Micron Technology (MU) 26 Jun 242024 Q3 Earnings call transcript

Thank you for standing by. Welcome to Micron Technologies' Post-Earnings Analyst Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to hand the program over to Satya Kumar, Investor Relations.

Thank you, and welcome to Micron Technologies' Fiscal Third Quarter 2024 Post-Earnings Analyst Call.

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

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

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

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

And question from Muse line Cantor the our of comes Fitzgerald. first C.J. from

it ramping earliest. you're but fiscal 'XX, at is sounds fiscal like here greenfield in question, CapEx only the significantly coming First certainly 'XX

that's will getting guess significantly conversions then, HBM we you guys. do I about your of be you with DDRX all plan kind think guess, if for the appear I So market that DRAM undersupplied from would share in you that, that how Is into And 'XX? 'XX to just DDRX? it guys for supply, by

will and half meaningful Idaho decade. bit only 'XX in and supply said can projects, yes, later. then new add York DRAM Mark some starting in it's growth both But C.J., the latter We I'll 'XX or of take comments. U.S. New towards the the that, Manish. provide

begin DRAM to which ramping both have our well. And going bit from Japan to Taiwan near and our and transitions we best technology we Taiwan in now, X-gamma in both industry's right still node production is actually our is come as X-beta, in ramp the that term implement and expect eventually the in Japan. growth in the then So we're that of and

last node ramp well. to enabling as so be we're X-gamma can the that Japan year announced we there We EUV that going in

our to the period new footprint. existing we to be U.S. sort in space bit up our So we in do driven have growth get intervening sites technology before lined that. of be and manufacturing able transitions the to everything by will And

we that only I see that, continue into did lean of as add 'XX, at We'll And be inventory -- in it approaching target by 'XX our to we C.J., would say 'XX. would end we on through inventories we that of be expect would 'XX. and levels

sort longer-term or of driving than and now, typically discussions prioritizing would like behavior to which they bits customers agreement already are is higher-value We for interesting markets that. earlier

And saying. I this think goes to what we're

on. to sometime and get Our our share is our share, there overall DRAM share market grow HBM year share market our to HBM share match maintain bit maintain we will in our then goal to calendar from 'XX, our and

yourselves? is a helpful. that about think how ramp, you you're as that a a I just share that product set higher your And mature hold you a worse when Do with does improves, guess on not follow-up that pricing How benefit work? that knowing setting going in we yield pricing something should have yields Or and that to customers? from that? yield Very you quick early out obviously HBMXE, you're perspective.

Yes.

is this Sumit the So here. --

pricing We done. have as XXXX agreements all for these is well as most of done also pricing XXXX

to margin XXXX done a as set all the level we gross provides to the customers the is done. a the of be at ever and product obviously has the our perspective, from value this that complex almost end robust for volume We industry expect at most levels, consistent where product And pricing overall are sold out with it customers. And for well. 'XX the pricing is

of pricing done lower the a the across level The products. obviously, come much way product consistent contemplates margin margin the is and than million margin is it HBM the that the gross the the with that us gross said mature typically we production as being. company's over down. margins well ramps, achieved ramp time. in all yield already margins of the quarter for of $XXX DRAM in improves were margins. improve. the And time. to pricing being course, what early gross up fairly ends the of also of over So very early costs have our that how as that. And to Then company That's pretty yield the revenue yields Despite HBM, works full as first And accretive

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

ago, quarters reported So you discussion I the guys little going prepayments. I on further. bit X some HBM think guess a

capacity that move you there point? on fiscal much last agreements completely I'm curious, I pretty the any establishing Given I HBM, course footprint of this how last higher? this think set that's quarters. flexibility about the that, 'XX million was quarter. are update the X then think that And as And over do previously there how guess for is to is I evolved prepayments? the any just of of at these you're to $XXX HBM, it part Or

footprint. to then about turn over Yes, talk to the and I'll question, I'll HBM it prepayment manufacturing the take Manish

and these In like with their some said, continue terms enter we of prepayments. goals these of takes discussion about into discussions in you had, have agreement. have the to And terms value and prepayments the prepayments, the on level of puts desires we as customers terms part as appropriate from of with in and and both us the various use to sides agreements

