market manufacturing technology we at passage at end end memory of and U.S. thousands have facility announced These of support. and U.S., approximately $XX manufacturing both sites the our provides we CHIPS Micron we ultimately reducing strategic Earlier Following the of R&D this improving The products.

build ramped in We and in maintain share These requirements well will line We second with demand second U.S. high-volume DRAM announce additional our capacity fabs be output consistent supply starting the to manufacturing supply production new of fulfill is goal wafer as installation in to discipline. which a our soon these Tool site. bit for with sites the will beyond. stages. growth, decade will as plan and stable industry half

in of XX%. approximately grew by and the remains on primarily Now most In in growth total industrial become by we by record revenues, and us of economy. transformation and important our XX% fiscal the end new secular hit combined year-over-year, center driven turning approximately than earlier ASP. increase in AI at revenue Cloud XXXX, our driven data profit the XXXX, fiscal healthy, Micron's industry. XX% fiscal both markets, to cloud attractive year. and will grew more revenue networking has XX% stable product declines graphics auto, which target to approximately in a fiscal our exposure Day from year-over-year. of our sequentially our significantly attractive down stronger center end to contributed revenue revenue mix most pools portfolio The fiscal for momentum XXXX, our to and data and track in set putting these fiscal XXXX In and grew the in grew Investor to This XXXX was this portfolio our outlined markets. markets as XX% revenue demand digital QX, In revenue XX%

and unit calendar around center end-demand XXXX, revenue ongoing center the ramping face production client our supply the inventory. cloud calendar wide XXXX XXX-layer of PC down Fiscal memory high data However, QX PC the qualifications in XX-gigabit gains market, we sequentially portfolio to on center memory, and an products and SSDs, diverse world. launches. DDRX, continue our offers in market and DDRX, to solutions market make constraints unit recent graphics are to high mid-teens declined industry-leading client of we solid DDRX including now data We in reducing at In Micron both data quality. some share a with storage of and as SSDs, progress center server customers due by to hyperscalers and ahead forecast that this of targeting NVMe uncertainties. approximately bills momentum anticipated data limiting a continues bandwidth volume With SSDs was first in reduced half year-over-year, across OEMs year-over-year. platform Building sales inventory and enterprise both and percentage QX, set decline began of fiscal of are memory customers macroeconomic

with QLC QX, TLC per GenX In revenue the In only leader XX SSDs both qualified of fiscal commenced to NVMe graphics shipping graphics shipping the also full the gigabits PC in as OEMs. sequentially year-over-year. QX, and client GenX Micron and a QLC performance an are fiscal production GDDRXX to in graphics second company of SSDs We hold and the shipping portfolio XXX-layer and high-volume continues we with NVMe market. industry's declined production. fastest excellent position began memory volume

calendar and fiscal year-over-year. XG and we digit exceed proprietary by in in revenue drive launch to decline year-over-year. XXXX. achieved sales, the unit of our see and in a GeForce GDDRXX are of to consecutive calendar QX to project mobile in to greater NVIDIA's of featured XXXX continues both recent Fiscal XXXX. content and penetration now unit Despite excited the weakness volume declined years smartphone revenue record we mobile XXXX unit project memory TAM end two We XXXX device per smartphone high-single XXXX RTX GPUs. the percentage XG XX% sequentially We

as execute made in up attractive XXX-layer mobile comprised product X-alpha our with our In we XX% inventory high. exceptionally slowdown revenue QX, strong In another shipments NAND shortages delivered on business industrial of because rebalanced revenues fiscal our levels and a which In XX% year-over-year, bit some DRAM positioned leader setting QX, and are relatively continue semiconductor over they challenges. margins. markets, well QX, and XX% fiscal stable deal of automotive XXXX and roadmap. our quarter mobile approximately non-memory our in demand long-term automotive as see and mobile well auto We a new all-time fiscal of grew automotive and Micron fiscal to as our growth NAND customers is shipments. LPDRAM bit record production

