Micron Technology (MU) 22 Dec 222023 Q1 Earnings call transcript

Good day, and welcome to Micron's First Quarter 2023 Financial 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] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Farhan Ahmad, Head of Investor Relations. ahead. go Please

welcome Financial and Technology's First Fiscal Thank Call. to XXXX Conference Quarter you, Micron

of call. On remarks me CFO. been results call site addition, CEO; to current along a at being the the Company, otherwise the be website on with you website on posted financial information on on non-GAAP at financial the and for President Mehrotra, specified. A webcast the encourage is Today's detailing and with Mark presented we most on may our results on measures micron.com and investors.micron.com our found press including basis, throughout discussion reconciliation non-GAAP be the We Murphy, slides, Investor release information has that visit our our Today's this unless attending. audio of is today including call prepared conferences may Relations the are website. GAAP in quarter our to Sanjay financial the financial for quarterly our

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

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

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

fiscal severe is environment, demand call. cuts both revenue the the supply in our the Thank and significant most XX from first Good is wafer EPS deteriorated our in supply guidance years. our delivered position. competitive despite which DRAM experiencing prior The Micron starts you, maintaining and NAND to industry pricing and range within last quarter imbalance significantly between making afternoon, exercising everyone. Micron CapEx by Farhan. our and discipline while

cut the inventory, versus are impacting fiscal to fiscal OpEx second continue year. also mid-calendar inventory costs to levels the demand, Company. and revenue and have most expect by we Customer to first is XXXX. which near-term customers our across reduced measures taking improving, to is we healthy expect relatively of improve We Consequently, to expected half half the

inventory DRAM gradually bit We to challenged and our expect remain The shipments start the Micron peak diverse our provide technology days QX XXXX. to improve a our in expertise, footing few NAND Despite shipment trajectory, reduced. current to I'll and of with of expect revenue our combination and this leadership, industry as improving environment. our the manufacturing significantly profitability in navigate continues we growth decisive both and calendar bit actions technology industry next product a lead fiscal challenging near-term of supply our quarters portfolio, this and overview to sheet position. through strong an today technology. is balance solid improve our over

We NAND. are DRAM market XXX-layer to X-beta first and with

improve. our Yield market product we to is industry and track, nodes previously and and we DRAM ramps While nodes both our when across indicated. their positioned well be strong align slowed we on continuing nodes trajectory to better demand, X-beta XXX-layer qualify these to as portfolio for will offer cost with ramp reductions, have conditions these NAND are supply these on

LPX, across a in improvement introduced used graphics. XX% including our improvement versus X-alpha. will DRAM bit fiscal Our XX% DDRX, QX efficiency around X-beta we density than be and delivers power and HBM product X-beta node, portfolio, which more

customers' turning to declined in Shipment weaker all end and customers fiscal in data in strengthen due not markets, volumes technology macroeconomic improves. in at below believe economic trend inventory center to to extremely for is We pricing. the inventory the end while aggregate for steep is to absolute industry of environment key revenues center, inventory at demand impact high, Now demand we customers. coming of customer end QX. due down end to nearly of our our this consumption important adjustments, as in uncertainty. immune shipping. still transition sequentially their that should to our expect QX demand decline volume to End macroeconomic were the XXXX markets, across data reductions market and trajectory by as once In impacted memory begins significant challenges, well DDRX customers cloud grow calendar historical but demand the new is cloud the outpaces

bandwidth per modern bandwidth memory the more by that our As higher pack DX cores decreasing. Feedback servers core CPUs, suggests best compared Micron scaling. performance improved generations previous and processing with the bottleneck to the CPU the enabling providing leads DX and Micron customers industry from xXX, across been ecosystem alleviates this into ARM has products.

products, for server AMD to EPYC began XX-gigabit is half X-alpha validated center DX, availability announced in the fiscal meaningful DX more shipments of bit the calendar the and mid-calendar QX, expected Building XXXX, that processors. memory we our DX existing crossover data second on we We become XXXX. in XXXX series for in qualifying of DX with expect new

