Micron Technology (MU) 20 Dec 232024 Q1 Earnings call transcript

Thank you for standing by, and welcome to Micron Technologies First Quarter 2024 Financial Results Conference Call. [Operator Instructions].

As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead.

to Fiscal welcome Financial Quarter and Call. Conference you, Micron First Technologies XXXX Thank

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

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

also can You us MicronTech. follow at X on

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

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

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

high margin above call, pricing. reflecting In guidance Good Micron improved fiscal Satya. provided delivered Micron's at the revenue, afternoon, earnings and gross of QX, execution strong with last we ranges Thank combined the the everyone. EPS end you,

which eventually transform and AI stages Memory demand the AI, the and business this every in already will society. of very most only and early positioned growth, in technology of improved of deployment are well is in by seeing product generative this set aspect growth is early The us of the robust servers, and GPU-enabled and the having disruptive we catalyzed gives XX-year multiyear introductions strong of accelerate confidence environment over driven will of technology are by a trajectory at We new additional executed to supply/demand phase calendar history. current driven AI solutions, time. Micron in heart our business. the quarter leverage our

levels quarter from industry inflection far supply and intend We will ROI. very with in strong allow have which to our benefit higher capacity with still disciplined our us stay to from calendar pricing year this a We our is driven plans. to pricing as prior necessary earlier in fiscal compared investments our prices associated

our strengthen expect continue course to pricing We through to the XXXX. of calendar

margins XXXX. performance expect financial in throughout record XXXX We and TAM and improved industry calendar

majority of X-beta X-alpha We the vast NAND. are significant have leading-edge and the nodes DRAM road our Micron progress ramping XXX-layer at with in bids advanced forefront in of in map. layer and NAND. nodes, both technology industry-leading technology DRAM industry's and and our is XXX most made The on

prior XXX-layer than mature DRAM faster As and previously nodes. yields NAND X-beta have stated, nodes both the reached

NAND. in We teens of mid- in expect cost high in long-term fiscal to XXXX low to expectations DRAM track and our with digits front-end line reductions single

in in DRAM We volume X-gamma using calendar track production on for XXXX. are EUV

of this improving markets market customers customer of for across and their end Generative competitive or closer embedded and costs for to personalization and use turning on-device greater most and offers storage. see in We of a to the industry well with storage AI productivity. the inventory center the in host the of sometime capacity, the at AI driving volume evolution and cases XXXX. AI smartphones DX and for to recent cross is enabling is as of normal the markets, product we continue markets. The demand. Now we benefits ahead range as map, in end rapid privacy, calendar levels demand expect that to DX in Across are markets. auto our in expanding leveraging from with lower to latency, are levels over data on-device in this to and in and market road approach enhanced mobile, early our a near performance normal transition from as capabilities PC requirements industrial center first Memory end announcements PCs, end improved PC, from inventory we content auto expansion data and market expect are for several XXXX. wide and customer cases of AI Edge customers is in turn center industrial our memory Consequently, higher customer memory Storage a and of from use markets. Inventories calendar such which AI these performance, increased at power Data lower see Edge our proliferation half DX, to creation the AI-enabled to our we

data AI-driven for and [ increasing aggressive the HBM for ] by growth to product accelerator XXXX In customers following calendar requirements calendar new as road ASIC mid-single-digit announced a AI benefit power. shipments unit increase in capacity, momentum. increasingly more data center, servers. Also, from introductions AI from several maps a these We to Demand year operators addressing is performance double-digit for budgets server and with these in gain have server GPU Micron several center percentage servers data response servers demand, of infrastructure of LPDRAM on percentage brought high-capacity in shift expect HBMXE, center opportunities content of low AI as AI data total industry-leading has to center content-rich traditional expected are strong to data AI been decline XXXX. in of trends with modules, solutions, exciting SSDs. by including portfolio DX center the types memory proliferation and an

a offerings to power We on have QX, to and industry-leading of HBMXE, customer qualifications. Micron consumption compared progress shipped platforms. has our to making used very received lower which about of fiscal better positive our Grace competitive of stages final we performance be XX% HBMXE HBMXE. samples our are of HBMXE approximately In XX% and in in qualifying good feedback is in HXXX number key partners GHXXX the NVIDIA's Hopper, next-generation and