XXXX adoption However, as we well of advanced systems driver-assistance of volume strong fiscal in in-vehicle with second our broader generation, half continued infotainment the ramp see advanced next systems. growth of as more

automotive for market of prospects overall be in for and at autos storage markets. We rate long-term in DRAM the the and about NAND by the extremely excited and and twice memory expect DRAM the are NAND long-term to CAGR

year-over-year in remain saw fiscal strong, revenue and fundamentals While long-term business our QX. IoT industrial sequential declines

customers to some overall of of our NAND. by long-term reduce business, strong proliferation digitization. and the DRAM macroeconomic Nevertheless, driven for have purchases Softening led automation Industrial outlook our conditions and remains factory

has market environment call. customers' including has the behavior industry the the An growth XXXX the storage now macroeconomic unprecedented consumer environment Ukraine expected earnings demand Turning affected buying War, outlook. in our bit in percentage China, and impacting multiple for of range, slightly influencing digit the Calendar for sharply single confluence The than in segments. higher inflationary NAND, events overall environment be COVID-related spending industry to and lockdowns is since XX%. DRAM low-to-mid to last and memory deteriorated demand

In well customers and demand also addition, all at levels. demand inventory to These below market to end DRAM are are depressing for markets end consumption factors across weakness. contributing adjustment NAND

the seeing growth very pricing for expect contributing an be calendar environment. Due to demand to also in growth XXXX, demand, both inventories supply and decline to sharp in high are significantly NAND. supply we DRAM extremely We near-term aggressive above

expect the weak demand low, currently closer in bouncing to high ahead levels calendar uncertainty back XXXX. growth growth NAND be very visibility while DRAM both to and Looking in long-term rates from is calendar XXXX, of is macroeconomic we and

improve We the to customers early starting of from XXXX. the quarter at calendar inventory demand calendar expect XXXX causing our in rebound second to

calendar expect DRAM supply industry well XXXX below demand growth. to We grow

in growth. NAND supply DRAM industry in lowest also modeling mid-single XXXX, are XXXX ever which would digit growth growth. expected supply a below We is in industry percentage to represent fall growth demand the supply calendar

we XXXX, remain challenging industry calendar entering inventories supplier expect profitability elevated the Given in XXXX. to

Following demand customer substantial the XXXX Projections we end first expect half rebounds XXXX, of a growth improvement strong weak as inventories. trends of for bit in long-term revenue fiscal fiscal half following in strong markets. remain across multiple second demand

demand mid- to We than of growth mid-teens unit bit percentage slightly high-teens long-term PC the moderation due be our of expect long-term in in expectation lower expectation sales. a to prior the to

which term. from long the We NAND continue market, over grow to elasticity benefits expect to the around XX%

Turning supply. to our

on Given reductions year-over-year than fiscal than required conditions, lower the now around made X-gamma focused expectations. be the doubling much to XXXX demand. select second and reduced growth have leading $X of and XX% more action investment lithography support product CapEx expect supply meet would significant we the our demand support as developing to to versus our to DRAM supply reducing decline in reflects inventory prior in billion, EUV in align XX% NAND will slower the nearly to is for reduce if address capability year-over-year. down immediately taking supply CapEx, areas situation technology nodes introductions. growth of growth, ramp the and CapEx it our WFE well to been are CapEx for and NAND. XXX-layer X-beta WFE for half and both and be to and trajectory were market utilization immediate new market our this CapEx To XXXX as change it we a our construction node of systems more We CapEx decade, development. not year-over-year DRAM Fiscal

they utilization costs, and an and closer fiscal inventory our but bring CapEx supply to on will demand. necessary industry Our XXXX to actions adverse impact our are have

over demand We to and aim our to time supply with to will and costs DRAM improve profitability. NAND grow portfolio our line optimize continuing while in our

technology are the with competitive Before Today, made I over a structure. over passing Mark, on last want in the we team has progress Micron reflect it and the to NAND leader to years. cost few very DRAM tremendous that both

industry. and in that is products represent are transitioning We strong a attractive share our a value profit solutions that portfolio gaining we more towards high pool have and leadership products in

appropriately Our balance product forward. leadership strong us technology, and allows is going manufacturing and to sheet to invest maintain

world-class expertise is by Our customers quality manufacturing recognized and our worldwide.

