Micron Technology (MU) 20 Mar 242024 Q2 Earnings call transcript

Thank you for standing by. Welcome to Micron's Post-Earnings Analyst 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, Corporate Vice President, Investor Relations and Treasurer. Please go ahead, sir.

you. Thank Micron Quarter to Analyst Post Fiscal Call. Technologies welcome XXXX Second Earnings And

with Sumit and today Business the me On call are CFO. Bhatia, of our Officer; EVP Sadana, Global Murphy, Operations; Mark Manish Chief Micron's

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

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

under these for forward-looking update no the call any Q&A. We actual to now up the can to We statements of duty open are conform to statements results.

And from of Barclays. from O'Malley the right. comes our Thomas All line first question

moment I our And will move One can question. you back next the we queue time allows. Thomas, into as think get on. for

comes question And our from Chris of Callon. Shanker the next from line TD

correct better This expecting. Two-part supply out to HBM today up setting question if for may. guys HBM share than turned is back. wrong. biggest Eddie back-end you are opportunity I'm your bottleneck for market is Please Chris. this for capacity. I call me Thanks be In for in in The Sumit, case if probably

you the HPM year? may today DRAM capacity you CapEx And have margins taking where away Do two, you a scenario of limit the demand. see opportunity gross higher and dollars most next have obviously, back-end

are calendar you to you this continue of prospects net increased improving Or where So that quarters. do still CapEx CapEx But next pricing invest the the may market? year majority think it's seems DRAM and that based to a in you early the profitability you point of see scenario in at HBM the despite consume few it on market? action a NAND in where

Yes.

So talk jump of you of some couple then the Manish and mentioned. in a I'll I'll comments, to about request items also make and

a our and is bit So first, at levels. goal DRAM consistent maintain share our level, at company to both fairly NAND in

but flat overall DRAM consistent So and just share not target both it's we other NAND. in both. bit one or And the

our shaping a product. on disciplined exciting So ensure to we'll that to close our is share. HBM continue CapEx have investments us a enable up invest with to supply fashion demand the very very flat in a and is eye how bit that ultimately

and lot We have demand performance an XXXX prepared have in meet customer industry-leading demand, XXXX, our power, know customer you lower how of we to is best specs, the already sold XX% already heard and allocated. remarks product that in here, Q&A a overwhelming majority than more following out,

to and ensure for getting obviously So share look on DRAM some continue some request it's for to NAND where target in HBM, 'XX it's that. of and whether about the whether equal sometimes your to I'll be comments how be HBMR, We going to DRAM, focused comment that as whether Manish CapEx, HBM get to regards share. that we bottlenecks those point investments of to on disciplined we are at things, it's for very our of to to

Sure.

we're -- want I -- our mean start I I So think to HBM.

X-beta so XX to think mature we fact on of our probably this of on one had industry-leading product reached that Eddie. year the ago, an backbones you it's we've of process. is we And fact a is the the ago. months sort that on talked our HBMXE that had call, built And Our yield X-beta about milestone I

build So we're wafers. confidence in gives us ability HBMXE it's very a strong to platform, a on industry-leading our lot of the HBM fact the that ramping mature,

right our able the very about we privatized our are started with for we've year. that started yields into good You're We've regard good Sumit that test targets we -- we today good that shipments ramp just production share feel having year begun production is this and capacity able about. shipments HBM overall. really and we being match the announced that our our made we And know progress ramping capacity that of and capacity, to to throughout on to reach the customer -- next be our and within we throughputs feel us talked to to our on on assembly about and

bids capacity in Our DRAM overall share next sometime year. of

all we'll In demand to CapEx terms be how spend both invest also I to that independently, point, with we just for at make these to on think right? your NAND across similarly drivers. the we but the separately. to on the much for the at there meet that question for to regard we'll would market DRAM Sumit's we or looking we decisions able see trying DRAM looking market So then of market based how the demand in decide in be the and see, And that much NAND, demand

Barclays. Thomas And O'Malley our from next question is from

your serve names about capacity thinking other to some of well? put next talk capacity you was One tools coming there? build the order tool a fabs what be part a how up constraints, ability the time call your a second with market year that of as announcement But to potentially go HBM? to public were better? common if in the then I there color back we is AI think is And just should Is what is a limiting you're NVIDIA. your kept given unable the some get? upside to could concern? two-parter. to be bit in Just factor you any accelerator kind the in potential have that if Could takes again. of it constraints it on question causing Is just the it Mine's theme And something about the obviously a is capacity on the

back. thanks, Tom, and So welcome

take the I'll Sumit let that I'll take then and I'll the capacity let So part, customer-related part, question. CapEx

reductions are think, the I and really, nodes. tightness at the the went really the unique DRAM. of XX is well two them the downturn we factors, last what's significant supply in is as through then as over DRAM three the as leading-edge of are terms rest And months. So the But NAND, of -- creating there to to have first and that we, one common one industry capital had last the .