CPU our data LPXS ], center the used [ case In a computing. in accelerated addition, LP driving the being memory Grace for use new is for for

of several begin ramp fiscal We production of HBMXE are our and hundred calendar revenue early in dollars HBM volume millions in track XXXX XXXX. to to on generate

sometime and will our XD performance, the continued built our which revenue data Featuring calendar a monolithic we die continue [ customers support HBM flow We HBM share to on center not our industry-leading ] DRAM for and industry's and in will expect using node we the workloads stacking our introduced XXXX, bit fastest month, assembly. high-capacity enables growth lowest share thus expect X-beta overall market and modules, does future. a latency today into gigabyte best-in-class memory-intensive XXXX. Last solution require in simpler that XXX match process and

our released we die can [ existing vendors TAM as as validation XXXX CPU has new platforms a immediately. that in well platforms. for leading based XXXX offering significant monolithic have our modules address upcoming XXX-gigabyte ensures and ] confirmed Additionally, support that on This

in based significant data ended mid-single-digit quarter SSDs X share revenue high to XXXX our in percentage we low to volumes SSDs, of fiscal in We center build and XXXX to Micron consecutive share data fiscal with center superior industry of we grow unit by This start the to expect look In PCs, beyond. A calendar next revenue to solid quarter record volume momentum in third calendar on declines. testament volume production assessments. with through revenue on record marks quarter PC double-digit growth second this execution and unit a offerings, the a percentage after years and XXXX. forecast independent

the XXXX we X SSD capacity see as half of of expect PC device an increasing to average gigabytes DRAM in start per capacities on with ramping We second OEMs calendar and additional unit PCs X to of well. AI

grow and customers gaming our our for announced creation. In powerful comprises shipments smartphone the demand client to achieved QLC-bit now recovery, also QX, QX. our handle shipments will first SSD. XXXX. Built of SSD, SSD, products XXXX have in majority NVMe This with industry-leading modestly business help XXX-layer client NAND. announced and shipping our in completed X-beta record Micron layer our QLC the upon also customers qualifications bit or several mix the XX QLC industry-leading leadership, fiscal gigabit reached both based for calendar performance XXX-plus as Building ships fiscal for also workloads client and month, more is Leading fiscal smartphone mobile, shipments consumer adopted demanding that SSDs unit bit we showing on [ of billion scientific a NAND, vendors applications language and In our new signs ] we solutions. large consumer we DX the parameters. forecast computing, at shipments PC are XXXX in at models customers we client on-device SSD both We record in industry-leading our world's with content supporting XX QX. new

popular DRAM smartphones, OEMs smartphones poised generative an gigabytes is of term, applications and our leading opportunity. portfolio ramping Longer to X with be smartphone to on per AI-enabled expect additional capacity of We storage in XXXX to and many this will X AI start memory unit. capture product

second industry-leading the most applications. mobile LPXS new will requirements demanding bandwidth X.X the AI-based gigabits of Our per address

auto XX-gigabit part support which Last, portfolio this the due AI-enabled auto opportunities. XXX-layer next-generation and as DRAM, of to of The to in our cover sampling end of the continues we markets memory, long-term are proliferation and growth UFS at foundational of more our began revenue also AI to predictable in to industrial devices. edge growth X.X relatively a industrial, markets the host memory LPXx and and the I'll value X-beta and We edge needs AI NAND their content models. increase translates profitability emerging

Xx AI-enabled to content cameras Xx edge video for is memory Xx security than more standard AI-enabled For in industrial video memory to have example, cameras. there standard compared PCs and PCs, non-AI an increase

quarterly Business QX, achieved new a revenue of volume new Automotive demand vehicle platforms. lamps Our and in fiscal by driven record better

in ADAS market in growth benefit leader quality, OEMs Micron and memory in-cabin expand automotive from automotive features a storage in and applications. content As as will share

remains win automotive Our trajectory design strong.

opportunities as the and create customers. Industry at new industrial fiscal levels recover. Machine solutions storage saw Our widespread improve fundamentals of to for storage a sequential continued market a Learning and partners and distribution us. QX continue business levels as for memory strong in industrial as at growth normal adoption growth and memory majority remain of for the are IoT, our to Inventory double-digit AI

Now turning to demand. our market outlook, with starting

from prior In up DRAM-bit for We range percentage in XXXX to XXXX continue demand calendar range. demand mid-single-digit we expect single-digit calendar expect growth. expectations bit teens in the grow high high to percentage growth the NAND,