XXX-layer making proliferate DRAM in QX, also CXL are we we and where customers continuing our number doubled center CXL, are we SSD, data fiscal introduced on nearly the we of customers. in first progress we and SSDs, to fiscal data qualified. In center QX, samples to addition, our In are

leading of customer. by mid-calendar and decline near to are XXX-layer XXXX low in for unit with completed In calendar volume to with important DX crossover well expect to DX to through PCs, we expected calendar products. now levels. and percentage with XXXX mid-single-digit QLC PC XXXX percentage positioned qualification enterprise increase decline We is we Client forecast adoption transition have this XXXX in our gradually an also high-teens to XXXX, the units

us. is important very month, and our competitive increase XXX-layer this helped in growth an advantage continue shipping QLC SSDs NAND record. lead QX, client strong which had and QLC also QLC, mix We for the In consumer NAND began Micron to featuring new SSD, to Earlier most the fiscal it client a industry technology. world's advanced

the high savings percentage to ship in broader demonstrates high-volume up calendar NAND second, As gigabit the bit to expect XX% our on earnings driven SSD SSD XX momentum expect world's node. by decline XXXX. and unit we by last with smartphone first XXXX now industry-leading In to drive fastest a in enabled Micron forecast mobile. product following memory XXXX graphics Micron strong be continues of client projection build improvements year-over-year single-digit NVMe Graphics, layers, its production. shipping per We the call. flattish In the speed, calendar XXX market to outpace NAND decline to XXXX in reopening Micron slightly using GDDRXX power versus the calendar superior density China we to our growth smartphone in year volume year-over-year industry's mobile, continues XX-gigabit unit over volume economy. to

mobile DRAM NAND our fiscal of XX% of base shipments. and mobile up bit nearly nearly comprised As all QX, of XXX-layer made X-alpha

mobile for our for platform In shipments into LPXX fiscal of We X well DRAM latest and were Gen bit Snapdragon are and Qualcomm's QX, in positioned LPX FQX, was validated transition X reference also the LPX. our designs. integrated the majority

positioned is we is create qualification In industrial auto well increase. auto auto and margins. automotive which assistance relatively the fiscal next-generation industrial shipped robust grew supply end showing QX, industry's well and adoption fiscal infotainment the by slightly This revenues offer in early the systems year-over-year, quarterly DRAM The XXXX. markets, industry driver memory XX-gigabit in-vehicle just strong but to more driven addition, Micron as demand growth advanced we in some and stable XX% ramp our our as systems. the the in see advanced for fiscal X-beta Last, continues markets. In of first XXXX. record in environment broader production automotive chain long-term The market unit of approximately volume of below is leader uncertainty does auto growth macro and as signs LPX. with QX auto improvement samples I'll cover a

achieved five the partners overall demand of the NAND bit and expect autos in DRAM some CAGR the industrial Over inventory for weakens and XD markets. distribution and integrators X.X, to and across and product twice IoT, quarter, as In NAND latest and channel intact, XG end Industry to we automation, half in levels of collaborate the for with our NAND of rate growth approximately ML, volumes in DRAM our second customers. fundamentals of The ODMs QX first AI, years, to expect improve and reduced and industrial continued their we and sampling continued next Micron LPX remain our DX, with be generation OEMs, The softening our solutions. saw at closely fiscal market customers year. the fiscal design-in all advanced

our Now to market outlook. turning

bit industry both and low demand percentage the in NAND. growth XXXX DRAM calendar mid-single-digit expect for We to range

For growth in DRAM NAND. XX% and industry expect approximately around calendar demand XXXX, we of in XX%

over growth are demand as at PC historical Europe expectation in customer to cloud. earlier and of due term, grow from strong from demand macroeconomic in in growth in regional long-term expect as smartphone environment primarily the in few customers, DRAM the years, we demand new future markets, declined impact improve and starts factors reductions reopens. to high trends expectations expectations in inventory the NAND China. this platforms further, the is below launched next year economy moderation demand levels well term, gradually inventories CPU Gap] Near Longer markets and to largely of for For due trends our lowered most growth some both and end we the have and the months, improving the [Audio China and memory and

demand growth XXXX and industry respective their well in to above calendar DRAM XXXX. for demand supply to in NAND and industry supply closer long-term CAGRs growth. calendar the is Turning growth Industry

capital industry. a and reduction well industry a margins, for expect the decline industry in we resulting current investments significant as the Given rates utilization pricing in as

and remain that rate expect which timing XXXX. well in well will and demand throughout will Due industry year in that DRAM at expected supply driven would DRAM to pace and taking supply accelerate XXXX a The of growth NAND protect to chain. demand supply we the industry will supply this inventories number bit long-term balance and NAND industry significant profitability are year-on-year be calendar in align across We into be and mismatch supply supply below the sheet. demand to that XXXX balance expect challenged the environment negative XXXX, bit supply/demand their of growth XXXX, are is in the this XXXX. our and growth profitability calendar by decisive calendar CAGR Micron believe growth recovery brought calendar entering year-on-year also normalized below flattish recovery. and We actions with