of that we've lower we've and basis WFE down And previous had 'XX. for call, over mentioned is on -- 'XX I so the CapEx fiscal those fiscal the -- us

certainly levels. supply So it on impact those the high was nodes, obviously, we as very and timing and edge that leading decisions very, the inventory have done, our of had

trying as time in down. CapEx increases we line we're make sure inventories any with So in coming to

second that both to The we've strategy we trying be undertaking to we've that -- DRAM this is have start structurally comment we a and and reduce transparent been see capacity across making, NAND. wafer been the

a and performance, power, to technologies new equipment of able the to for these to block and themselves nodes, capital-efficient get our that's and power doing performance new these it's to way apply technologies. of Again, lower in the that our particular, and of capacity some building has X-beta. lower benefits than converting and prior certainly that have to have the also we're These higher be others cost, HBM than node. industry better in lower but they in actually leading-edge it take And

to reduction structural reduces that are common overall -- also those But And on to our and DRAM supply. NAND. two factors capability

of wafer, in industry, for to also we X needing to industry, approximately same trade the The penetration you wafers be in one as across for as the would, is you HBMXE, weighs the HBM this bits everyone in one, starting ratio in third mix trade DDRX of capacity order number increases the HBM course, of on the get start ratio of increase this frankly. HBM and supply business were to our for as the

this. to results sort reported. of course, -- profitability still even of So what's they the a creating be, of that's a of we levels breakdown are little where below of bit need on with And sort our

be there want to you that return in any able So increases investment that? we're good on Sumit, to to about would disciplined sure be, that say, we do and 'XX. make trying talk in capital ROI are year fiscal

Yes. Sure.

So customer I'll the angle. talk about

it We HBMXE, just account a have HBMXE. HBM future as mentioned, them. in been for the many engaged HBM developments map, all for certainly, is purchasers world. HBMX substantial with HBMXE, majority for to high and relate know, practically already of on are XX that there of of of all of but who road you high, to our of high the key and have also XX engagements course, of There product closely handful we that. shipped as TAM relate And the well aren't on as And that full the samples X have we which, engaged the the

Now capacity are we in we in a the course, you of that have announcement ramp early the NVIDIA, made know of but with substantial stages HBMXE.

get substantial capacity. you more in towards have very customers, clear we making our with products. HBM is the we'll progress base that our And XXXX, customers more -- that allocation goal as capacity, XXXX of the And diversified a to we for customer to are will our for new great to majority

the with of we good customers. really rest and discussions the continuing So in are shape

next Mehdi Our question from line of Hosseini Susquehanna Group. the comes International

time. up been a record the You But and mix, margin, you when quite about be And can cost gross at confidence with some is consistently follow a the peaks? confirm and can that us you record not and the talk you that year. it, share been understand dynamics product the in here the give What profile. a a may you does of with this XXXX? in becoming what the of to guys year We prior team a about what you're trajectory able as wanted if happens margin margin structure increase. confined I that to talking the profile least price perhaps to doing have can of you a about have Or overall talking XXXX for meet on think Sanjay about

and Maybe I'll start, continue Mehdi, and Manish to. Sumit

quarters in including of the the Mehdi. that out call next year. over lay I and XX to the extends and want points. factor the There or of mute, may gross few next last tried the to into go the we Price go. call been on You on the of margin the second over main has margin arc quarter then expansion how quarters couple dominant general

through effects increase heard also of value-added price, believe costs we and points. third And just you resumption through period number foremost, Price excluding to Favorable to costs will contribute this of quarter the effect the is coming occurring so drive this more transitions then a HBM. increasingly, factors And dominant and first products that it into the in 'XX downs, that second and XXX margin while will about expansion. off are the 'XX factor. are mix increase those continue then because node of HBM But basis cost to today, down. other and forth normal