We levels of in have markets multiple XXXX, cash shareholders. to returning fiscal our in end record revenues delivered record while

and the to our will financial While turn in us. capitalize long-term manufacturing environment ahead confident and line in opportunities further will making our stronger we to are performance long-term long-term footprint emerge the exciting deliver is challenging, we on with investments to us position near-term it I model. now diversified our are ability Mark. The financial fab strengthen over of

Sanjay. Thanks,

and strong original a with range. year-over-year. guidance fiscal declined $X.X record flow XX% sequentially $X.X in decreased representing for substantial billion total revenue in in revenues shareholders. XX% revenue returned billion, and Fiscal Total to XX% DRAM declined down QX Fiscal sequentially came update, revenue total a percent shipments Sequentially, which was and a QX XX% $X.X within XX% capped set down free up revenue, was record cash XX% fiscal we consistent low-teens year Fiscal was QX XX% $XX.X year-over-year. EPS our while of QX off year-over-year. at X range. revenue fiscal down the August while billion, was DRAM billion, Our generated the total revenue. ASPs roughly by bit XXXX was

declined total DRAM NAND revenue fiscal total Fiscal Micron's revenue. representing -- billion, XX% digit revenue. to revenue NAND For and year-over-year. the XX% was XX% QX of revenue bit declined year in $XX.X Sequential $X.X the representing high-single down billion, XX% year, of XX% sequentially the to year-over-year ASPs fiscal XX% mid- range. declined percentage increased range in was low shipments and percentage

billion, XX% increased year-over-year year total $X.X For of to representing the year, NAND fiscal XX% fiscal revenue revenue. a record

new Networking to for driven the and less by primarily Business sequentially hit $X.X server and fiscal a $XXX approximately XXXX. Storage fiscal revenue Compute Business fiscal while revenue down Turning Revenue for sequentially down Business $X.X Unit QX down business for revenue unit, was Unit sequential was year-over-year. and a down the Mobile The to our XX% in graphics new and was set year-over-year. XX% XX% Networking revenue for trends XXXX was billion, XX% million, the billion, pronounced. Revenue by down and record client, Unit down year-over-year. Mobile in were XX% record. sequentially XX% declines decline

the share client For with the Business fiscal was Storage ever year, Unit highest NAND both in and revenue SSDs. gains center in data its

Finally, revenue X% and X% for $X.X year-over-year. the down Embedded down Business sequentially Unit billion, was

fiscal approximately driver gross automotive revenue, pricing revenue margin was industrial XXXX, fiscal in For of for sequentially. records points billion consolidated percentage and down the $X.X delivered XX.X%, decline. by supported markets. X The primary the QX EBU was Lower of

just below to $XX last in over the guidance in gross Sequentially, up timing consolidated was million were QX call provided spend. technology primarily expenses fiscal our lower Operating fiscal to the margin points billion of earnings year, quarter. was $X on due the compensation approximately range the up part OpEx year-over-year. variable For X in due percentage development the XX.X%, around and

X resulting XXX XX in the XXXX, of technology resulting For basis by $X.X prior billion, the margin points up percentage year, of and an was from EBITDA prior percentage R&D operating points down up in in operating adjusted sequentially $X.X to operating resulting million product QX points expenses $X.X XX.X%, operating of our $XXX year. income sequentially. was and down fiscal QX support income the year. XX%, Fiscal were billion, driven roadmaps. year-over-year, EBITDA XX.X%, approximately operating $XX.X an billion, XX margin approximately billion, from was an down margin Fiscal Fiscal approximately points

fiscal an XX.X%. was the resulting margin taxes Fiscal $XX pre-tax year, or adjusted in For of over million were EBITDA $XX.X billion of income. EBITDA QX X%

$X.XX the pre-tax of QX quarter. $X.XX, from or million from $X.XX in fiscal were and the fiscal down share total the approximately taxes up per EPS was prior fiscal earnings year. ago Our QX $X.XX $XXX was in Non-GAAP for $X.XX XXXX in Non-GAAP X% year, year in fiscal income.

