MU - Earnings call transcript Q1 2018 | Micron Technology, Inc.

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Operator

Good day Ladies and Gentlemen, and welcome to Micron’s First Quarter 2018 Financial Call. At this time all participants are in a listen-only mode, later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Ms. Shayne Hudson. begin. may you Ma’am,

Shanye Hudson

and conference Micron call. Chelsea quarter first XXXX financial welcome you, Technology’s to fiscal Thank

Financial will On at Sanjay length. being CEO Chief webcast Mehrotra, call This President Today’s the with and Investor and and me call, including from Ernie slides, minutes our approximately investors.micron.com. XX be today audio are Officer. in call is Maddock, website Relations

presented contains short financial to website be our reconciliation the a be while results and along website Today’s addition, release, A a on a earnings found basis In filed non-GAAP financial convertible capped of ago. discussion will specified. may unless debt on non-GAAP dilution press call our with financial otherwise measures GAAP of table.

from also on including replay remarks the later quarter we will and As most our be our to website the information the this be company, financial We on at on a will information encourage you conferences website for attending. that the current today. various monitor prepared webcast available throughout call micron.com reminder, the

us You @MicronTech. follow on Twitter, can

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

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

statements actual date of the to results. update We are conform statements forward-looking any under after no to today's to these duty

event Investor May Sanjay. call to now the to York XXXX in turn will Analyst in Event this the coming further share Micron is New host details With months. I its about Lastly, that, on planning City. We'll over XXst and you,

Sanjay Mehrotra

execution, results continued supply demand a the reflects and first and the strategic Good fundamentals. market you, memory demonstrated importance healthy record strong that Shanye. afternoon. and Micron's of company's quarter Thank environment storage flash

During the record XX-layer improved recently, increasing XD we achieving competitiveness, first revenues high yield shares. delivering XX-layer our solutions, and XX our enhance We to cost SSD our continue further we began quarter, maturity mix value DRAM SSD both on of and consumer NAND. our NAND shipping SSD. More

also combines Micron’s and NAND We XXGB memory which deliver workloads. that fastest to analytics a industry’s introduced the intense addresses NVDIMMN, high-density solution data persistent DRAM

addition talent enterprise focused underway. cloud agility. is We the with have recent Manish qualifications Bhatia, end-to-end improve managing garnered who to brings leads global customer costs our bench reduce interest and efficiencies solid of customers, strengthened we and manufacturing and and supply and experience chain from operations Manish our our are And, driving in extensive on operations.

debt. the are and foundation capture pleased storage and better and accomplishments retirement improved continuing to the robust with with our I our and Finally, for discuss $X.X customers position of increasing trends billion data number Cloud on results solutions. major financial speed believe and trends and in enterprise to now our memory end-market of will we opportunities. markets. deliver I’m flash execution center traditional of to of our each drive value our Micron focus demand

impacted customers QX our in increased the We earnings sales. discussed quarter’s SSD to and September cloud revenue enterprise last flash from issue Our that component XX% recovered SSD sequentially. call

memory were enterprise market. and in execution sequential markets, center’s than side, into by had strong growth we both cloud growing XX% data year-over-year, up bit our the driven solid need and sales. revenue customers DRAM compute DRAM underscoring this more by shipments to primarily data the enterprise On center for

to reach well of cloud. stages qualification QX access, coming is and and have more interact customer production us. a beyond cloud a technology. Fast analyze, and than world need during simple have with advanced us received quarter our products benefit, node of accelerates of in surpassed they and revenue these customers, perhaps our web traction mobile the with been diversifies monitor, is store communication early Smartphone as nodes. of Our data our extends it by well significant The new This XX production and ramp the cloud our most cloud help deployment in apparent customers the nanometer capabilities and XX browsing, around market. designs technology by navigate, from market

use functionality New fidelity, mobile trends, cameras record applications solid increased higher-capacity amazing like have revenue with mobile This driving in along memory in precious the FQX. of solutions and emerging and These our capture execution, is in moments AR storage promise. increase drove with tremendous devices.