these And we'll opportunities. sort evaluate so of to continue

know, the have a industry. had we Of downturn as you course, in tough XXXX, in

of of these to We open discussions. as So open some to some of we discussions. it, coming definitely we were out remain were these

call year and to earlier the flow prepared our next the provided cash capital the fund cash is those through remarks, and our next for a However, the and for in still for next of have we our you growth expectation that year in lot investments in capital robust growth and Sanjay investments free flow year. operating will in as Mark have

we customers, are rely it about to continue to to to those case-by-case to the So unique going to I'll a there Manish And on we on But of opportunities turn certain over with talk basis. that. evaluate continue into enter be arrangements footprint. can types and

Sure.

you -- and of HBM know have goal match market that felt and and delivered overall But technology product that our and the we with towards. on share for calendar HBMXE so -- base that's HBM and a low our capacity very our are where customers which share we focus marching target team -- to would -- differentiation installed DRAM intercept So capability, our decision given coming we're product share our we to set and skip HBMXE really market really from our have really our our so 'XX, we're year normal appreciating. in DRAM what to

that. that, all room investments ramp investments and are that in in the clean space so And HBM in equipment, we're trajectory and on achieving towards confident unique marching our our

Just more for we're ramp standard keep HBM room space mind enabling of this The room that is than assembly in things. a space. complex clean couple clean

we're goal. we're significant and cost to yield to excellent reach world-class we're confident from, where to towards structure. goal going But the be able quality, that able what to of element one working achieve so and is with ramp given that's that but starting we're So do world-class be

know follow-up. quarter. you How guidance, a fundamentals just Mark, about of expenses the you do quick just would this And this gave think about operating quarter's the as Okay. here? you beyond from but path I curious think glide how improve

that's well for our X/X activities as November do control. the related at quarter, again, Again, the ticking of Great which be a into was end also guide increase principally fourth including in built That OpEx in -- demonstrating DRAM expenses, a we OpEx development. quarter fourth Yes. up from but R&D also on said, we're our program the the sale. we to on driven third see really quarter, quarter. In number in NAND primarily again, We front, HBM land X/X guidance, expenses. would program R&D we of of work lower the by quarter, third about was of had OpEx. It's the by and responsible driven about up on did

we be increase over would some 'XX. OpEx XQ up the XQ So to expect sort mid-single to then of $X.X in sequentially year through and digits modest billion

Raymond line of the from from Pajjuri Srini comes question James. next our And

customers question My of and smartphone PC just of maybe the There some increases. at talk customers, price your looking prebuilt some at inventories some inventory ahead that customers. your the is is on

demand are they center, mostly bit, like your done. correction your what the curious, about talk is as server much on can about on view you you inventory talked was And And to visibility picking standard comment it just I'm well. on inventory up how you that even optimism based can if data a so then wondering as looks the If some holding. I about

then mean comment data go I I'll center Yes. and to smartphones. on the we'll and first, PCs

mainly data driven center. demand data data some to had third quarter in -- center on And for and has calendar expect continued, fiscal AI. we pretty It this by a we And and 'XX. the start of started center we saw continued mentioned On that a strong second the then half much the returning quarter lot earlier. target. coming to that we side, time as first the strengthening has that the And demand starting with calendar saying that trend been are from AI, of of we demand had the see been in or

continuing. improvement demand traditional some to started kind have see improvement is in We of servers, demand and that in signs of early

a the a the inventory that's just level leading-edge been that tight. we trying servers chase pretty well. AI a So the in of to comes is overall urgency, the sign data of positive center center nodes have lot because the the And and with and in are as demand supply beyond normalized data

the volume how continued et 'XX, of out center. up mentioned in into transpired. markets We calendar PCs the strength it and in and for had certain that terms industry terms end data of XXXX the QX, coming that exactly we of would the segments shape recovery strength has downturn late of before then calendar of pick Now smartphones in been that that seeing cetera. And in those started

of customers of strength the pricing. And have customers that those terms discussed because relates to so in being X with and built of was some One purchased important factors. yes, trajectory obviously the price inventory