operations We billion cash XX% representing $X.X QX, flows in fiscal and capital of in Turning to from revenue. spending. generated cash

of For the representing from of Capital billion $XX.X the during fiscal of $X.X quarter We cash and expenditures operations, free year we for consecutive generated the revenue. billion year, was generated Micron. billion $XXX of flow for XX% in were free $XX fiscal fiscal and million the cash year. XXXX QX fiscal flow year. Fiscal for positive billion cash year sixth $X.X the

million share we quarter, of XX.X $XXX shares. million the completed During repurchases or

repurchases fiscal flow of repurchases we cycle XX% of share our year, XX.X returned $X.X a in fiscal cash free share across shareholders to billion, and shares. million cash representing the we XXX% payments, free Including the returning billion remain combination $X.X to flow. committed dividend completed For of We representing dividends. XXXX through of

was billion the market of XXX fiscal ending the Our reflecting days inventory and days, inventory during for was quarter. quarter QX conditions weaker average $X.X

balance and strong low XXXX were leverage cash cash rock ratio billion of a net is position. debt QX Our liquidity, billion ending fiscal sheet percentage target. revenue total billion. $XX.X was Fiscal $X.X ended $XX.X of at We solid liquidity, with investments our and exceeding and mid-XX's

to outlook first quarter. fiscal for our the Now turning

bit a shipments challenges NAND. result of and described decline in Sanjay DRAM demand the we earlier, fiscal As pricing by expect QX and both to

We to have to expect actions in and and XXXX. remain be inflationary disciplined QX that management planned. headwind expense costs pressure We in specific continue taken more a will our fiscal with

with bit and low. is weak macroeconomic range DRAM NAND. high both be a shipments visibility for is In still in and up, fiscal as but QX currently we As to expect revenue QX, we look ahead, similar fiscal uncertainty

year. volumes second recovery fiscal in in also of half and revenues a We the the expect

XXXX year. first of our as the half in days the expect and improve of fiscal fiscal recovers in demand inventory the second inventory increase to to half of We

$X spending more As we than expect near XX% decline year-over-year, XXXX driven wafer fab in a to around capital XX% down CapEx. Sanjay mentioned, equipment be billion, our fiscal by

capital first negative result, November as a weighted the we half expect the And be the toward over cash spending quarter. in to of We billion fiscal free flow year. to be project $X.X

elevated. cash fiscal to tax appeals to we this to CapEx, or capital In expense conditions. reducing to tax we lowering ways legislation flow, free managing expenses We as and R&D continue recent that for working R&D improve be our and amortize purposes, Congress expect market year. respond we requires to recent delays evaluate deductibility, XXXX, Unless changes capitalize including rate fiscal

In addition income at a on tax approximately U.S. factors these tax rules, resulted lower minimum. mix and our foreign taxes These $XXX and at profitability become more based estimated levels. in an our fixed million of

the tax depend income of on Beyond operating actual the through this level level expense the year. will

delivering fiscal in this Gross million. normalizes, all rate low mid-teens plus EPS minus as closing, technology minus our to our million. sheet of operating amount fiscal we and data clear mind, expenses client expect share rate. minus We So to to $XX billion, revenue increasing pre-tax plus accomplishments to higher lower follows: the plus or returning revenue, leadership share had Based to Long count basis $X.XX. expect strengthening a of year or capital XXXX, QX points In our balance be both approximately on profitability and record expect $X.XX diluted be or term, our XX% we meaningful DRAM guidance we range. the to $X.XX $X.XX, $XXX minus a including shares, shareholders. margin XXXX, fully in as for percentage and SSDs, in these in in profitability and billion, be be many to billion, further be achieving expect factors is record we in or XXX the non-GAAP of $X range our plus tax fiscal center materially and NAND, tax to With

our the and product cost extremely rock it challenging, is portfolio sheet. today structure, strong competitive is prepared navigate environment to solid near-term the While well balance with of Micron

financial out performance will cash a a ability long-term to high-single digits, turn XX%. with events, of Beyond deliver now back including external revenue fiscal our confident I financial margin consistent of our it model, starting year with margins over are set growth challenging operating in of we XX% XXXX, Sanjay. cycle to cross free and of flow

challenge Mark. for The presents Thank unprecedented environment the current you, industry. macroeconomic an

supply our changing supply technology bit long-term and Our business rapid actions drivers reduced team utilization The demand profitability sharply Micron bringing our higher strategy execute to a CapEx continues our and back in our focus for stable of discipline are value share and to and with into conditions. to both moderate to to We solutions confident memory. maintaining on with and agility growing illustrate balance. we the portfolio committed remain of commitment