We our of customers. MCP, to the diversify and to growing storage and our LPDRAM, our managed discrete are strengthening of continue offerings solutions meet portfolio needs

low-power our We XX of such our of portfolio are products accelerating with to solutions as our progress expand the designs. new LPDRAM release

with NAND customers, market and promising managed Home discrete products. drive to and and solution to XX-layer in industrial revenues computing our continue of and chipset samples consumer which storage wide require initial a automation memory shipped UFS of also very devices edge strong segments, results. We partners variety

solutions edge begin we provide in these and higher-performance devices and machine memory more opportunities flash to As intelligence, integrate markets. see learning to storage

graphics demand gaming be popularity eSports. The We fueled for market have growing and to of products. graphics also ever-growing by seen the rapidly continues our

size, currency Although supply. interest smaller has crypto memory mining graphics put further pressure in recent in on

networking bandwidth GDDRX high early continues our rapid market, autonomous XX% to such record and automotive Our close graphics We helped other by need up drive interest in as industry-leading calendar to followed this customer customers than innovation significant production revenue, networking. portfolio GDDRX high-performance XXGb-per-second that the We for technology and and year-over-year. sampled automotive The automotive applications to ramp are towards memory more create XXXX seeing to and GDDRX relationships our leading an in key win platform memory success for quarter plan of graphics the moving product continue products leading fastest XX design provides. leading-edge important and applications in new driving to higher shift We the that support memory have secured LPDDRX market. driving replicating demand to autonomous in retain to in in autonomous we are this significant key this our greater rapidly technologies. performance. to on and applications share the Automotive customers than products focused ensure and announcement driving capacities more and for will they a technologies are past,

innovation generating opportunity record as for networking ties revenues also devices, networking drivers data set customers. strong Micron. consistency serve are market with These drives centers and edge diversified We tremendous supplying reputation applications that the our and trends for growth and structural

DRAM in and comprehensive quality, portfolio ecosystem solutions, both uniquely We excellent are engagement. positioned and broad NAND these with markets customer a of

We and are revenue these deepening mix enriching developing to our the focused products, on on opportunities. right customer capitalize relationships, our

our execute our cost are ability and foundational technology, to Turning competitiveness manufacturing technology our ongoing to drive to roadmap success. and

output In terms achieve of second the NAND expect achieve of to FYXXXX during output on bit to of wafer half manufacturing bit the by calendar crossover crossover XXXX. DRAM plans, XX-layer XX still end we expect and on

our fiscal factory assembly expect meaningful in outfitting to and the ramp before back-end the end new are Taichung, output of test the facility year. Taiwan, We from capacity, and

XY on and effectiveness for track half are in traction of in of plans, investments with output good Both DRAM progressing XD and the cost XXXX. initial well, of both are third-generation development these seeing investments. Our and NAND improving the our efficiency calendar deployment we capital operations remain second are through we our tracking and

of solutions, to product our technology. we working focus assess efforts been increased continued focused XPoint We views of our these team and manufacturing resourced development opportunity we opportunities Micron’s details with product our on Historically, enablement analyst progress market are on we ecosystem given to good make provide have Simultaneously, regarding during high-value on development in will upcoming address recently the the a with opportunities, XPoint further players various but us. ahead early and largely XD event. and our technology XD to ramp, have

opportunity calendar will mobile discussed. DRAM expect demand XPoint we is to also by XX% XXXX, have as supply enterprise healthy the remain as cloud, this with just to environment, projections consistent bit market strength our growth Switching and be expected the continue to quarter. XD we supply center, a our in industry We our and outlook, our partner data we and shared about ongoing driven sell market to industry develops. what output last to

in bit projections for becomes and be time. production. SSD growth volume industry increase remain for our data that growth Against fiscal We our to available growth expect the the the into to and as own the be NAND and industry, in to we unchanged, somewhat DRAM to growth NAND bit above below we our slightly for expect bit center computing bit industry XXXX. as XXXX, industry over designs backdrop, XX% client calendar further will approach more expect adoption ramp XX-layer to continues supply expand applications continues

any technology capacity, During of without fiscal our to and total to additions high-value revenue for mix enhance and wafer our our are both DRAM we share. XXXX, transitions on solutions on focusing improving NAND,