CAGR expect CAGR forward, for Looking over demand be growth DRAM few percentage the long-term XXs next NAND. near We industry we and below low bit the bit CAGR forecast in for the and XXXX the long-term of mid-teens range somewhat NAND. calendar for years, DRAM to in growth demand

trial last to Turning growth and with to supply maintain of between than production discipline, recovery now for fiscal demand exercise $X and supply. Significant is that enabled strengthen year's $X.X aligned primarily DRAM is billion levels XXXX market Micron's period share would supply the reductions underway. CapEx CapEx the slightly be to projected industry strategy billion, pace to ramp. and Micron and have will growth long-term to higher the support less of HBMXE recovery. continue our than across the An bit plans supply our extended NAND.

in expect to continue WFE We fiscal year-over-year. XXXX be down CapEx to

the roughly size DRAM the HBMXE will will discussed growth have ] production of capacity previously, the is of die constrain industry HBM supply-demand the in products [ improve industry, DX. equivalent we non-HBM overall As balance. Across ramp and supply help the twice

quarter's industry-wide HBM a higher we reduces as that than impacts to nodes, supply manner. number interface die is early DX practice through the Fabs ramping tools capacity NAND, transitions last of our help stack underutilized in underutilization will likely an in of product leading fiscal we at is which edge call, The be us nodes at technology the approach supply wafer a account, packaging HBM diverted is the capacity. more wafer to communicated planned wafer overall In utilization into our below underutilized leading-edge for DRAM given tools equipment more and diverting year, Additionally, new in Xx our Taking to and that lower leading a edge expect constrain yields. in the industry a indicate supply fiscal for the bits. as steps XXXX. produce all increased year. Reports XXXX that this substantially higher rates includes these we meaningfully we this is fiscal the redeployment this year strategically structurally leading-edge of earnings in that consuming logic both These in decrease fiscal well Since demand-growth bit to factors days complex inventory XXXX. number growth has result to to production wafer underutilized of Micron's capital-efficient of towards move processing factors and

expect calendar We will below industry be industry inventory of supply result demand and contraction levels. DRAM which both in to XXXX a for NAND,

New customers in The highlighted York have difference compared with work overseas we liability the we and are before, globe, we and test expansion. To our for global and of Micron grants have cost to CapEx fiscal opened Taiwan. on support the and competitiveness grants facilities Malaysia As to Government and projects chip's chip's our XXXX. depends better state-of-the-art to in assumed assembly continue U.S. Idaho address our plans around the receiving

are qualification approval previously authorities commitment QX, the from customer assembled of we mobile our LPDRAM We strong mobile furthering Chinese In our of expansion proceeding at China. received having our investment. in Xian with site achieved our planned fiscal for Xian our facility first serve to customers our announced

remains Our and address of resilient customer strategy element operations a broad to diverse demand key of a fashion. network global in reliable our

over the for product now leading to manufacturing position to our capabilities our it and Our I us opportunities Mark members well ahead. financial will dedicated technology, portfolio, strong turn outlook. results strengthening capture and team

provided results Thanks, good delivered EPS strong our and earnings last and QX we Micron in gross upper Sanjay, margin the than fiscal everyone. end of with in afternoon, guidance revenue, call. higher the range

sequentially, for billion, strong the execution billion, our revenue DRAM During quarter was sequentially revenue current XXs higher an total representing range. increasing the in buys The percentage pricing. XX% low execution in revenue. prices customer quarter, second $X.X reported NAND. the increases, occurred and up fiscal fiscal our bookings across percentage year. Total improved environment of full has supply-demand increasing in prior outlook approximately XX% [ fiscal strategic DRAM year-over-year. quarter strong trajectory our DRAM $X.X improving QX XX% and the and resulted QX and pricing team's Fiscal financial fiscal was up range despite and shipment, DRAM ] in quarters the increased bit that low XX% prices CQX price revenue single-digit including shipments with QX limited for Robust QX entering Micron's on

QX, NAND execution approximately the price after fiscal increased volumes. offsetting Micron's and in more mid-teens to sequentially pricing in growth decline representing than improvements in in the increased billion, contributed to an NAND Bit shipments and range percentage expected declined the record our of shipments prior communicated XX% quarter QX calendar strong contributes revenue. effect Our increase. Portfolio by mix solid prices sequential of with with X% the NAND $X.X total even QX revenue seasonality. Fiscal was in revenue XX%.