-- bit expect on can't on DRAM, a We do the bit we increasing would NAND. cost I expect somewhat But this future gross call. course for more remainder sort factors but And slightly of the provide for those price, Xrd 'XX guidance up we'll a quarter. mix So for 'XX. year, to more X calendar comment contribute NAND. expansion of 'XX then flattish fourth competitiveness, somewhat specific to higher margin margin we to improving factors will of be mix, on will shipments, those to bits

quarters do richer third about just next So beyond improvement stronger you gross the of model we of see, think as products and that mix -- margins I leading-edge again, mix. the

obviously, we expect and be But on somewhat fourth effects mind pricing. higher so higher XX% quarter margin, includes, of the gross the in Keep NAND And in mix. to above would that that

the line question And Research. Chris Caso our next of comes from from Wolf

that? on commitments on with commitments the what's spoke HBM into The into well. a part pricing respect effect getting driving obviously, usual Sanjay better -- at wasn't you more the on calendar does the that very you least in about And call volume the visibility to about could and question the the any as some It said call, as in little you're is those it clear call compared 'XX whether have that as extended of to detail not business, And it's capacity normal. that? planning in HBM of something that's go

gigabytes, and is Yes. pretty seen growth into rapidly. overall GPU ] starting new we and from I announced have HBM opportunity has mean industry And couple XXX do HBM Number [ a HBM more earlier gigabytes gigabytes. substantial. XXX media HXXX AXXX, Blackwell of visibility every gigabytes XX% of by the better that GPU is XX for attached TAM you've the at been Blackwell now HBM for HXXX, the one, in has reasons. even this week, had to the growing and

So in the is us there increase HBM TAM has substantial there. up going gives good visibility and a been hence, and

that even headroom HBMXE has about about feeling high the our has with tremendous the have of impact rated important you makes more done operating the power that cost are as of only define it And We data going product. the specs Not been really on how good of the The beyond shows benefit the center other perspective centers side sometimes. constraints it perhaps an and of of both just spoke is as having even from specs. on performance much power part testing we leadership all have data an really product. for capabilities this know the all does performance, on but -- on well consumption we customers

And that, HBMXE our are demand of lot product. we customers because seeing are of really good for these preferential So a from capabilities.

in already not very with And for these we in these that capacity negotiated a have of in is able to included thing nature the our but allocated XXXX. majority price in of are done terms XXXX business. we put to some that for of be unusual intending being are overwhelming have being the the So customers, unusual agreements mentioned, Sanjay to place our QX only

price done. it My year in agreement of soon. is the Of done is course, some and XXXX, will already expectation priced all the volume The XXXX, for full of fairly has rest be done.

customers them, terms the to that in in mention of so will And stringent I times, teeth the terms a capability created positive. So have testimony from is that's longer lead tend has these other aspect and that's another more that. agreements complex Micron also more is that all products I more all commitments and and team product this this consistent with the very to good with of think

with capital to help talked to Chris, means being HBMXE need visibility structure certainly And this accretive does your supply it much the for in and And we we about having just point, already DRAM. to that planning margin place. yes, put justifying the

where profitability DRAM we'd company but -- be. to So overall overall the -- our like it is still not

careful in investments So make of we'll we're and the being rest very business. for disciplined the

Ackerman comes our And next BNP. from question from the line of Karl

market rebound excluding recovery hoping areas couple you the quarters? the HBM was the as both over volume quarter? do seeing I could in quarter NAND you August which DRAM, a as next in secondarily, the strongest And of in of see stronger-than-expected well discuss the in you're and May pricing

Yes.

bit. I volume, just may of if a out terms in So think, I little zoom

were go exactly first that into a our the Over PC had last and because would is mentioned purchasing quarters, to OEMs what they be couple had that happened. you smartphone downturn that first the and OEMs expectation of we was to

strength sometime we mentioned months, that in expectation of normal getting last last center to of right have would last in the to and upsides where we tighten calendar And the was slowly the these normalized of inventory terms center from market. first many our weeks, data on And data serves you in had the in been upsides couple the more cue, customers. return will in data seen the half focused XXXX our And also buying center. have patterns quarters. in that That's start few had

discussed changed very haven't levels traditional They similar the last are units. volumes [ are also of demand, angle, as And We're supply. on And strong have these server starting starting AI are and much we're of Of was calendar it AI center is sell-through -- But also as as smartphone center unit demand exceptionally certainly and we side. in several very obviously we the for end The has we much data improve. well far our more Nordam volumes DRAM to from for DDRX HBM expectations PC course, strong pretty is servers. DDRX the what upside seeing really on have data months. demand there and course, getting at data SSD demand, XXXX the which center ], side sales the coming server stronger. than the

are we So on the very edge chasing supply tight there on there. leading

of data also course, the SSD is And very the notable. strength in center

just data as center data we of that in that FQX, up highlight the the more you, sequentially. -- quarters. has to have points sequentially XXX% data data of we remarks to couple in for the cloud performing our I in SSD prepared to as our for hit revenue center in doubling in share new than really robust a been hitting So new in record well us doubling been example, growth center FQX, wanted levels DRAM over And for And several is continues year-on-year, share FQX. peaks last shared