XXXX and it DRAM details quarter nodes. to space fiscal provide for XD we first now continue NAND by technology more clean results advanced unit. to to beyond, to over business For room the required scenarios fab to assess transitions and on future, I’ll turn implement Ernie our

Ernie Maddock

on market Sanjay. further exceeding joining all start strong of our migrations. metrics, execution, our you driven the robust by today. to all financial We And continued for strong year, to you, very had across thanks technology a and Thank guidance fiscal call progress a environment,

billion, was and and up points up XX the $X.X the points XX% on year-ago period. up up prior points prior fiscal a the the to Non-GAAP percentage of from quarter XX X Non-GAAP up from quarter FQX FQX, XX% XX%, first gross percentage company in operating XX% margin For revenue total expanded percentage margin year-over-year quarter was and XXXX. basis. from from from XX%,

operating and and with $X increased and expenses quarter-on-quarter. per XX% from This share. revenue manage $X.X both Non-GAAP FQX $X.XX $XXX performance or net share from remaining period. $XXX billion of prudently to year-ago spending share $X.XX per with X% R&D totaled QX, or for income to with continue or up We SG&A compares the per in million $X.XX quarter, non-GAAP relatively the approximately million billion, totaling flat

unit: of Networking performance billion, $X.X FQX year-ago up more double Compute and revenue The than to Turning Business reported levels. XX% Unit and by sequentially business

in to to to increasing SSDs. drove demand XXXX. XX% strong increased processing. sequentially higher XX%, Our enterprise graphics record in a Business compared customers revenues for XX%, share QX FQX was in X% up performance year-over-year by memory sales. together SSD with Storage growth was content, income Unit strong market by billion, driven driven Operating driven and in by server increasing were sales XX% FQX On which basis, $X.X revenues

Consumer, product levels XX% to increased and and from Enterprise fact, value The sales $X.X mix across negative continued In higher in up market SSDs XX% Mobile a quarter, in Unit sequentially of These percent Business and FQX of up double-digit in XXXX. NAND with operating Cloud XX% reached XX% XD TLC the revenue, in sequential year-over-year. prior products. acceptance margins based SBU quarter, results reflect and Client our and record growth X markets. reported the billion

XXXX. portfolio of Embedded demand solid are FQX in revenue The percentage flat offerings. in in up income essentially and We XX% latest-generation acceptance year-over-year. points margin of XX%, products quarter Unit strong our environment, XX%, combined made led XX X% traction to our of The and up FQX, and up prior quarter the $XXX prior the million year-over-year. of from we’ve seeing line from to with reported managed NAND Operating and continue Business was with FQX products, the operating in enhance LPDRAM our with XX%

noted Sanjay edge with cameras. evolving continue surveillance the ultra-high-density trends storage solutions to required end-market high-performance devices such to embedded driving, markets for underlying for across exciting memory ranging we video as of from As requirements each autonomous demand see earlier,

our on opportunities. capture leadership upon focused growth existing position are We building these to

and product servers, Turning X from revenue ongoing hyperscale XX% exposure to up client particularly cloud drove and of up revenue shipment new year, by percentage PCs, line: XX% the to XX% basis, points from reflecting for in results market flagship company higher gains XX% share the FQX. of Trade by low up and the up XX while the mid-single-digit declined On in high-value increased DRAM from strong increased during up quarter non-GAAP percentage range, sequentially and company mobile X quantities a sales overall year-ago and upper markets. ASPs data represented NAND in NAND year-ago was and centers, ASPs smartphones, margin and Demand end solid Trade embedded quarter, single-digit richer our NAND from X% in SSD market into revenue the XX DRAM non-GAAP prior strength in sequentially FQX. mid-single-digit points range, robust the increased revenue points in range. represented prior margin and quarter. increased in in of quarter, the single-digit year-over XX% year-over-year. up points overall range. growth markets. the while trade driven percentage shipment was demand the in Sequentially, DRAM percentage XX.X% the up gross quarter Revenue by and from in FQX, gross a was mix XX% sequential the from FQX, from quantities