long-term New categories. outpaces applications growth will technologies and trajectory other on data drive centric memory semiconductor the demand in that

underscore is investments strategic confidence Our long-term decade trends to these joining and on Thanks will in the today. for capitalize able this Micron ahead. ensure us

open now questions. will for We

The [Operator question Muse comes first Instructions] ISI. from of the from C.J. line Evercore

please. question Your

for magnitude the Yeah. should question. Good those in how and first the little on February you to be a margins quarters? underutilization detail bit guess more I any taking cuts November we charges about you question, utilization afternoon. and taking of Thank provide can

think margins. answer and I I part Mark second take on can on the then first part So the the can

have and and in range. mid-single digit for DRAM the cuts utilization they high that in across these NAND So are the are And the respect products approximately cuts, with inventory. to course, been of

up so deploy the And freed it that those are products up that and equipment using of to technology space cutting we new toward was the production and is the freed transitions.

CapEx And gross on actually comment helps us that margin efficiency. So impact. the with can Mark

and X or first us you that bringing lower. we -- And dial going depending the course, to we between on market this quarter, X at of utilization in not year Yeah. points impact conditions, and of hit but in are later C.J., either as would point. back mentioned, the it points be would it's

guidance follow philosophy cash negative, your but for as Very around up, helpful. free strong buybacks? well, position, near-term quick flow -- a your considering free what's And your cash cash flow net

I'll to cash to state continue around, opportunistically free XXX% going of really We did first Well, repurchase we -- focus and so repurchase. returning change on shareholders. flow quarter the no in we're think to will I

C.J., a you course. and as course downturn, we elevated challenge it then It's an And got been and cash it CapEx happened it's suppressed the inventory had first sharp of builds, so pointed out flow our has we've in quarter. of As unprecedented income quickly. sudden associated

So the we expect first. challenge as talked deal take levels billion $X.X well negative with, What revenues in guided we or elevated work in as CapEx that the and down. second time the will then we with we about. we And the to inventory the bit shipments then

Capex, be to generation more inventories it flow and the expect lower expect of we do second to this quarter half our improve year the can a in of to heavily. we're our in from working working to down, we -- volume cap half half. We best first We expenses And continue CapEx to and coming to capital first the weighted cash return We expect working do free the work -- projection down. in back have. course, work continue -- recovery working managing

you. Thank

Thank UBS. you. Timothy the question our line the for from And next of One question. comes next Arcuri moment from

Your question please.

what's it behavior flat has Mark, gross probably you of the are these guess earnings. going of in you down across up. pricing February to going more cloud of sounds of to as most is DRAM you're like production the a down. about that is sort costs move in lot. only be sort the calling but and is around sounds -- light mid-singles, coming is Thanks up to margin sounds pretty my supply. the like bottom so from obviously, happening year come not said going But to basically probably because like if industry, it lower said, next going flat, go to revenue inventory, out question be It customers as to I mean so is of supply I is

you see are think these customers, the such pretty next pricing. can in sophisticated to come back so year, pretty a early table pretty I that sharp So going they're to that would recovery

think So year sort you've and of I'm the Thanks. bottom? customers the talk from how sort or as through wondering cloud Mark, just can you maybe February you these as if of of sort out called plays behavior the Sanjay of sort about this

end here, So levels continue all to just of in pricing end customers, segments market segments. noted at cloud. our look and to but work their closely project they with not across customers inventories course, going course, we but are trends are we cloud, as including in future inventory we of that And are are will high, all not customers market across adjusting

We action respect important have nearly we actions and will growth. most reduction our take thing is to WFE of course, reducing decisive with supply and taken to by XX%

industry will mid-single expect growth to growth We supply in for in the and supply XXXX in the also line our DRAM. industry be be digit with the around the same

growth and improved that have by the be have and expect adjustments less, will that customers normalized customers will once while substantially inventory the fiscal in trajectory from second second than that's for is the industry half, mid-teens important our improving we demand at meaningfully what our an supply as the up supply-demand demand go [Technical 'XX. what's think improving I growth through brings supply So balance growth DRAM then or supported be demand inventory, will growth demand less business of will in be we will go fundamentals Difficulty] calendar by but year

your mid-single going year-over-year, actually Sanjay? your just I correct? So, on is down be digits, be clarify that, will to Can supply production but Thanks.

growth and that in will What -- line mid-teens that be digits supply shipments in this in the growth we this demand supply mid-single is lowest the Remember, growth but are mid-single the the supply is saying digit be record with are we to the range we we -- expect also will for be next recovery that DRAM. the for expect. And correspond saying year. also industries to DRAM would on

Perfect. Thank you.

will to higher be supply used the supply inventory the which supply than demand, mid-single the be will in be will growth So again, digit, the growth.