XXXX. have We throughout pricing also we calendar increase articulated to continue expect to that

so to purchase volume ahead. an incentive been the has that some of some And for customers

of to obviously AI capacities. and higher The PCs customers' factor AI launch they in demand relates average smartphones. as own expectations with business growth second These their come

if in And we remarks. We look expectations modest PCs, have prepared unit of you spoken low about in quite assumptions volume a bit are percentage cycle have year, smartphones. And fairly increases, in only growth mid-single-digit replacement there at percentage unit upside. that volume next fairly be single-digit our even year, expectations but could terms the our of this modest, in

higher unit Some next are of expecting volume modeling. what of levels than we our growth customers are year

and PCs. And cycle could be so could replacement upside, driven that stronger smartphones and by there AI by driven a these in be capabilities

about HBM, in server growth of of space, So year in wafers. customers growth and cetera, calendar a the ratio and you a any And portion if side, growth, supply of us supply, robust The against that which that is up the pull these scenario between customers hands are XXXX this third guard their of earlier-than-usual of on get a some DRAM that. have where growth high-cap we industry these some with some a is on -- at HBM data with these demand on traditional getting the the continues as because to growth. of smartphone of next some long-term PC their is the very displaces lot discussions to growth, of unable earlier, and said pretty keep And to to return inventory part supply these they're for driving pretty to growth et is that about extra carrying the the soon pace. get concerned quickly some DIMMs, is server in trade that causing we their supply in what LTAs, discussions very AI to center drive X:X ability agreements And build brings the to year. get this buffer,

that. So that's sort of on the perspective high-level

quick one maybe Sumit, follow-up that. on

high-cap one strong You in mentioned DIMMs areas the the quarter. as the of

think higher complexity? compare margin, and I seems that the high-cap you I it And the proprietary this curious, as how And Just as you sustains? good put terms context particular mean, product a the of in margin how also, in does SAM DIMM, nature to DDR, into of as the product. versus given And guess, some like, applications for is, do also that it's is the HBM big what could if that are HBM? also, than

Yes.

an XX think, gigabytes right? as DIMM I higher, anything that I'll this gigabytes, and XXX -- We high-cap XX more that as anything gigabyte that important first, is is DIMMs just clarification. capacity, we so is define So mention of XX high-cap than and gigabytes or DIMMs. classify higher, that

Now XX-gigabit the it to when Micron DIMMs, the company one XXX die-based XXX-gigabyte introduce were in introduce we DIMMs the to ones comes at when industry. high-cap gigabyte -- DIMMs, XX-gigabyte you was And to DIMM. first monolithic of first look

right? [ ] it it's were than lower to able a essentially, TSV-based TSV, know without actually extraordinarily we is I performance. this product. And higher has cost-efficient So product latency of but a demonstrate So DIMMs and that's DIMM use mouthful, head that

world-class it's very, of first really a very And very compelling ones with market we the and have on so the one a is this. good Micron And this. structure cost in product,

servers. AI into go products these Now

very rest server increasing stronger rest portfolio, company the strong company for before, have and has in and products compared company is the company definitely robust. high-cap these DIMMs. rest that to HBM And the margins also As accretive these been this both the the to AI we very the growth profiles of And keeps overall obviously that mention level. But DIMM mentioned portfolio improving the margin the And on I'll been of pricing DRAM quarter-on-quarter, margins pricing company of has high-cap some the the of accretive portfolio. margins. very demand product the of have

So margins. but very, robust that's X a positive, are too, very these products

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

kind I The sort Brian NAND. maybe kind -- your first. But Or just of XQ? P&Ls of it is NAND smartphone guidance shipment crossover, expect of shipment growth a to here. low of pull Chin you not, Or increasing as reflecting more of utilization rates know if in one you recover? bit profitable of Maybe demand? do terms detailed business is forward there fiscal It's just near and was give be And constraint single-digit in of that the reflective XQ? NAND in term DRAM between your that bit fully in somewhat fiscal

we is that disclosed, that the the probably see the the improved improved Yes, profit say substantially business the tomorrow. for prior segment overall deliver gross Brian, improved the quarter. business level, can which at quarter, did and the proxy best substantially the storage we -- Q business what business that third NAND margins you'll I has in operating unit, quarter. from And then in

for part low Got it. about guidance bit single in And that the NAND? shipment digits just forward then growth