First, are supply CapEx to reduce in bit growth our XXXX reducing and investments XXXX. we

Our level the $XX expect year-on-year. fiscal down billion and between earlier XXXX 'XX. fiscal XXXX to $X WFE represents we year-on-year a being range CapEx more is fiscal a $X from XX% billion the be approximately and to target than $X.X billion XX% This lowered billion in year reduction to

We are align reducing our environment. from to XXXX now supply-demand earlier the CapEx with significantly plans fiscal

We as construction XXXX from even year-on-year. fall expect to increases fiscal XXXX levels WFE fiscal spending

supply through reduced reduction wafer have in sharp bit starts. near-term we Second, a

expect combination reduced growth of have we up slightly by for be DRAM and in calendar announced, these NAND XXXX our and XX%. production a wafer bit negative to starts DRAM only approximately NAND. in As previously we Through actions, we

cycle manufacturing bit to our reduced be to the levels realized fiscal times, from will Due be supply in in Given the will impact our XXXX reductions CapEx, materially XXXX prior start trajectory. WFE of wafer our starting the our reductions full the fiscal QX. on supply

supply. share bit flat We to relatively a continue target of industry

our bit help in to bit CAGR for This our supply decline us long-term investments. DRAM the align in and technology change expected slowing growth, long-term the CAGR response cadence will we are process NAND Third, of transitions. node

X-gamma our beyond decision XXX-layer to production delayed DRAM in NAND the that node demand to we our will required and the be Given growth. will outlook new next ramp, XXXX. now introduction be Similarly, align our to supply X-beta slow expect

technology decrease positioned. reduce we to very to year the be to our changes steps phenomenon. industry-wide significant and our in cut well reductions expenses. external attrition the expect productivity taking these business, are expect for by salaries industry-leading and operating discretionary technology the spending, driven We costs of we to company-wide, an programs through across calendar over cadence to being With approximately of capability, project combination reductions spending course bonus XXXX, Fourth, our remain node are by We a reductions. the and we our program personnel XX% select fiscal of remainder suspension the voluntary and XXXX spend. also product XXXX, are Executive reducing headcount of lower through

to exit and quarterly around with cost fiscal OpEx our P&L. We $XXX expect in of million with additional XXXX savings

Although to steps, manage will to levers flexible prepared we our make Mark. further and supply to turn we structure. aggressive to over remain it are I have our cost taken these exercise and control changes all now

$X.X of Fiscal revenue. revenue and QX representing Thanks, QX our Sanjay. was Total quarter. worsening guidance and the XX% market XX% down year-over-year. declined revenue QX $X.X within conditions DRAM sequentially revenue XX% billion, came course revenue the of NAND was ranges in over DRAM EPS revenue sequentially approximately with the despite $X.X fiscal range. in XX% total prices the down percentage and of XX% QX sequentially Fiscal billion, percent low declining range mid-teens bit with total declining decreasing in shipments revenue. XX% revenue the range. shipments low was bit range XX% representing mid-XX% Fiscal prices Micron's billion, NAND and XX declined the in declining

Now to billion, revenue graphics $X.X a unit business business data mix low a shipments QX. networking. million, billion, weakness fiscal the was QLC unit increased by between $XXX unit timing to and partly high. with of client, was due Storage business business was Mobile markets. and QX revenue staying automotive level, while business fiscal unit $XXX unit. than $X was Compute Embedded million, revenue stronger new revenue turning with and and revenue to consumer industrial networking center, across

fiscal to million Operating $XXX QX expenses expect grow due for were $XX the revenue The fiscal through to fiscal consolidated approximately year. down gross lower sequentially to down in We rest of XX percentage the XX.X%, margin roughly sequentially, mobile QX billion. was pricing. primarily points