remarks, of XD XX his ongoing NAND on fiscal make our levels we roll-out throughout we Sanjay will are these technologies ‘XX. and strong the As meaningful in progress XX-layer roll-out prepared progress deployment. noted as of DRAM The of enable cost-per-bit reduction making

operating of bit half year generated growth $X.X fiscal to FQX, compared our output heavily will period. flow DRAM, more output bit $X.X in the second in The while greater half growth year. NAND the the first weighted cash company relatively ago billion For year, will be in to of billion be the of fiscal the

we the contributions. for expenditures, quarter, billion partner capital During $X.X of deployed net

We FYXX negative halves or continue the $X.X fiscal Free to flow billion quarter of compared the year-ago cash period. range minus the the free to year. in of in expect $X.X fairly CapEx was flow and first for second between plus the cash billion, balanced X%,

strengthen We plans to our sheet continue to pursue lower and debt. our balance

billion raised with offering debt. in $X.X principal converted $X.X value of from to expect face of debt $X equity an FQX, and approximately as the or currently During FQX, billion exit FYXX end repurchased debt. in billion amount we our Total we of of value and face was $X.X billion

from effects impacts the of We expect offering. dilutive income anti-dilutive equity de-leveraging savings non-GAAP cash higher from expense FYXX, and for actions, Exiting the the $XXX associated first see investments, FQX million converts $XX a versus combined the interest interest larger to billion ‘XX. quarter cash, position. settling net these interest balances with We we offset with continue of to the restricted quarter in foresee cash of $X.X cash, to and opportunity per in with quarter FYXX exit million cash approximately $XX million ended marketable and per of net positive the materially

XX%; between Moving on to of we $X.X range Revenue the billion shares. share, Operating million EPS billion expenses $X.XX range and between Gross FQX $X.XX million; $X.XX XXXX, per guidance $X.XX non-GAAP $XXX in the billion; a Operating for expect income to on ranging and; based $XXX of ranging and XX% and following: $X.X diluted in X.XXX on million basis, between margin to billion, the

to word our in have offsetting a expect legislation rate, some an our more balances. would cash beyond, In our reform, as impact about Finally, and rate, we in deploying tax the range. drafted, we the tax flexibility with FYXX would no to global be significant non-GAAP continue to of tax to mid-single-digit which benefit expect FYXX impact

develops, turn we further updates. As legislation this I around will will clarity that Sanjay. appropriate back provide With to it

Sanjay Mehrotra

Ernie. Thank you,

in modern the life. calendar look role larger to Micron we a XXXX opportunities trends out technology XXXX, As we close and for see play increasing to shaping

excited plan hosting elaborate view be trends team world our We of and in the be our May, about more envisions at and capabilities, unique market. assets our conference in of we and technology, flash to the talent how believe on we Micron years us trends a future. growth in the come. will place an biggest technologies technologies, where to and analyst storage that Memory in shaping the Micron put that cannot are the in position intersection these We strategic our

solutions the an due Our us to partner design view provide. customers in essential differentiation early our increasingly can as discussions

on throughout to increasing XXXX. that value, of the forward this and focused are sharing We focus look I results

for now will open questions. We

Operator

Srini the line of our [Operator Instructions] Securities. and first with Macquarie question comes you from Pajjuri Thank

is open. line Your

Srini Pajjuri

the and a just in congrats have some the half. there great community at coming side, of any you be guys. a of quarter there couple be investor on if questions first the you about your among the margin how thoughts NAND mentioned half? what am exactly A what’s gross is to am the industry forward? on you is provide but points I about Thank going concerns the into for know as first Sanjay there, we sequentially, more going that supply to some is color I NAND and I least Ernie, sustainable if XXX could mix And is to flood improvement online head supply-demand just wondering then healthy driving as that view the you balance curious that seems into basis