We expect the mid-teens next demand in the year. to be

Sanjay. you, Thank

then and half. combination takeaway, us. the just NAND will of volume just do then challenged, that in out a better combination go quarter. things little third quarters. should up quarter DRAM to then bits we will down similar benefit up, would be NAND, situation be then quarter in lower FX, cost for be the year-over-year, we've and full and be will mix then Yeah. be but inflation bits than as We maybe half, first cost laid be said, year, up half then from In maybe down will first mentioned then mix color to there. and And down the cost the improve and bit that's market long-term more. some Maybe the a are we reductions do ASP But we some expect down first expect still other DRAM maybe timing. second just be and as in get they'll to second of provide up Costs fourth get quarter in And volume, against I same node about the the around -- some they're important more and We quarter, and think a and the the to expect second the volumes versus the revenue bits difficult some and factors but slightly second range inflation And just Tim as downs sequentially, in the year-over-year. Sanjay are and bits the average. inflation to we

Thank you.

Paribas. from comes from of Ackerman next line Karl question Our the BNP

question Your please.

demand described mid-teens two the and of have your Good demand long-term NAND expectations on capital range the and follow-up in know calendar for past 'XX sales. please. does to XX% DRAM question 'XX appear for kind the you. XX% have guess of % be XX is of intensity being in But memory afternoon. a XX% questions I to that I I CapEx. it still first Thank just Yes. could calendar demand. below you

I long-term own the so bit are to guess guess, NAND. I you 'XX? a And I consider views demand up for question bit And And DRAM do your investment rate a fiscal that industries the believe support follow beyond is, managing please. CapEx and capital have lower terminal framework for what needs to growth on

XX%. approximately mid-teens CAGR managing And in line always we with long-term our investments would is on view supply CAGR demand. our to our grow So NAND DRAM be and

will variations longer needed, considerations, like through have just but And seen at Of of in that we as now. transitions are getting well. course, making tech taking on adjustments more are overall can should you look keep as the mind as And the we mind transitions tech adjustments keep ahead cycle, in focus be course, there we CapEx expensive. that just

DDRX So to Tech the die of actually course, bit and to the giving growth, is tends because is also die wafer also lower and because lower be transition bigger to DDRX specifications. intensity contributing per growth transitions of than of capital DDRX just bit higher.

but So our XX% term, variations, be expectation mid-XXs is, mid be around revenue. that cross-cycle on average course, of would CapEx And had can there stated earlier, over be year of CapEx our we cycle that's that we across expecting. any long would given intensity

either within can I any different be quite appreciate what my you helpful? guess same even that I curious, that, fungible you. on for end Sanjay. how customers, be Is kind to end inventory of markets? was unfinished you. inventory goods repurposed in have I the clarity that and would or follow-up, Thank markets can you repurpose of of Thank terms is there portion your different

Yeah.

last it it's quarter our balance of the we But back ideally, it's are increase in we to unprecedented mean be half. take supply expect XXX first limitations, of the And we downturn own most this CapEx an it begin going to recovery is Karl, ended over inventories. we're their just to be replenish year until customers view because, course, is time, and as what quarter build days and repurposed. the but think, shape earnings I so levels be course, XXX we And XXX, -- quarter down in well We around again the through should and to over have through good meaningful but out. the and this will decline stay see over -- confident inventory. elevated, probably that yield days when over was at designed do XXX elevated the designed had of the second going to sudden, that but be should sharp here We grown strategy thought inventories we the and days. call. it, way that, to that to it, some benefit to -- there I of