down QX, fiscal actions We X%, the margin in negative operating adjusted to the an significant the Fiscal margins quarter our reported from down in We margin share million year. loss in year. year before in Fiscal Non-GAAP $X in as and million in fiscal per was points profit XX% are being share earnings fiscal resulting ago billion, QX an close result percentage QX taxes XXXX to XX%, resulting expenses additional was X this of an operating from $X.XX of sequentially. loss tax in $XX $X.X operating EBITDA a remainder breakeven. were operating through the per taking of quarter. down EBITDA $X.XX reduce of $X.XX, QX QX of in fiscal XX% of of prior prior and

million we a billion fiscal in $XXX X.X or place flow an through and in from we negative average flows of Capital cash shares million approximately 'XX. $X.X these XX% $XX.XX. cash price revenue. Under of in down to Free Turning billion quarter. the were cash operations million CapEx during We quarter, the XXbX-X during quarter, was of share spending. plan generated see $X.X at from trending in representing expenditures and the QX, $XXX repurchases levels capital fiscal completed

$X.X inventories QX DIO QX billion, Our The fiscal has quarter rapid actions days. was reflect intent well target and the and our was bit levels, in QX average inventory our and for shipments in down. to fiscal above these XXX work ending decline fiscal our driven

and We billion investments We in cash peak QX total with DIO $XX.X our and and our then improve. billion of liquidity. to quarter of the gradually ended total expect fiscal $XX.X

in With we in $XX.X market debt and through this the the macroeconomic ample net $XX while to and fiscal bringing billion liquidity of Given quarter. intend the project with net income ending added consistent maintaining income rating. We second liquidity debt $X.X uncertainty our investment-grade fiscal maintain quarter of of QX additional we on total environment, to approximately leverage our and bolstered debt, million project our interest deposits, our billion.

The to challenging near-term our outlook environment impacts and profitability for turning Now the outlook. our quarter. second fiscal remains market negatively

down. related revenue recovery Included million, settlement both This an we second disruption as For recognized to approximately to insurance most is insurance shipments fiscal fiscal and NAND, DRAM operational guide in recovery QX. is to be occurred of and QX, up in but fiscal revenue. in will which bit be of XXXX expect an in quarter $XXX the be

flow reductions, to our we demand. a in announced goods Beyond forecast recovery incur the revenue most to expect approximately $XXX fiscal improve to continued as cash fiscal QX, wafer to we we second of of second headwinds fiscal which expect anticipate in and half. Related cost we half in free start sold in of million our 'XX,

effects, be XXXX NAND, Singapore. fiscal costs primarily underutilization to and energy expect bit be to due healthy but these cost reduction in unique DRAM Excluding to in per challenged we inflation to

$X these higher operating to see the fiscal expect XXXX. cost million aggressively have fiscal this outlook, OpEx income, lower continue underutilization we approximately we to around In billion line, As in into environment considering as inventory QX. And mentioned, down will costs. fiscal manage we by trending $XXX as mentioned. and QX the impacts previously from to Below net sell-through, Sanjay interest we continue

there still we level discussed geographic than we in less $XXX tax, While and at see due last income, mix million. fixed of a now the XXXX fiscal is taxes level as of to quarter, coming

XXXX range capital We half are planned in XX% of to of weighted for the CapEx first down long-term in fiscal year-over-year. spending to be capacity billion planning. XXXX the CapEx will reducing be $X.X towards our of increased the level the than with billion $X fiscal includes construction year. WFE expenditures more an Fiscal

these fiscal QX XXXX we fiscal will follows. for suspended cash market our in factors capital to our share on and We compared dividends is plans. prior improve, non-GAAP Until all for are focus as return our have also CapEx now. our reducing flows significantly guidance in and With repurchases mind, conditions

margin to million. in plus plus minus expenses be plus X.X%, the $XXX or We or XXX $XX $X.X million, million. basis minus range or be operating Gross be billion, of and points; revenue $XXX to approximately to expect minus

We a million. approximately share approximately loss count of EPS of we $X.XX, expect tax expect Based on plus shares, $X.XX. billion $XX or minus expense to be of X.XX a

through As this and Micron tenacious balance we a solid the benefit work team. operations, strong a has critically, conditions, a most best-in-class portfolio, of market sheet challenging period of product technology, competitive

supply-demand and industry. trends, term, growth storage semiconductor strong broader growth the confident we supported long content operating achieve are downturn and memory and secular this revenue and Beyond to our and profitable growth in it over investing will is manner combination and better on the outpace cash is that I free balance. a back memory model. with generation This Sanjay. now to responsible of long-term disciplined Micron turn focused flow by consistent the will

Mark. several to are have CapEx drop and reduce strong has supply the you, months, and quickly responded Micron Thank we control taking a we actions demand. output, expenses. enterprise-wide dramatic In last seen in our our to

operational increased have on liquidity and plans. balance our We adjusted sheet our

environment currently half. remains half first improve the challenging, the to second While XXXX we from expect fiscal revenue

We broad data-centric are by for joining that will the XXXX. and us expect billion industry for confident you total by to our create available Thank the long-term $XXX approximately reach technologies advantages market growth enabled today.