at revenue center normalized center in to enabled for increased $X.X XX% business memory was capacity growth and sequentially. strength Mobile AI-related $X.X Shipments strengthened up inventories customers quarter. unit. inventory shipment and average X% customers up and and Client turning unit show continued billion, units sequentially. growth. Revenue demand. smartphone the by market Networking and shipments to Compute business Data was at the revenue Unit bit and in normalize revenue The data storage as billion, Now Mobile customer client the Business drove

for billion, XX% incentive in fiscal of Business improved and ] higher revenue partially sequentially across $XXX prior in SSD $X.XX $X.XX, improving operating resulting an due of year, by our OpEx strong in QX million greater revenue. The prior by of $X.XX QX strong was consolidated share quarter. Fiscal per from up with had certain markets. products. year, in higher consumer of fiscal the increased We compensation Our component lower expenditures update. programs sequentially expenses non-GAAP percentage margin $XXX QX most fiscal XXXX Revenue based gross Operating operating QX Unit taxes and XX%, a to XX the X%, DRAM million, margin million, the Growth $XX loss year points for doubled QX, compensation. sequentially up per sequentially. XX% in view updated the [ in lower quarter. on in improved by fiscal non-GAAP end an our year sharply was near $XXX outlook. reinstatement levels. Storage line the were on Unit a offset million short-term non-GAAP were Embedded was sales, ago $XX in driven of down mix fiscal negative R&D suspended across to The ago almost million, quarter from growth a the late driven and of loss Business $XXX million XX% including share Mobile an of November revenue was and in loss projected $X loss prices prior fiscal the negative QX anticipated taxes share compared the per fiscal and than in was

flows to Turning and cash spending. capital

Our billion operating were of cash revenue. flows approximately QX, fiscal XX% representing in $X.X

quarter. to memory million of quarter, customer the negative supply in quarter, for flow $XXX million resulting leading-edge products. Capital $XXX During $X.X expenditures billion free received cash prepayments we the during in were in secure the

fiscal was in days down quarter. ending or QX prior Our billion inventory XXX the $X.X XXX days from

products strategic for in quarters, of cost associated mentioned mitigation. and hold optimization we risk inventory stock As prior with build-ahead

approximately our days target QX inventory level. than fiscal would XX ending days our inventory stock, XXX strategic be higher Excluding days, only

ended including when leverage balance average of on low we investments $XX.X of $XX.X total debt, maturity end billion debt our cash quarter facility. We $X.X billion XXXX. billion the quarter with at our maintained On net untapped and a weighted liquidity held the and in sheet, credit of and

our Now for turning second fiscal quarter. to outlook the

While mindful storage improving. macroeconomic we is and risks, of the environment remain memory market

NAND supply-demand balance We in throughout and DRAM to tighten XXXX. expect both

and NAND leading-edge our Consequently, to performance. increase for through nodes calendar financial driving XXXX, year. the oversubscribed are full in Our DRAM improvements prices expect we

customer pull-in are is tight. And we inventory minimize to pricing. leading-edge of demand very higher working Our to response also in

growth As bit expected sequential than Both driven and term the a in somewhat quarter. are primarily increase rather decline result, bit in be by the a our NAND to DRAM in shipments shipments. near will pricing second fiscal sequential

price from in the benefit QX. clear to impact R&D expected We gross expect quarter. first forecast fiscal margin in reduced expenses of and We increases operating fiscal down quarter program fiscal sequential previously balance project decline lower QX written inventories on expenses and our from the to We in sale to the to previously asset occur underutilization. an second

in fiscal higher in some OpEx compensation short-term the and operating saw from to due forecast R&D year, fiscal income over QX billion. We including now outlook, an For much and operating a QX expenses, loss higher to a return we in project $X.X reduced QX. improved we project be to what incentive

has million taxable to year Our expense on $XXX and We forecast from across the based over increased heaviest tax updated for million tax the factors. income other of be an the $XXX the profitability year driven under quarter, fourth allocation project outlook. by to in