Sanjay Mehrotra

respect industry the XX%. demand-supply that, approaching the growth industry industry have So say in supply with would that said me the just in XXXX be supply of calendar terms let the year growth to we environment,

demand is, the the demand in is has course the of particularly While year given year that years several right? increasing The ‘XX PCs of tightness mean, going to XX% in pent And year to you rates. what year continue year PCs applications density toward XX%, related tight, centers to continue content getting and because ahead overall and also calendar trends, calendar increase high overall calendar client In mobile has more supply applications somewhat requirements. course see march of XXXX at what PC and trends over of growth of increase. capacities PCs And than SSDs look range ‘XX, cloud to down data and SSDs all timeframe to well. average notebook rate is attach calendar to XX% XXXX, XXXX. I XX%. rate data the up is by toward usage to notebook strong the to as in next the client these the The attach data respect there higher about the supply continuing attach was supply calendar SSDs been look drive applications are in ‘XX cloud centers, average the it areas center with of enterprise slowed in NAND notebook demand capacities have of I client environments. I in the been of PC, at certainly When in

trends for is with So same continuing of in NAND be increase. replaced continuing all SSDs markets to capacities HDD and lot that still are are average to

solutions the our the demand mobile on respect to environment. continues markets flash, yes, be our well more and But are very to portfolio to strengthen very to SSD with increased trends as more we managed with focus robust NAND So address share supply markets. product as continuing

Ernie Maddock

And I are and of for are as toward the higher making NAND, mix to to we solutions for opportunity added cost well. there relative carry margins. Also One, mix amount make continue to think higher we progress cost respect good of well and question a two as on the pieces you that. margins, increasing about -- those value progress side as TLC the reduction a XD had of quarter with typically

a good perspective So combination higher solutions add the from of relative facing it’s quarter a with to and an market costs. both value operational

Srini Pajjuri

you is which guess are follow-up just next on you $X your then I quarter. Thank said billion, about to you. And going gross said maybe sheet, balance debt Ernie the you reach one previously target I think

tax priorities forward? that the change about will can your that Given again that will talk the for pass, you pass, cash then bill going what’s assuming target? tax is bill if And there any to assuming

Ernie Maddock

that that fiscal gross in Yes, I we’d have don’t FQX, we we said debt year. of by target our end the think reach said

time are aggregate the ‘XX, sense getting QX. we able for priorities, that which balance continue in the fiscal to in would we best not we in relative The to be of levels transition to year sheet make as necessarily that then make for it understand always we to debt. change production And that fiscal and at us. level bill, expect to wouldn’t shape I so And sure tax these achieve technology certainly have the would a that can

Srini Pajjuri

you. Thank

Operator

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

Your line open. is

Harlan Sur

Good afternoon congratulations execution. and on the solid

CPU got looks CapEx cloud have to the Intel On spending XX% lake, and hyperscale side, you ramping on side year. EPYC grow the you’ve next DRAM AMD about server sky ramping

continue from you next the become do these, of in an business to over mix guys continued mix two higher years of server server segment cloud the anticipate and all DRAM your three does cloud next and consumption to industry year? to a then and move part perspective And mobile? in overtaking bigger momentum the Given DRAM

Sanjay Mehrotra

build at as forward. cloud these to going have cloud, to be the growth and and large these enterprise in we momentum very Yes strong do industry markets penetration well we for continue center volumes data the server, DRAM expect absolutely, will markets. centers And data in as to absolutely actually biggest drivers continue

Harlan Sur

wins Great, thanks quarter. that. And semi and autonomous you about talked the for in fully Sanjay

subsystem are focused All are per level vehicles, you to car required that on X a level NAND technology of auto these kind the one how with and That’s talking three in consistent up see step SSDs this, of leading and major of DRAM trends content, processors sensors XX-XX to of guys DRAM fully we types terabyte for the talk automotive for pretty and and on is over of in significant autonomous. guys OEMs about X focused next the five and gigabytes X years? that the they content