We will now open for questions.

Our Arcuri the Instructions] UBS. [Operator from Tim Please of go question with will come first line ahead.

outlook had question the about I a for Sanjay, DRAM. market

industry you income at do. concern high I already mid- the have in 'XX. going singles core think was the be in will have then that if your said this be some industry terms two the what But DRAM? One, your down, production big would will There's down you production in said is for guess, accelerate that year-over-year said about to do you to remarks, And recovery this competitor calendar profitability. your You questions. of production in point, I DRAM down

do curious, down down I'm industry cutting that are So such the production will is yours that they of you just year-over-year? in think like DRAM just be sort

our year point that So Tim, what to like I fiscal out we DRAM growth be would supply that would said negative is in slightly 'XX.

be to actions. the have So That's mid- single taken would -- growth for supply negative. because digits high we single not Micron

also output We are -- wafer in know, in underutilization reducing CapEx have reduction. of And reduction taking supply fab. the we terms as the supply actions you through

fab have pushed supply to our X-beta DRAM out closer can we the so our that production We bring demand. in

supply to we the pace is balance recovery terms and course, together. be rate supply to reduction. actions that and So of And and bringing believe oversupplied, industry industry in demand of of actions the with Micron's do the as need cuts closer in would supply industry taken respect of affect reflected the the

look, that negative, with to the year mean, comment supply respect But industry. industry can NAND, DRAM we it is calendar for recovery So growth in 'XX if supply and I and our flattish specifically competitors. the the we is accelerate -- for what will is cannot the -- you in tell

will Muse for next Thank come of line C.J. question and you. our from that Evercore One the ISI. moment with

line Your is open.

question the you've few leadership last in I and role NAND. is DRAM taking really the years, in guess the your both -- --

the into so leadership? you can you What do role as we about that downturn that doing in time, front? XX years position, take in go technology of when think can How same lead worst supply on taking And are make appropriate sure that that Such reductions maintain in the are you, really your again. hitting upturn that you the at and and lead next advantage the and cost. you

C.J. you, Thank

our road technology map. Micron good position. is a our We technology about Of feel very and in capabilities course, strong

prior our wafer improvement deployment of X-beta for X-beta bit improvements but if node our you bit DX, as with node. our DDRX in a -- and gain efficiency efficiency gave per DRAM you X-z over DRAM And what per in And XX% you good look industry, our X-alpha well see prior Our is you compared well would to node now at performance node expect products. good us our wafer. efficiency at less, designed look power that our if X-beta, XX% a is terms X-alpha versus

good when there to very that other out X-beta are it really EUV you even is nodes it's compare any node the So in a industry.

So it's industry-leading an node.

are in well ROI nodes maximize And node. of we these course, overall growth R&D our the demand X-beta accordingly. positioned for the of positioned adjusting X-gamma bring node and cadence And as well balance CAGR mind of in timing and the manufacturing. are course, will to supply DRAM keeping and our and be And longer-term to with technology production We well. our in our

So and And our good well be in customers well in and Both development cost, are course quality XXX-NAND node a those fashion, managing XXX-layer is responsible supply with manufacturing terms terms thing positioned of, positioned shape. are we think our technology. and qualifying them on same NAND plans and our yields, NAND we'll very terms side, I with we X-beta plans highly technology and our in of of of in continuing with in in to products. work

So we just recently plans our our there, And X-gamma customers road get customer position talking NAND. X-beta the of a node Micron's point in GDDRX and leading the portfolio Micron, accolades out and industry. executive the not capabilities technology on QLC are too. was LPX, the same on good map, XXX only customer to as from just we and with And in and products our and to we of of facing And XXX-layer feel that beyond on the NAND. layer, was kind for course, I our about broadening best being

positioned. with we technology, to are not respect So well only

well. we I respect positioned well product as to are think momentum our with

Caso next line Thank with moment will from One you. of the come Credit question, Chris for Suisse. our that