I so fungible that our we're think it's get to a leading that to days. out, and in confident able time, point node down use primarily eventually or and sense, be it's over as redeploy XXX we'll you XXX, inventory target

Very you. clear. Thank

Thank you. Joseph the line from One moment comes for our next Moore Stanley. Morgan question. from And our of next question

Your question please.

it overheads that the November could about sustainable the things of million the think What's of your is beyond cost being almost fixed of sequentially down that coming looks of that you down like At that. the and elements so is cost sort like midpoint, much quarter? sales depreciation $XXX I Great. I November that if Thank kind and you. are happening comes quarter. of talk labor wonder there

we're Joe, into the we're -- absorbed running mean being we're I and clearly, that's fabs inventories.

the that's to think your I So answer question. short

Okay.

of course, down are down volumes so... And

Yeah.

Okay.

quarter. had $X.X much sales, going built So inventory in next and billion August worth billion $X you of $X and quarter, of billion you down it's that almost cost

a So I guess we inventory it is would significant what build readout? is pretty

Yeah.

the I doing being inventory we're our believe. over can think this period we're of high high work unprecedented I higher. we again, a be affect capacity function what a our question, to to answered supply, and be down, And we do, inventories in in future There'll inventories. and position they're those quality future are -- XXX it's going as last they're levels days

all will we're they of So, expenses, them capital and working time. this though flow aggressively -- cash be managing usable at

it. Got

Thank very much. you Okay.

moment of SIG. Mehdi One for the comes you. from next from Thank question. Hosseini line our next our And question

please. question Your

Mark, my follow-up. for quick just Yes, sir. Thanks taking a question.

points, February the margin that X later, gross could down happen track would you because but at You -- commented least that gross should margin is would charges have flattish, under-utilization revenue assume will February? in said impact a that be that I

rest be going market. then the gross at be it's function, the a later is depends the not is P&L. recovering or it P&L that in think are of we're of the on be when it's and Mehdi. inventory on elements and course We going clear, year, that but the of out -- not in to -- just to guiding the would pricing -- element, point got, you've point margin It at And yes, the we're Yeah. just that cost volumes

gross point margin hit I throughout of to 'XX? due remainder basis Should fiscal spread XXX under-utilization the of

Yeah, Mehdi. We're not -- the half I year. of mean that's going to the be a headwind in back

Got it.

But quarters its we're but guiding at -- point. this those not

Just for be with will industry broader recovering activity we we believe our gave demand customers. with our framework along the the and how we business see what a

Sure. question Fair. rates. my I is guess related And also follow-up to under-utilization

after is take inflect a that out shipment would on especially, assuming on would laid like you under-utilization scenario bit a be but You've significant and the the side, conservative very also improvement as February there view given demand supply be quarter. Would actually additional be to demand charges? for 'XX, not willing you're to

So address term of as we to short Mehdi, long-term macro actions needs. that continue industry the our we as as I overall to to trends the would as monitor as well would appropriate prepared will say course, the of the And course be in trends necessary the well and take business.

looking -- just -- toward and So deferring requirements I like under-utilization, the here and have look decisively to we that at under-utilization needed. leveraging we utilization with that inventory to to CapEx those before as we'll using said respect products as have moved at, towards, excess continue for tools continue will look opportunities

you. Got Thank it.

comes question. Vivek moment from our of question Bank And our the One for from line Arya you. of America. next Thank next

Your question please.

Thanks question. Hello. my for taking

smartphone your calendar historical with would line in in line assumptions bit with prepared PC historical trends. year bit be in support mentioned the growth demand I'm Sanjay curious, you the next demand will about and to think what are that 'XX market remarks, I your be trends?

slightly PC points. year the PC I to it down, year, respect in lockdowns unit So impact had demand. And And in up China rebounding. year China certainly overall flat is be with significant be as mid-teens percentage to 'XX, COVID script to be demand we China smartphones, next -- respect down. The expect opening expect mentioned calendar to economy that and with PC, we would this have on would

XX% need towards highlighted would down sales down consumer year, including shifting think to unit basis focused prepared extremely in the rebound next that more, and year important fiscal we in remarks, And in business away what of of going So what's biggest be smartphone high-single driver to PC a year as on side, digits, 'XX. overall our of there on that -- some unit XG in be smartphone need growth, from by the this memory 'XX XX% the I phones used also we course, storage. would year fiscal more and are to we continues Again, sales. the expect be is content smartphone year-over-year

are So marching on strategy. along that really we well

reduced in percentage In 'XX, that fact, fiscal to year we XX%.