Yes.

obviously thing to And look, and trying of quarter-to-quarter very are And to terms in the mix the do flows the basis, ebbs are to lot quarters. think data and is important our between there a NAND, towards all margins good I that the of we that on NAND always that kinds a of of in are chasing at prices shift compared we demand is portfolio. center. the rest growth

smartphone volumes. So to business, for we of doing. that of mobile our you the that's we our reported the what all like in example, are revenue, referred terms changes And

than that 'XX. in this and in fairly for to in in mid-single-digit for volume in of full reported calendar business be overall mobile now has overall at outlook expectation mobile we of suggest, phones XXXX numbers what mentioning If in several our growth have for time. calendar Our That been but been sell-through volume planned was industry anything, for consistent with unit that not and percentage business. The stable year would was happening calendar better trends XXXX QX. that of expectation that we business our the sell-through terms the were our all F quarters QX mobile down X% out the what changes changing are year are have for changes been mix

expect get think other in you're with tried bit if able the for fiscal that to communicating is increase this level reasonable at supply it needed that bit that expected understanding more CapEx construction be Okay. maybe Great. to line high somewhat for at Micron of next maybe is will next demand the year? for DRAM, in year? level maybe to currently to I mid-teens have Or folks for grow be NAND even stronger well. 'XX, would as or of But that more than market increases teens investment follow-up, for just And half at CapEx, now

able with to long-term able X-beta the enable can those of and growing going maintain to we and share DRAM the year then technology in for technology mid-teens being to HBM and just trying just expected the call 'XX more of fiscal have do facilities couple in So some will the increase Brian, that We and sufficient between transitions. And to for right? your CapEx work even to achieve -- in CapEx again, around our that's calendar 'XX, are said for with earlier, be out. in I transitions to half we than our in A the clarifications. our or penetration the us of on more is CAGR footprint CapEx, introduced in our be be be as question believe X-gamma range Asia, we the mentioned parse really to ramp between rest that or 'XX that other construction continuing increase of and the Japan Taiwan, U.S. ongoing And so answer, that. market --

to grow grows, years, will become these with do, the U.S. of greenfield As decade. we for technology expect growth timed latter HBM we've which as needed, said and be towards projects, continues many penetration less wafer demand that's capacity transitions the half be efficient, to and as

and to shipments have Yes. we will us, our NAND. bit part expect that, -- come to inventory. that those build -- of part And on we year just XXXX share calendar year and of both for to DRAM And maintain across the fiscal expect from

So normalize year. that you be we Mark next share XXXX. us can part our inventory that heard maintain ensure will of going is have that end And you helping mention by bit to of the flat inventory to

Sandler. And our Kumar the Harsh from next question from of comes line Piper

at look XX.X% margins look that When your range. I I the somewhere in are your and bit, I long-term model a saw of kind little peak back

Now you've XX% hard contracted for 'XX, idea for us where what And if and get for and logic try might aspirational pricing what an us for a for I your can't planning for would -- be if you HBM margin to And pricing gross like, help got in HBM, that call was range that's because that you you give but wondering give think us number, that sounds you in HBM. if range, is. idea can it's commands. Could think 'XX of to gross an be margin what you for could me you -- we be that so framework might a maybe about margins your can't HBM. of --

this today. obviously margins, is mean I the industry but imagine are certainly we have tight you can HBM a not view place in we that Yes. our that disclosing

center tightening obviously to expect due 'XX to AI-driven other into and growth, of price tight segments the continue And going see calendar growth data have increases fiscal of 'XX, industry conditions mode. HBM calendar we all and We the year. continued growth into in to going

to in pricing XXXX the industry fix we of don't with continue HBM, the we we a are fixing financial backdrop going we to to performance calendar that do strengthen that And pricing going course, is level that at regret and terms when of of later. for for obviously, mind, about so pricing in to all And think want margins.