Your line open. is

and gross can you Do about as QX? you beyond some free are here? well? through for that's flow margins better case comment in they gross cash on the charges impact you through margins revenue half. think And go being is pace Do second and the how about the the the year as of And unutilization of the you bottoming believe the of margins you and Question gross if year. spoke flow

take is say we up A in expect few the QX quarter to Mark. the down. and bits second bottom did be that for would the this revenue that. I'll on and bits, We comments profile. Chris, be

So market around conditions. that points the to continued challenges

XQ also be on but be on expect DIO, will inventory We the XQ dollars. peak to peak

customers profit expect in year. position and to second margins. is will remains the we oversupply and better But that calendar gross are in the them inventories, year, through challenged situation. depleting be going an quarter to So of by the be industry But challenge a the

specifically as or node utilization just 'XX, and strived FY In talk Micron than has maybe better cost historically, I'll advancements, effects weigh and weigh downs and manufacturing, But the going other in generally volumes Now productivity challenging utilization on line achieved be effects costs the term first. the to per 'XX these through on business industry, there that And drivers costs principal is is One the and cost low a overlooked maybe that factors. routine that. of near is three margins. are effects and period in unit the just fiscal an help explain factor simply will run the on normal cost basis, preproduction impact you scrap when are period revenue, add volumes, sort and And effects of decline freight, volumes things. going pre-qual those these royalties, sharp volumes, this in to margins. year

that. seeing we're And so

also especially second then is third, much higher costs. some that and the back volumes And the course, lower underload of year, visible in is higher inventory been it creates creates period early in on And has a cost end. of that up creating issues inventory significant most is cost, but that hangs factor are driver still our weighing the The costs. most in inventories And our 'XX. said cost. that will -- FY announcements end. versus And to the also -- is total those utilization over to is front are just period which be applied most impact over fixed -- going have And costs will lower that inventories significant need we of on the $XXX and in we be of half of to that a costs -- cost million

'XX. through Now the rest flow of in costs those FY will

more less than volumes we're $XXX through about if FY volumes higher seeing are will flow earlier, FY expected, those inventories our in now, are will pulled better cost through if right But those 'XX. Now million 'XX. of expected costs be in than than

second the per underutilization effects Again, in and more effects to going and clear. as expect especially normal inventories this offsets. Again, quarter. back-end effects that's back-end to and quarter mostly QX. the a have inventory effects That's just quarter, volumes. modestly we're the as then bit clear. then the is just more low to third those But the that going some And the we summary, that's starts then up period in to fourth, cost be cost effects in related front-end have So the we cost of back-end be bit third that in and to in are and then

in cost are In is a the pace just utilization -- certainly it. going as supply-demand us and financial and get reduce for is actions and impact taking important. volumes fact, great it's -- the is largest we're function we actively that demand, -- occurs. of the the have unseen And supply. and to volumes, see details. taking balance of to that be It's profitability volumes and that focus. a -- and to the a a permanent in you drops we're worth been down outlook rate and the and is managing supply noting with aligning address It's decisive But this pick I cost we CapEx on We're improvement condition. think to absorption function quarter, as not fourth actually This resume volumes steps up of the

come will One the our Barclays. question, line O'Malley with from Tom moment that you. of Thank for next

open. is line Your

demand question really My side. is on the

end you a I specifically an that just did what the ask into But next from market calling job on think you data out saw to of perspective good I wanted center. year.

quarter, a center do think than the at Or you you do data versus in that guys think that and talked past, about inventory center but thought? you out weakening initially where last of demand? worse data customers you in terms the called was seeing You've you're inventory

customers what including thought. So higher cloud inventories than with we center data is

And begun, environment -- that So exists given weaker the for consumer-related operations and and any in cautious as macro there some cloud wood agreements, companies somewhat well. has of that as managing environment driven that the that trends, and the interest is in become long-term cetera. macro other et And a the their the result of be given course, also overall expenses are may overall rates portions terms today, in trends, macro higher do that cloud chop by of end activities area. demand some adjustment demand to and inventory it has and consumer of

seek like cloud. So demand Cloud environment some that remain definitely for can ultimately impact out digitization that end is the do macroeconomic macroeconomic in what past helps longer-term we trends this. environment cloud remain But strong. environment trends would expect once efficiency do like drive point businesses in for positive. and the of that We that get will an current that to I current weakening, absolutely

environment, the overall outlook. as terms data of our In inventory impact impacting adjustments cloud yes, and center well. weakening and current demand that's of some