Sanjay Mehrotra

absolutely when them. look content associated the that to autonomous have think the right. future similar they X, are mean, really are XX I very It’s average is. when it vehicles to in about with workstations, level And at DRAM in about gigabyte servers server projected you in that autonomous is of are capacity vehicles, the you

DRAM So future fast be time usage, drive of are data real to millions these will split the computers flash They using decisions really tremendous to they also but be cars generating they of destination. will in of powerful content and be that driving sensors very will to second amount going in will will usage. make be have sonar only make NAND to not their make vehicles signals accessed transported will that processed, and from to safely sure data be There be cameras all generating billions the in that passengers of autonomous to can be effortlessly order the to decisions. and

memory in this trend and front storage. the driving than us usage cloud here Earlier terms of is applications continued the of of are data absolutely autonomous and faster talked right that be about to in industry, vehicles driver in you again will are the a of future. really big those center another and secular we growing So note rest

Harlan Sur

Thank you.

Sanjay Mehrotra

solutions address market is of these with growing portfolio strong uniquely its Micron solutions memory as positioned as And trends. fast well with both DRAM to the solutions flash

Harlan Sur

Sanjay. Thanks,

Operator

Thank our you. the from comes question next with Blayne And of line Barclays. Curtis

line Your is open.

Blayne Curtis

Can as Hey, you server, and as year and about is Intel’s guys. maybe Thanks clearly of taking clearly the second you my can content per more then you congrats questions, of on huge meaningful? you talk half year that's still look been how back for just how well. look to a servers driver much as DRAM, and Couple next the question go being that maybe without into increased the and units. driver clearly this just really minority that into been much

Sanjay Mehrotra

projection And in I X,XXX when So XXXX look march X,XXX it's per rate levels you gigabytes. think gigabytes by of timeframe XXXX almost above about anywhere you X,XXX tripling at gigabyte content capacity server average growing terms XXXX well. as continue timeframe average XXXX look flash the to attach ahead around from above to if over at well capacity

average gigabyte side, average capacity side, showing So about on by going timeframe capacity that about that to estimated and XXX and server are XXX. per increase the industry well. there reports nicely to as similarly on continue XXXX In the DRAM timeframe is is SSD XXXX

not near-term, as again say trends increases year-over-year just here. secular and are solid but strong these in very So, I

Blayne Curtis

of fiscal do ramp I question, And just want is down? you part are to as of and the the to to going go obviously curve is side, one going the look other that. what's how across costs for NAND year start any here as on up that you back you sort a you XX, of then think seeing one gen slop over the of just Xrd about there is Thanks as cost the trajectory -- that

Ernie Maddock

to layer. the implementing impact As generation has just Xrd we will dynamics or of as favorable will XX into it continue that of introduce year. have quarter cost would We our as last expect mature don't or fiscal FYXX XD relative that significant negative get believe that be we have to yield technology results the a we NAND, positive in that we

So, way the this it to see material by XX our we're fundamental change that either driven to dynamics which be won’t going year, NAND. is layer enough largely TLC

Blayne Curtis

Ernie. Thanks,

Operator

our with Stifel. Kevin And next from line you. Cassidy the question comes Thank of

Your open. line is

Kevin Cassidy

Hi, thanks my taking question. for

you the more about guidance Can what and goal you mentioned would percentage for gave call DRAMs your added what's had value You the adding into that? the CapEx right when for for added now year say group in value Flash. your and you

Sanjay Mehrotra

SSDs consider value the as category solutions added add as SSD had value the and revenues, and gained QX we that we our managed space, In mobile as we fiscal our the well. well. increase count in NAND solutions, in solution in solid in we really In shares market also are NAND discrete

course be applications to opportunity low they side, low, as high making gaining And quarters portfolio. we roadmap see substantial we value contribute relatively that we -- diversify is on the of expect graphics, single-digits, automotive, performance toward to today solution. add but markets such continuing tremendous product as those applications product as we to in are in share our in come, as the And the Our DRAM such all progress. execute

not are Analysts We any in providing specifics Day at our point. this We'll May. more details at discuss