the sensitive mentioned substantially improving current cash quarter of with first the We the capital see levels. taxes operating half of we've and tax in of distribution line year across fiscal and planned are We basis of outlook. to As free estimates fiscal plus all QX $XXX We revenue now in as are expenditures cash highly fiscal the levels profitability, the second previously, expect forecasting at changes to approximately in be in margin expenses minus fiscal points, guidance flows positive to non-GAAP million. quarter. With to in our XX%, plus minus or minus be factors million, fourth $XXX be flow mind, the or XXX for gross operating $XX plus billion, to follows: or and $X.X QX range be in is million; the these year

beyond. $X.XX. X.X a financial $X.XX for strengthened of We is shares, share improving, million. on loss the industry minus approximately we expect billion and year the has In $XX of expect environment fiscal of tax outlook plus approximately Based and per our count a or closing, share, expenses

we low continue position over continue the capital will operate price, positive business spend. liquidity productivity and leverage, a will return we Sanjay. of of to managing sheet profitability a net take from I and We free approach optimizing disciplined now to strength to to levels focused on balance and to and to back controlling forecast driving flow. With turn cash as remain high it

you, Thank Mark.

foundational Over the memory teams expansion last the our and ensured product portfolio. industry-leading in world-class business and technology, manufacturing of our year, ongoing leadership technologies

encouraged restore pricing, value are progress by made are commensurate we our with provide our the the great to profitability, track more and on we We to customers. on have solutions

ahead. towards technologies and Edge, products healthy that HBMXE. record further Center driver be to the a for to can will leading-edge a growth towards growing like today. to a capitalize opportunities along TAM path as in joining of XXXX year revenue XXXX From see and bolster years critical to recovery with suite significant immense the expect emerged industry has environment, of the the We us strong for AI secular supply-demand growth you broad in positions the Data come. Micron's us and drive Thank on well new

We questions. now open will for

first your our of question from And Sankar TD Instructions] Cowen, question, from the Krish please. comes line [Operator

of layer spoke you calendar pricing the below in The curious you I is sustainably kind of X onion question Mark, very if 'XX. of say we then and and about helpful. 'XX through had can first Sanjay peel kind into if for that And will XXXX, DRAM And extrapolate follow-up. be and calendar think a I how pricing NAND? can about have you I'm

balance as the in context script. to of our respect the question. of to because to continue the during pricing strengthen pricing, supply we And with we, and healthy the calendar XXXX, discussed of expect this for demand course, is Krish, Thanks,

of to here trends course overall have improving result seen, supplier our been in supply Customer as course, the year. And inventory because significant of are normalized the growth have inventories have inventories will as we the industry. through demand continue cuts improve inventories will inventories customer of to The pricing expect in have we the half smartphones, beyond industrial. there own improvement in expect you that As demand in and we become well. normalized as PCs, a discussed, data trend in XX, well. in to 'XX, automotive are of boost continue, customers get point, demand And sometime in at as another and first calendar in center XXXX. would of data And center

expect pricing to nodes. and we the short to to our healthy point continue already So in across And and healthy all the DRAM inventories in continue and end well improve leading-edge in as markets. profitability we just environment demand healthy us this XXXX both dominant I revenue to increase pricing have a in environment a we demand-supply want expect improvements in noted, on backdrop we in pricing [indiscernible]. And as well. and opportunity NAND as driver out They improvements, that, as a for drivers, being AI growth in are demand of for supply, of results will dynamics overall tightness

the next much gross CapEx. that I of it margin? for And NAND, Is very follow-up is investing such is on HBM? very would price? catalyst in to what CapEx That's quick HBM at there year just And for a Sanjay. is down of of NAND? Is going [indiscernible] Any for is going the understand then be you helpful. start lot it be way catalyst a for the quantifying Is it. a Got how CapEx and to year-over-year. helpful, towards

focused the much but we very have that of of is course, business, supporting HBM And are of So are growth our our we other business. between not on and noted parts we the down. breaking down WFE CapEx the HBM

starting product, in calendar very are us. early offering are will our our remarks, which We growth HBMXE about half HPMXE for we is be we the qualification, most advanced be going And post excited back in and noted 'XX revenue the the in are, ramp we industry. as to driving production loaded leading-edge more

that this point investments mean, for make 'XX. I just whether year needed and NAND in we NAND to of at profitability the the the point. important in And will, investments. DRAM. in in CapEx, necessary demand out is that in terms basically CapEx I sold out is increasing to in 'XX HBM support in or really supply our order our returns levels HBM that course, most of justify any to What's would is calendar So the are

disciplined on far supply needed is industry the from profitability are this we'll know we the investment. growth the we this CapEx levels And get still considerations. to extremely you respect to are any So extremely what remain that in with the ROI and respect with to regard. disciplined plan in focused is on remain any And that to