Please Thank moment you. line go that next question, ahead. with Krish come of Sankar from our will Cowen. One for the

wondering a in is second for of Kind should have quick we risk in just write-down? methodology? peak inventory expect base what of quarter in inventory FXQ? kind to question you the Mark. FXQ. And inventory and inventory your Mark, what said I of is days dollars inventory What the write-down

Sure.

think I question. got I the

is on to to -- consistent the the thoroughly expect in quarter we by lower be steps we've then the the bears the expect and recently costs repeating. where do and encouraging. seen you've we've the calendar with we Inventory monitor cover we to carefully though have said those expect customers and supply worsened a it's XQ. higher a we with year, volumes risk a have from -- But gradually down. I the which So are obviously XQ, in and and utilization dollars And we bit this at as the is did second get improve, mentioned, taken before, quarters conference, other better Yes, be of customer warranted. in that's inventories the of to quarter. it projected trends, that's conditions did change, disclosed unit. that And that to there shape with in have value was. our factors. peaks, lower. our profiles And extensive both DIO policy there analysis project realizable always the And has a as refer We where that did outlook. decreased quarter-end risk number then write-downs you from are future cost If the in that, of and We our net -- estimates we inventory this of in but be we market safety further, no a have, And weak thorough margin perform reviews We to conditions determined in could of or lower of none do. of includes are write-off XX-K. it pricing. I we the we there that do associated per course, the November analyze peak,

evaluate long-standing inventory pool, a and and have consistently. we a We we apply evaluating regularly, of as policy policy single this

for moment One you. from Please the Susquehanna. line Thank come our go next that Hosseini question, will of Mehdi ahead. with

demand end on customer back to the I Yes. or the to by Sanjay, by end trend application. go you your, color provided want

are New the that PCs DRAM say, asked QX, market DRAM and was I'm current seasonal X% part be that improved that decline whether a PC it PCM time a to visibility bottom highlighted the you suggests frame, could me of Year. better post-Chinese could -- be for over. Could that March, PC to in because in certain that by take rolled If catalyzed NAND just to I would it the and market to understand rate application build And end the April And expected actually let's apply the down and with XX%. end I You've more segments? unit help stabilize as a pricing catalyze just NAND? trying December market

PC the too, sales smartphones and sharpest course, This And is and are where smartphones, talked one calendar unit the markets. NAND well. Well, about already decline high we PC decline another where year high. historically, decline DRAM diversified. history PC teens of Actually, in terms well units. a of And the of the the 'XX, of is units. of area decline in PCs, in down markets is that, in as in XX% globally the

of parts And demand of end about other are, of inventory the adjustments demand. on course, in then happening top impacting as impacting of consumer the course, market and inventory earlier, are these it well. I spoke So that as adjustments the

period in to in and respect compared 'XX. low- you the year next prevalent in demand, over really about XX% lower 'XX approximately mid-single-digit demand we the to at digits, growth is I calendar demand the time. with mid-single growth of growth 'XX that in been think expect years for terms outlook when And look that to year XX% significantly past, our time DRAM for CAGRs have over in rate a two-year

the here what's The important So, factor supply that the here is supply has reduced. I reduction. really biggest to think would be be

comes a have underutilization, profile be profit actions much to to 'XX, are The into that that of see factors as we the financial in past quickly taken term, drive in and reduction, the discussed have supplier of address depend do those the in Of course, about And along macroeconomic that industry. and do of node long-term cash reduction terms the long-term pace of how have the the of the I improves. XG, 'XX. we much on will improvement IoT, supply And function the the that all of very the year than And the we we how improve. CAGR performance fiscal demand fast environment spoken once factors But trends will biggest And would adjusting balance. of adjustments, discussed, supply for near and all believe demand in with get lines in able AI, in we inventory factor to the supply of the technology will demand, our the really will today. a industrial in demand. again, terms revenue, free course, actions, terms by of have CapEx we is just environment the the autonomous, flow before, cadence. the industry better supply be rate course, driven

our Thank question, Hari that for with you. Goldman the Sachs. moment line come from will One of next Toshiya

Your line is open.