Kevin Cassidy

been the push maybe back had towards more especially you Okay, as such market, DRAM from getting follow-up because market you a to want one is any customers commodity great. commodity? they that move your just And are

Sanjay Mehrotra

that increasing we response the with question previous solution we we point to May, out progress while in me certainly more basis, pleased value-add that mix our detail just let substantially your will in but and provide And on are year-over-year are very making. a

being on applications question are requires we second whether mobile in factor algorithms go PCs make enabler more really and aspect, and DRAM, years reality few mobile more verticals various in leveraging LPDRAM look in the DRAM, your type in you cloud decisions it notebook data require when space low strategic engine they helping in features today well is to diversity centers, in being the will talked highly more mega the of at search the even strategic. form of Regarding applications markets AI future that AI about the in pursued activities for Even computers, is for a power trends various augmented toward all as DRAM DRAM is future as as of come. and

automotive and So you just as of course we talked about see well.

when DRAM when to market. in talking is is to gives them, markets memory portfolio applications. stronger they large meeting in with markets, you and have these profitable them solve diverse is their And becoming dialogues that have growth memory, DRAM now several are drive of we bottleneck opportunities our markets needs helping I we us addressing now differentiated So how always diversity them the that happens mean, with engagement product of customers really the when an that

different, enabling in and very DRAM a DRAM. PC DRAM truly very is providing arrives. as right said era only times just are before And role I many of really the the applications So the world today strategic in is from all that mobile, was about or PC creating it applications more when many it before about these today transforming

Kevin Cassidy

you. thank Great,

Operator

Fargo. David question from next Wells our Thank you. the And line Wong comes of with

line open. Your is

David Wong

total that year, sequentially? quarter said it, as Thanks or you drop the NAND sure in the next XD And very and you on grow much. quarter, NAND but your of your XX-layer February did was to how November much I’, production production May not transition NAND?

Ernie Maddock

about completed XX%. fiscal that of quarter and the our number ‘XX just output of we balance expect XD the over of course to would about XX% to grow So on was the for

more remarks and year. growth prepared it be to we’ll expect the heavily quarter some each as weighted the said bit We that measure of half in said the we back have every little of would we

David Wong

grow But half? the let in will you never first

Ernie Maddock

Yes.

David Wong

great. Okay,

Ernie Maddock

in for quarter output that single-digit range. the Yes, was up low the

David Wong

very thanks Excellent, much.

Operator

And you. question from Thank of Muse Evercore. comes with next our line C.J. the

Your line open. is

C.J. Muse

the suggest Yes, would my about taking question. question good afternoon. I for supply year. talked bit tightness which you the on Thank ‘XX, continued you in XX% industry throughout guess whole for first DRAM,

you curious to are pricing, as to reality, what of seeing So that are visibility extension in how as reacting customers contracts? well kind

Sanjay Mehrotra

of this terms how adjusting certainly we customers shaping gaining make we that their product is visibility And and up to can our technology with sure work closely of applications in very are future our customer-to-customer. work needs. and requirements hard from varies their DRAM their We that so roadmap and

more Some engagements you we certainly basis, customers I and closely term XX% well. right a that a revenue expect strategic very drive going higher, and healthy yes, tend mix as growing work demand our and to likely somewhat more the industry to do continue quarter industry to growth some And demand note, supply be longer month-by-month are and be environment some to on forward. mean, of about DRAM to supply

C.J. Muse

two follow-up Very side or the on I approaching the one expecting NAND or that for of guess other that talking type helpful. lower in And my are market XX% of as growth. you industry around bit growth bit the are players

So bit making it your would appear that little a robust assumptions XX-layer are around be than that the more you ramp might competitors.

would is risk you ramp? a how think probably agree of up? curious where how would than about kind I lower thinking ends I truly you it So probability think you are around put the you clearly And guess that XX%,

Ernie Maddock

around will technology industry in the of as into estimate our of well, are are the but And in as the in growth growth projecting, the yield all we bit technologies our terms on XX-layers course may our supply with continually that estimates as note of taking we here. it the based industry with industry review the intelligence you assumptions of right and of at look in the we the ramp factor be that and well And estimates our bit dominant industry on with of here. ramp we mix of any of to along have, if course share models will production we as of our have refine that changes as we XX-layer on we ongoing technology. ramp collect an this wafer and So third-party from you. them basis, may We consideration well reports other

C.J. Muse

Thank you very much.