Aaron And next our question from Fargo. Wells the from line comes of Rakers

as I two well real have quick.

the customers work on when out dual sold I in HXXX that GHXXX HBM referenced are basically you're NVIDIA. do curious, look within in for sight market in HBM qualify? comment line into year. you double building First, comparable in share in kind have know that with and the of I'm basically be how SKUs? market the DRAM the expect your as the of to fact of kind work just curious total share kind Do qualified visibility out the the you you I'm those to your in get that of you you terms just that have you you remarks of on these at that in that HBMXE, prepared position and called on how 'XX? as product does qualifications down

said be of shares us in qualification in that hundred to be that here, product continue year fiscal revenue our half as and several dollars ramp volumes volume able for to Again, and of 'XX. of in to qualification, that go would 'XX, well yield So to more have as our noted progressing DRAM. so as the qualification, get to market But as our half. back in as calendar 'XX. will that year and comments with expect we in ramping what in revenue that's 'XX. And a into level millions sometime customers, our revenue back of It we will production year year in fiscal expect that to increase we and more to our fiscal well. in as is we align will be as to continue shipments our is year will we build opportunity share post up the calendar well HBM our

us. So revenue has an also you per per HBM this exciting And is as opportunity know, higher gigabyte. for higher It profitability gigabyte. is

and is, one memory today. in biggest this growth the it's So of markets

So there's tend And HBM terms products. would are for with that tight than play in a opportunity. for standard for quals of will customers takes we this relationship integration are of any customers longer [ excited all suppliers on a given it to course, factors tight about And role and HBM. ] platform number these that of have very the

you Yes. midst to strategic just or able of the follow-up, then Can you curious think was appreciate in have us said Just to in and comment tight, the the follow-up help what quick minimizing that? comment, that materializing. a you're and exactly very whether focusing inventory pull-in, I inventory? increases leading-edge on do you any taking basically, your really had visibility minimize that pull-in customers was as I'm how any you pricing And you're the are any manage curious

our frame, look of maintains increasing, our certain business. So the strategic, we we are made had healthy customers course, completing meet our of and environment, much course, the with in dynamics sure of here. had managing overall of strategic in on fashion to and we certain respect make our that think we strategic is focused that in have this discussed certain in are built CQX very I we customers FQX purchases time as supply, in want requirements a to, our environment inventory, managing And past those ahead, we pricing demand, that

we think in Beyond here. a don't further discuss that, position to specifics I are

of from Goldman the question And our line Hari comes next Toshiya from Sachs.

happening And sequential is that into talked two so the sort I an May, follow-up charges break whatever change out and on or X% perspective? maybe margins, of throughout you we 'XX. terms else and of underutilization pricing, guess, from lower look Feb, beyond in of down, pricing about the Mark, my improving prior inventory sort hoping as had improving then margin the well. One as quarter is was you for for gross I questions could I Sanjay. Mark from gross XX%. profile in to breakeven

continues the gross dynamics about a that math? your that go So How some be of other tailwind. margin we to into should think

Sure.

price. quarter, some So the half of XX mix the DRAM we of we've $XXX that about. points favorable about reduced did had the idle lower-cost then remainder talked had We or inventories we volumes. we first higher up And gross margin, see at on cost. some then And the on was were fourth half charges million. quarter that Most clear was over

up XX not Now in but move margin are mentioned, we second second quarter, seeing seeing to quarter, if volume we points. as still the we're out growth we gross

driven some or all by it's it's by shift increase. seasonal customers price-driven within, price is and principally largely mix effects. price. There some So again, But a

have XXX we quarter lower inventory when clear in we'll ] $XXX [ million from or low-cost While ] benefit clearing, in quarter. the we the first had second [ have the of $XXX benefits million

before, about we've utilization, We we've what we are and leading with then of and the seeing some dropping cost idle higher increase again, see as charges production, wafer the talked to the discussed. node declines with lower start starts occurring

again, that So of the beginning though cost the quarter, losing cost but in benefits we're lower see price benefit to some even inventory. then second principally

quarter we We see year. to to, expect up. will going quarter, see volume to price third in through would the again, the lower there then will margins growth don't utilization fourth We're in gross price appreciation, good drive and charges. price which and And be volume some expect either, appreciation but we the