a then clarification Mark. for I had clarification one quick and question,

you 'XX of a platforms few million your you You given half throw have of server the utilization stay You talked to production bit could perhaps then on quarters? reopening of the of rates assuming for specifically, XX% you is talked the about into May the as fabs. talked increasing or out are for couple talked skewed assuming you about gray. in visibility still You calendar rates for of inventory, striking, you not new as the and XX% Or remarks, the question server estimate, second through couple August? in over industry in deals, about remainder And the the months. at underutilization prepared bit But months fiscal more step side. but rate little for of about you drivers we're is progress as kind customer do hearing just obviously the and some up of that bit inventory customer inventory much year. those are the growth related the three reopening you $XXX some Sanjay, that next some of China How demand little normalization to you making might the CPU cases, be headwind and key your utilization or the the Feb, cut When you China next pretty are of what a rates be today. of but platforms seems dynamics? assumptions

what curious have of visibility you kind there. So

first year the the one. market update beyond you to and on accordingly. touch 'XX. conditions expecting evaluating most we're briefly fiscal going through just just be that, -- we'll well, of I'll and Toshi, market Yes, through We're And underutilization these elevated always levels the then

out customers. customer aggregate inventory has believe consumed point is inventory, the customers holding questions the it terms to what inventory And regarding being some end Basically, in demand that there -- like means be would some on of of few I that we though to volume in points customer a now, by to and to inventory of in that your even high is some their that is keep down that come And that have consumed down, are terms demand. at although increase used address you of And still the to see can shipments we And in shipments. substantially. by guiding or be weakening to industry they come the may the ago where be mind levels. being demand end market them QX, are bit that in versus in just bits, used in quarters

And on by time. may So suppliers. of continue. trend discussions projecting basically, course, though improvement it be inventory healthier improvements than by this relatively will greater closely, but purchases has of the customers position as ship revenue mid fiscal perfect in that be projecting regarding continued even gradual ship And greater is half will we first And all on with monitored China well. second expect believe are beyond 'XX, visibility, inventory of say than be where be calendar the and terms we in, will don't year China, we And that's we customers and at of customers we the would our that improvement, based second inventory question our are half, our to reopening out the by have in we half of customers, from that by choppy.

test recent operations And chains. of some also cases we well, continuing of China impact for of term, we but second calendar of respect to In demand, China electronics year, system the well those the monitor are the markets. and half terms to And COVID demand as of from course, assembly any in customer supply global terms is increased we reopening as China reopening Chinese near course, coming terms on are that just issue with result the and assuming to the have is not of there. be of in benefit in will monitored China in

So, I COVID monitored. China, have be -- to will reopening continued cases to and think closely be

platforms, CPU of And visibility the Sanjay, in server new Sapphire Rapids ramp? the Genoa, in there terms

So will terms a attach of somewhere and for mid-calendar. in around as by servers, And calendar percentage deployment servers. continue that as of 'XX of greater our 'XX these that DX are 'XX to ramp we are the and, XX% course, the by the be DX positioned, well. course in well during these range said, XXs that will expect end ones we expect in and drive products ramping And with we of

they cores. points rate just attach with DX that processors. new to greater These platforms the and more So our DRAM, increase deployment work to that and forward They with for hungry well those those will dynamic of with bandwidth are are looking new DX of memory CPU they memory particularly products deployment. processors, to we healthier drive and because positioned, are respect adoption

Thank you much. so

out, them plans been broadly of last forward in some or year those mean compared over new but the been it the getting out. we months, 'XX. pushed So as year of few adopted deployments to has course, look have progresses processor last pushed to I the

Thank the do Rakers will with time from Wells of line have we for And Aaron question. final And that come Fargo. you. one

Your line is open.

assumptions pricing degradation? to guys for you kind is environment factoring this simple pace of are make quarter. I'll I'm of course that guys pricing assuming I given as quarter you your and declined this just think you of it the change pricing as last of last curious, NAND, just of when are and pace price as of quarter? thought about the quick up Or of through acceleration the that a DRAM we the quarter kind saw saw question. for current kind environment our you kind a similar guidance we this in in roll of any guess,

don't supply DRAM today market bringing on And are I experiencing to specifically of environment. demand about again, is challenging we that actions and actions it and and kind are towards tell both into are in that certainly decisive progress look, the important pricing, oversupply that have balance. So NAND highlighted make you the comment but we can

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