the this ahead for of super creating been profile for time. ecosystem. we have that margin set are of We And for of expect our justifies Micron sure. that a these the value comfortable is we margin level product, complex that it and is profile. Because able with But prices to HBM which,

And a follow-up. quick Understood. just

you pricing an about years? that? that many talk You've with longer talked XXXX Is your of visibility? visibility GPU design design fiscal. locked about visibility is Or your into design Could vendors? is How than indication also 'XX large

XXXX. -- Yes. purchases customers logged of are platforms some And going XXXX I we mean platforms they have we continue and those starting those with and beyond. are volumes to for have are customers into that their in

XXXX, with and So earlier work XXXX you beyond. who then the with NVIDIA launch those to XXXX actually in discussion had have the about for customers we with continue products going and launching are multiple into XXXX in to multiple customers we

HBMX the in, keep then going through in launches a following the will to in this then in Now the of you of through we'll transition HBMXE, the through end get to of with happen on. the so the you'll that, XX-high. relates then course HBMXE And And end and product. XE XXXX, the calendar mind, HBMXE shift And all And later, HBMX X-high. have The and the -- over late while XXXX. then decade will product comes -- decade decade. mix

And deep HBMX engagements already in are designing HBMXE. so on very and customers with we

we firmly planning very deep And engagement are their more of that, of leadership customers. And because and integration And designs. so is consumption, of where, in going make a And customized the strong XX% will we long-term IP. leadership won't performance, cycle product very are engaged They with of because mentioned and as multiple there long the before, time lower to base same these die, to a HBMXE, specs planning of into have to customers. HBMXE require with product, HBMXE, get product. in power we great our customer of for long-term be HBM a customized customers, really all more necessitates with it be IP relationships that as possibility have we and going and R&D long partnerships customers, HBM

Congratulations, guys.

the Company. question And line our Bolton & from comes of next Quinn Needham from

transitions. HBM the transition transitions. modules market mean, memory high-cap no share historically, DIMM I to just want the ability just the back I I to I with node think, to and guess with maintain come guess, I the to

You typically, wafer equipment see the with decline. same typically net starts set,

got so factors net argue of for And reduction starts. like a net a sort lot feels -- of reduction in continued wafer you've that would

so years kind of should could just over wafer thinking over of period. address starts wondered we what of that I And in DRAM couple if about be the terms trends you your next

Quinn. Sure,

talked the So have some of the what now, industry-wide think we kind we this calendar well believe start and 'XX did take as where we 'XX as into -- we we others of in given of industry, on we in and all downturn out as reduced others in phenomenon advantage fiscal calendar you to where the technologies, capability that transition in an mentioned, newer wafer industry, color phenomenon is structurally.

us and happen did others. for that So -- for and

said of the because well in the rest from did case get be that's very, that demand as still the very reduce as that, not of to reduction we technology always terms the industry able is Having to benefits weak going in the to transitions. and performance it and the something be of face cost CapEx

So obviously, have you on year your and moving that's your -- structurally if cost. reducing, to going every impacts both forward, that's just not keep bit you supply can imagine,

So into will continue that upturn, structural with this would thinking, we industry reduction head not be as that I year-on-year. the

we wafer make in investments maintain see pre-downturn would transition while line more typical with we You'll capacity our these investments. a where

-- about generations, need is just phenomenon more maybe that maybe greenfield need as capacity we've the the towards growth wafer for as capability for more challenging, the of transitions newer capacity that the half bit new go trade of that as industry. Now makes decade technologies for before, -- this the previous more technology great over HBM that's from where ratio second aspect the -- we half and the important. DRAM second grows not we the commented talking beyond, if for and one of we're become -- entire we wafer the the see go is and need decade that is that And towards as as

able overall we to DRAM even our about, DRAM grow feel share question, Your to maintain with being line as we market be share. quick share good our we our HBM as in discussed,

it. Got

and allow of it space to you like to to So you've share. the facility sounds maintain Taiwan wafer in kind got starts Japan increase

Basically make maintaining to be while technology starts. able wafer broadly transitions our to

Got it. Yes.