fourth to quarter again, expansion see to second So and quarter. to third we expect would third again, margin then

as helpful. then my Okay. Great. That's follow-up Sanjay. super And for

it presented debate CapEx. increased relevant operating margins things model we Is margins business, look to you environment of XX% have still quite went has from of financial as You model the your Should talk about free XX% a when as your at necessary cycle model the was that changed still at Day, guys a or think that's when ROI taxable the increase for higher. May. of Clearly, bit, Or cycle but had changed since? in to view? you Through reference point? production last guys May last sort I Investor cross your

continuing inventories, demand the much all recovery driven has environment we'll and been as the normalization continuing this and of from through factors, that impacted I as to how and recovery, we in of downturn recognize the other have year year very customer have once relevant. about course, about get XXXX, last is talked XXX-year well impacted, demand This industry and, year. which things well. past to been course that has the then model as and we through downturn have improve, increase think steep. as we called pull-in pandemic have and this by talked other we we year That all this Yes. have to the well. severely Once just see over And profitability the be we recovering, of pricing related it the downturn

recovery, would the this have say we that's target for. in we definitely hold, past, what look discussed we model that As and cross-cycle past would definitely that we

line our Timothy And from of comes next question from the UBS. Arcuri

million. a pretty that these that ] question big [ on That's I getting, prepays $XXX a number. you're had

these should that say, to to, is of follow-up that as that prepays Data mostly end of a most like had is we of then well. across your Or vertical HBM related more or So markets? as that, onetime Or part a expect Center? And I deal? a is And continue? particular

from point both specifics our obviously, capabilities. nature close from as confidential example provide we cannot it our Micron. due what It any these like the the of this with does of around of a sides importance to reflects to good is customers and but agreement, I commitment would our technology, commitment our and out as products from reflect prepayments, delivery well that So partners also from relationships our, our

confidentiality. provide really And any to honoring able specifics again, the not I'm that, here. Beyond

Okay.

think you I some I you limiting approach, just QX competitors guess I about that? price just risk pull-ins Okay. shipments? fiscal can QX. Are if shipments said you that of talk, might to and of limiting your Got sounds then, the don't holding It Sanjay, like volumes ahead the increases. about you bit match back logistics to you pricing leverage. the that. guess are talk kind for regain fiscal on you're of Can prevent sequentially losing bit flat bits some share.

just that? about can logistics you the So of talk

tight. is as Well, leading-edge supply already noted, we that

And of of by impacted our seasonality. course, also is certainly the in FQX, some FQX that's impact so shipments.

really supply our on supply the carefully. environment And our us guiding is terms so we managing customers leading profile. of we you this supply that shipments want And as given customers, the make of allocate across we main tight to manage supply sure are to is of nodes the course, consideration the to managing in the as we

Hosseini the next Financial. And line our of from from Susquehanna Mehdi comes question

thoughts? can Two tends towards erosion. follow-up. led associated historically have what Sanjay, a margin can your high-end I memory us products? And with historically, higher-margin what to industry any with share follow-ups. which HBM margin to higher preserve gravitate And as Why are has Anything you is products. to the different? these

course innings. next and ahead I sense think barely about Data growth Gen AI industry is of TAM, biggest is of starting, the in Center few XX% Accelerator estimates very AI are these early you CAGR being heard years. opportunities recently, this AI Internet. And over is of revolution have great

suppliers, training in environment, grow Accelerators, about AI center inferencing continue and HBM AI of and opportunities with data from with center the those from as data it's course, applications course, accelerators the across where, to and rest Of to whole that's the Gen including and along growth center all the grow. and will data AI really infrastructure, grows our proliferating of the infrastructure various

of of than that be bits CAGR very, too that And opportunity. are over to about. the HBM XX% much project that it, we next in we this is XXXX of higher over but low is higher And year few will year, percentage more still, the innings. industry when you of early the we HBM DRAM talking single-digit the Xx think So of are meaningful a HBM in a industry, the years. shipped in and very CAGR course much first pricing, shipments revenue very, that corresponds in terms about