I effect good So strength all trajectory has tightened is and pushing pricing data based NAND. pricing mentioned for which has the the ripple to this, having think of up we in segments. across and all center in served the supply And supply-demand balance, that situation, DRAM on both been a

that's our in We remain we CapEx, And supply focus the in of you we very our of course, it. remain look on how planning. some CapEx. We on saw that very at view haven't And our from so changed disciplined us CapEx. disciplined

more financial goal improve approach performance the taking. capital, Our before we any substantially our commit we are is that's to and

times that very in know business. you lead the long this And are

fab you X get months, then at end the order get to expand through you cycle tools order tools looking months time capacity, to the from get tool months we're X time time the to another you back XX output. the through the and and the You and plus

So 'XX. part that pricing what that's the continue expectation calendar to was of to behind through expect really our we strengthen

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

Yes. sustainable I the or you're appears guess at that, in and leave we've of a is just to see talk the how share and Mark, to repurchase. fundamental it path out as how about clearly model my business been and of free curious curious think about one just you over thinking as got question since activity forward the repurchase return be next the flow. I'm just capital and couple improvement share you But while I'll sustainable cash about looking it's a moves quarters? to

Yes, question about, it's a Aaron. good to think

As profitability -- got improved -- you with basis. I'll been on working as free And say, through quarter fortunately, strengthens. continued near we're generation capital we're generation this very The to coming always Sumit call quarter in we the we're pleased performance remains breakeven leverage grade. CapEx and third and, down and expect started the cash the We've there sheet flow of a last heard so investment quarter. And discipline downturn. note down it's absolute great it's spot high has you the as again, commitment talking the was liquidity, then a in maintained been prior pleased time, outlook But net has Over which today, coming low on free cash our flow. to have course, peaked and flow also balance in priority. be the about, and cash highest still great free And shape. forth. that

the And in excess to return dividend. Day, shareholders. over said to time then we we cash our As grow Investor intend

and point So we at those Investor what Day in decisions. some be we're said much a make position very consistent to at with we'll

about? cash or think liquidity think a there that about you of you is kind level Mark, And level of kind excess

nothing's we're than commitments again, maintained of layout We've we in factors the we liquidity we in Investor of go And had XX% to more of there put from outlook improved the cash liquidity has Investor Day. at mode generating free forward. but we'll now. number changed been say ample through And our sales, high Obviously, it from have just downturn. as out Day, steadily take improving. But the I'd this we and a

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

it expected Mark, inventory was down. up. to I come kind of

that And finished come think goods know would also probably I a bit. it little you thought you said I are down down.

assume about up? Can related So is I -- I to talk kind And of is mostly that? that with that the you that's it's HBM ramp. guess,

were -- it things Yes, hit you've I for the you dollars be. already. on adjust we in was inventory mean the the it It's DIO. and thought around listen, low-cost that -- We down some actually on of it's where would was in if end, there.

So target good down with and think is I to we in them 'XX. DIO see thought. our be importantly, position into through We basis on by 'XX consistent And a a end to still continue think what inventories relative going track we real 'XX. we'll of levels

there So again, as and expect. completely we in control happening things

We're on edge. tight extremely leading

WIP of In about sold in a sizable you fact, DDRX. goods leading-edge products. building is a finished some decent then is that other And is what's amount as talk ], [ and what of out HBM in part

at control like a kind tactical is in be again, at to it's need macro a the business we it. about what's So what for as it's level, mixing feel happening more down in good we of and going happening inventory level, would

just higher-value good Tim, products have example. are data cycle add transition SSD another status longer is to they And Yes. time. portfolio higher-value do I'll products, center these system-level right? but as the So HBM, we products, And

of how how be broad our we of will just well looks the lengthening talked center for so it traction. in SSDs And -- we're as and the we're gain supply there. there how doing a more that about data doing chain sort future Simon

HBM time and cycle well. test longer and also as assembly

of kind this run demand of the that as gives ability something. And will committing with we're obviously, do with our same at But lead customers, through able us focused more visibility time, as longer board, have be trying that be to to part times. we chain. definitely them LTAs, across from supply that on as to these lean things the the make be the to sure longer-term So we

to down and are going confident we few be the quarters. through working I as that go Mark inventory So we're next gradually why that's

the question next comes Nicholas Doyle of And from our from line Needham.