like some HBM of you then the CPUs, by do you see Do AI accelerator think a just just follow-up meaningful? has is drivers? in HBM. that generation accelerators. Blackwell this AI of kind obviously And But proliferating the on the anything network lot is the Grace CPU this see driven largely GPU Okay. Obviously, Do a significant today with being wondering, it. the in or pretty accelerator content terms FPGAs more you demand of HBM switches, driven AI becoming -- to

level approaches, then, applications, is be I there Yes. HBM. to cannot servers, require with requirements the based type that of the of on a investigate are product other considered. Thus has far, performance to level level heavily is met this and processor, mean are be it applications course, of which easily that dictates HBM starting that of AI traditional high system that bandwidth and but of the performance. memory, If performance really level categories

you around the see the with a many just because as placements XX-high, X-high, et may and lot of placements, GPU memory, placements, X need placements. placements, other applications, HBM Of which these that course, X many GPU may cetera, not contemplate not using

this out to versus mix over evolves of companies way are is It in to is HBM DDRX places, another that compared also is other other but it of very is one high to time how it obviously, because HBM very But the efficient expensive power is figure ways. trying is that assess being implementation in bar the doing contemplated architecture And versus memory. LPX.

center. data way serviceability, So of the LP, is its low-power way. which the the to and RAS be capabilities make into memory availability reliability, is is starting used Didn't to LP, But as LPDRAM have approaches. and same show the a of you seen the requires NVIDIA way DDRX architectural servers. of in using terms new leaders like Obviously, not consequently their lot in

is that volumes but time, increase be usage HBM over dominated overall, by will another as trend So approach. starting the accelerators. But also will

line the of Securities. Vivek of And our comes Bank final question Arya for from America today from

CapEx Just a side. few on clarifications the

So are benefits Intel CapEx net or gross you intensity, funding? that chips any been And doing? margin benefits has depreciation the assuming of is like any gross mid-XXs and

net is be also net in and we'll providing numbers our number, grants Vivek, latest when you a when received. so That's assessment come based ITC on on and

We service, it's timing timing that ITC, case cash be but when a may put of there will benefits reimbursement the get will there the compared a -- in to in depreciation difference difference be on grants. the

it. Got

be net is number So a the could and higher gross that. CapEx mid-XXs than

That's correct.

what us the Got it. And think in give mix mix -- the CapEx you what the of in sense, 'XX? fiscal Mark, in was then fiscal conceptually can should in And 'XX? how a is mix about sort on we fiscal WFE, or of

say down did We down fiscal had it fiscal was again in down was 'XX 'XX. been fiscal 'XX, -- then like in Yes. in in fiscal WFE that

We will have in said it be up 'XX. fiscal

beyond is greenfield did that part WFE. fiscal we say However, the of material a specific we've But not that, spend 'XX. construction in given

our HBM I'd little did -- ramp provide as is to up the bigger share there, on we a year. say, This more EUV HBM equipment Vivek, -- to equipment does the to we and that ramps color. one ramp market does in to keep start other thing try for go towards be natural portion share are to able to next -- from this very make embarking mind

growth to a the very high obviously of or equipment So as unique going HBM percentage-wise, categories, area. terms in -- equipment a -- highest -- is that be is the

anything for Sorry, ahead. incremental go EUV? And please

Vivek. No, go ahead,

got I some -- talked pretty about we've and we're plan mean a to already for investments efficient EUV we've going X-gamma. be implementation made EUV we -- we've are

thing Japan, are guided. to though. one in We be going implementing EUV is we've That

mix beyond. So plans for WFE EUV of and X-gamma in ramping is our the

question-and-answer of the hand the for today's Mark like any to session program program. remarks. Murphy back further This to does conclude I'd

a to we for provide that wanted just housekeeping models. several the were NAND was I In down percent bit costs third of sequentially. flattish. bit reported, your quarter DRAM just

in long for to all DRAM for 'XX, But today's downs, HBM be FY cost all-in down in high term. 'XX single will and DRAM call. For only cost, digits, downs impact mid- joining you modestly. Thank mix will 'XX down cost

the conclude conference. program. your participation today's And Thank you. gentlemen, you, ladies and does in for thank This

now disconnect. Good day. may You