So see Gen strongly grow will it's well AI be influencing continuing HBM grow. to as will enabler key as training It more for we just high more look drives because ahead, and as larger more demand in in we required a applications data more industry, of and more you memory. training language demand more look models data larger, high is more low-power the on bandwidth, and at large and performance, as

is has have the bits to with this the HBM factor than discussed takes other as Xx go. And the more DX. produce to ways as that So same number really beginning. important wafers very it long we as is of It many

well. DRAM helping in us and effect balance the of headwind the growth has industry of strengthen supply-demand a So the it's to really is supply as a, it the the industry, it

DRAM long-term so growth the this important we I large XXXX. share that certainly at it of has course, manage exciting some over opportunity. this are course, opportunity. is So fashion. It and thing some manage we us important sometime of excited DRAM for of are absolutely we about a as looked of continue to And part and to as and is HBM in supply. maintaining flexibility getting terms on it demand this well manage is think well our for will opportunity, of align any have and time managing our that in of Micron ebb course, with will aspects, flow key. be as time, and in share our look industry overall And opportunity, And this in as DRAM seen prudently we'll And you these over at long-term an to have

are contribution and well to look course We revenue we and continuing product next to our positioned with product, few the of forward grow this line years. over with profit

there this if of nuclear capital memory? Great. think help as a have capital could follow-up normalized intensity, And flows? normalized just us you what cash especially Is free that of, Mark. don't out we off come we there should kind better in a for any, there Is that else winter forecast a quick intensity

we've to the provided. that No update, model cross-cycle Mehdi, Yes.

just CapEx is of I as mid-XXs time. over a So over think to about time percent best we've think percent the given way which revenue,

CapEx, Of more yields premium course, and a accretive example, margins. requires as HBM also but for price it

that believe time, provided at that before that we So intensity still is we this capital intact. model

Sur question And from from the of our comes next JPMorgan. line Harlan

to ability in factor Do your seeing you you year? profile? applications largest to more output guys looking capacity for see NAND gap plans, what your likely the move that nodes nodes? the year. now fiscal oversubscribed you fully leading-edge your supply end from full supply to do Is 'XX? year demand conversion And are CapEx customers demand mentioned, As When you and the markets is through mature your DRAM you or calendar of supply as leading-edge

have As strong demand we of being data a center smartphones these in leading-edge in fiscal the applications, nodes nodes positioned course, and portfolio driver nodes. well PCs year, move with we leading-edge tight through and are of supply, is and that

and And still supply be the prudently to the industry our focus supply pricing made, important as profitability our for across profitability levels and investments driving I CapEx the and to business demand for best on at on the to this our is allocate we'll our to to needed as continue and do we'll end our as the manage investments course, not and markets maintain that bring manage is of of well the basically, discipline, mean, return and on work so us very we driving is ahead. And very, customers.

historically, like if I the NVMe quarter look third-party think more your but XX% to some been the of sort quarter somewhere of the SSDs. mentioned in the where X% to XX% in consecutive look was X% this back at market your again, research share prepared about you share data I center has range. team you second If had, briefly in Great. September estimates, And remarks,

obviously, So strong recent performance. share market

been strong big forward? guys SSDs. how the center You've What's got share team a do going you lineup differentiator your continue to of grow And data for the here?

our So for a thank offerings the the the have Center year. course Center share that. with SSD achieved done for now job for strong Center in record product for with has of data team SSDs And QX, now NVMe great share and a we now market product Data mean, NAND And implementation, And in really, we playing the in together SSDs line out And the where to And Data full over SSD seeing quarters. our acknowledging device vertical from X our integration calendar product share well. is full of SSDs. wide greater application, consecutive center portfolio Data you set our customer to time you're ahead course of system qualifications. And with as benefit, industry. developed benefit. here to a of very portfolio worked of of to really the customers, this closely the customers have design really strong industry-leading opportunities with has across understanding is the working power firmware in range over robust team a I

recall, center the the past to Floating played successful, factor gains company and from transitioned recognition to here to going strong, definitely being customers, factor, that opportunities Gate ago a important is how to Gate pleased in key So center on success our revenue this some began selling components has execution NAND, the been really the says in SSD to drive timely solutions transformation have by provided that are our data team in this in we SSD key and reflected may And in value-add is, certainly very a in has been data of they and time share of role our from the terms that course, made contributor that we Replacement in another has that market. strength. you big an the technology we

So we here. are very market this position future and excited opportunities market Micron's about in our

as session today's does question-and-answer participating today's conclude in program. well as the This Thank for everyone, you, program.

day. Good disconnect. may now You