Bolton. Quinn for On

total more On the given growing digits significant industry through CPU call, customer your Maybe a you're in 'XX, And line you about unit talked think back ramp the half in calendar Do units high that's be you on the year? see 'XX conversations? I the half at stable shipments Can server single with consensus. trajectory, you quarterly about mid- to expand traditional a coming any it in how survey is drive second thinking on or second would acceleration? helpful. thoughts

Yes.

In terms of quarter not the first server units, great. the was

for calendar late starting but First back started quarter, see XXXX not that first we of come quarter. was servers the traditional great to some to demand in

calendar So is QX, then we QX from the it first do sequentially half the think and half. than improves of second stronger that year

that are most footing strong. better around servers of year demand it have to AI economy is et well. seems abated server cetera, as that concerns have were And starting exceptionally helps there so to last the improve. the recession, the traditional and

is can is terms but limited continue more demand improve in much to the service for Our servers should year. it calendar the how view ship, AI supply of through traditional

the first that year it's inventory robustly when is because optimistic an XXXX, the years half center you will of still half for think first will be have we in first of XXXX, the the With the normalizes when sometime be buying if in several XXXX the calendar data full 'XX. more view about year

the only normal in So patterns to starting half the XXXX. second buying of be get would

both center to the DRAM robust while both [ data the services. of data across come is traditional purchases in year well be ] and ramp NAND the traditional in center and AI and overall data servers center a servers as for first -- XXXX back, XXXX very both So across strong to full continuing year for as AI a

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

Maybe I'll kind about bit of ] map ask [ road a here. little POS

what's and for that? Regarding then can part cost at what I to Xx? if won't also look way HBMX?? cost we die severe more just is X:X wafer think, X-gamma until you X:X happens on size Xx, that a ratio better and ramping Or that, you also, to conversion is how went likely qualified on touch is second And the a down to an our even the is we loss, a it X-gamma start see DRAM when the HBM from,

Okay.

of Brian, there. So a couple questions

gamma with feel gamma when start and comments we're one in is not on around year the coming in me and Let calendar good last One us really year 'XX HBMX we of them commenting market We on that which it had first, to progress. that and about script to in the track, supply to 'XX is for yet. calendar good starting some ramp make overall

question we In how HBMXE terms about three. how at we of the -- how your -- trade went the ratio arrived for

test are that providing a two. high ratio. product different and is second HBM always DDRX to I One complex high-performance standard color size process. die we've a and we're said of yield in factors the in a there particular, trade-offs kind trade die stack -- more with die is there think than we're landing think trying few a the on it the deliver was there I between complex to be more the assembly are able a die, that in And and just where seeing such it now. a It's

And then we UM the takes we is a that to capacity. -- that produce to now third also interface that the fact we which need well, as have logic need wafer

is all across So everyone the trade die we're similar industry do and for that standard. versus the we're the believe DRAM. production ratio, industry rest because HBM based we ship standard us this with we've that accretive on else starting And of in the the even mind in including those of our revenue this quarter, is to what talked it's GenX with us, already as keep about for in today, margin

So to costs the product. a for pricing premium we that incurring the are we're higher build getting HBM

double We question, and maybe -- high some times, cost digits mid- do 'XX downs. for as to that we've the low said call, we cost on single Brian, housekeeping ex many that just HBM, just Maybe digits then is maybe FY on mentioned for NAND. DRAM cost on NAND downs as the front-end

So the similar. mix helping coming seeing we But period FY for offset HBM benefit what all we're costs is to in it DRAM, the off 'XX, be expect from these inefficiencies is this initially. would all and

Now HBM become favorability that off. the to eventually, mix associated going costs is with that sequentially going you're to have rolling period not

You're volume of going increasing have an HBM. to

trade to But dampen to that, product. that as going downs good favorability cost. see you're the Manish contribute of So and cost again, said, given

said mid- to end And year ranges. HBM you the high range the would deal, end costs single-digit Obviously, to what back in for in Mark, . front similar when somewhat be all-in front we a end the you all including said

And mean, lower NAND then single back incremental team. Manish all downs would NAND, and Again, a cost products as component good cost. little said, that on because be end got and on says high trade larger on premium in, considering we've 'XX components up the all that I digits

think HBM forecast I obviously in XX we're as to look we out fiscal to ramp 'XX. 'XX,

then dampening in again, So that would NAND, be cost-down a things you're DRAM. fixed But likewise And to impact again, downs effects. value-added going cost this in other and mix would, it's still SSD rate. see would

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

day. Good now may You disconnect.