attractive we we stable and and as, markets on of So course, mix center are graphics are increasing the strategy. more such delivering and that networking, automotive, more industrial, data of successfully

I'm because going does the next most WFE your concern, And Got with year, been become of level? historically has same to helpful. where of on it your competitors are range also point reduce at technology. spending a cuts expecting And that the by it. what competitive is for on you spending then that Very question

competitive and what if at does cutting cost you're So impact your that capabilities? that impact by point capabilities XX%, down your

in terms DRAM industry recent has management supply CapEx historically, management. in of been growth the So look, disciplined and years

Of course, unprecedented the current we and unprecedented factors that have the the discussed, to by customers of confluence inventory impacted environment that of is adjustments respect level well. with demand, as our

necessary the in It take supply We this will with regard. in bring actions is rational line to our We prudent. think important is to demand. it be

restore balance. is will well do to and business highlighted to is XXX-layer thing bring But our growth headwind this respect and to this trajectory costs, growth for as using as we with our right for the technology the NAND, X-beta to supply a line as the this what delaying demand-supply demand the of is with in for healthy under-utilization. course, Of transitions that

highlighted in I is I maintain will So also the of as is comments, and we as would, is share as prior highlight thing my important, but our of where continue course, do of this part right to that to just well that the towards profit pool part strategy, market, shift greater. that we to also the and want

strengthened whereas to our used profitability. last significantly past if from margins, that we maintain few are to So seen be Micron will quarters. over Today, course at you but And the of competitors also we matching will continue I behind years, we towards think the look few we you've margins. share, in shift

that think profitability. we I portfolio towards remain focused that our of shift remain our just on to shows So pools and continuing greater disciplined we

remaining just spend Vivek of to maybe the its then have, I we And made on think is, the technology. that add, point we is focus

remaining we the maintain market So advancing will on into focused be need can position to the the the so appreciate in have technology And our then, to still we that. we your point, in business, spend invest we with inventories we that quarter the the drawn we about XXX that period as of have and the -- have talked we'll time. enter prior for some days well that the next or next over in question,

you Thank much. very

the from moment Brian our line next our question. One comes of from you. for Thank next And question Stifel. Chin

please. question Your

calendar us a decline year? that digit into ask DRAM in WFE mid-single what 'XX, sneaking related bit assumption next question. for industry thanks to the that is and It for in XXXX a supply afternoon, translates question, increase Good memory your to Great. but is -- last in --

disciplined, others Look, we the out, you especially parts terms can't shared of in ahead respect historically, their of actions. implementing growth, has taking to terms our of industry been on in demand. pointed WFE with with actions prudent in are WFE, industry of but when to be manage But we gets what have the industry certainly we has as supply I the been it commenting

that if even quick or year. are, to this closer growth follow-up, that Maybe second X-beta was -- for half Okay. -- DRAM maybe curious NAND of in assumption sort a kick what Yeah. start must particular not that how bits. follow kick is because mid-single-digit is, one drives supply plans start but XXX-layer and be that just you DRAM what knowing just the assumption I company there

how long to many of those than a typical does compare timeframe quarters how a bit Just curious the until how products shipments it's and planned, ramp originally XX% that, bit crossover that you think two if -- slower do technologies? to new

inventory demand reductions that supplement relying the in really those in fiscal revenue of meet important and prior CapEx have our versus talked of going customer in preparing fiscal production and year technologies year the And So it's growth producing the supply revenue WFE fiscal drivers the primary about bit turn, that we and we we our to to qualifications. for using 'XX. through that to shipments actually they we be will talking Because on contributing 'XX the CapEx reduced be growth year delaying late to learning engineering until the X-beta again and not technologies for or in are new these growth our toward I ramp we off the course, billion that about cost the for CapEx the uptick products in plans. understand will is XXX-layer 'XX. 'XX, In will -- $X most fiscal -- are of expect be year think technologies

Okay. Fair Thank you. enough.

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

Good You may now disconnect. day.