Operator

And comes More with our question Thank you. of Morgan next Joe the from Stanley. line

Your is open. line

Joe More

sort usage? return strategic free think do much. wonder know want ahead when you about to cash versus from how get you a prioritization cash don’t more I a cash what’s this, next on very you I neutral get you cash and just investment you And of yourself far flow. of to too Great, for maintaining qualitatively thank to grade, net get but

Ernie Maddock

grade. that appropriate particular talked I range. to production parallel. be latest these how fiscal billion we we including return for in cash about wholly that think about things ‘XX overtime continue open broader the on I that cash ratings clearly will about not very thinking in worked technology prioritize are the down debt Those dependent things in to think is just programs. we And believe time I generation will as think supporting think $X We will think of getting focused at we our the of aggregate shareholder upon achievement are uses we any to lead deploying ratings. improved But

those -- where a this or work technology comfortable we of we about levels also and debt completed priority. place do deployment we in to cash. a hierarchy our have competitiveness to the certainly our cost our our completed continue get to the are But the will substantively that So uses those and regaining point of getting have until more on with thinking to remain aggregate level

Joe More

then meet And of more think I in can is the mix the the XX% bit guess mobile about balance? between still of sort PCs, disparity thinking stability business DRAM Great. do compute versus gives road from can high, about you How which that you how you quite of get forward your upside down mobile the mobile. that profitable margins in you more to operating allocation you that see quite that the are terms I obviously still PC a than wonder and going

Ernie Maddock

clients well. data Networking both array the as also but a networking Yes, -- products Compute which other includes but that not products, and don’t Unit Business forget and mobile center, mobile of includes wide includes

isn’t it be and DRAM important Networking And also to Unit NAND. we both the many important. Compute sub the deploy So consider the certainly just would Business are of have and segments within strategically a statement where compute about environment opportunity we relationships to and these client those mobile continues

So Business is I driven Compute that performance out by performance necessarily of the clients. of presume our Networking largely Unit wouldn’t the margin and

Joe More

Thank you very much.

Operator

you. Thank

with comes Nomura/Instinet. question Shah of from line next Our Romit the

is open. line Your

Romit Shah

it your for have like some Sanjay Yes, been over -- semi have XXXX driven you. their just higher forecast thank by months seems DRAM equipment, the last suppliers since equipment cap spending investments. impart three of raising

So out XX% my your perhaps is laid that competitors what’s proving that next question risk are share the for assumption conservative? going year end growth may more the for actually aggressively and you

Sanjay Mehrotra

various reports for to wafer the mature compared as I information prior and and with we we increased getting actually today NAND estimate based supply remember certainly technology same gain per will do very, that said advance the you look the complexity. have think sources look a that tightly this fairly generation all less at in increasingly thing, other technology industry today yields I greater gather also pointing on we before for close is are I as that even nodes our And well complex put the just scaling I the well at from very Again suppliers that are are DRAM closely. given here. on intensity, routinely would have here. nodes. this but capital that -- by all challenges becoming the they when basis at we you aligned as even And bits growth estimates as transitions to industry estimate they are think estimate, and

the capital moderating technology these growth. effect increased all supply So, complexity intensity and have a of trends are on actually increased

Romit Shah

sequential than on your other quarter, you period. or down like driving don't you, the you and than pricing growth quarter know it factors is a guys well? seasonality the What's are better the but February guiding better normal it November seasonal to off expected for a individual is quarter Thank basis, of as if seems on you. at typically And February periods I then a look just

Ernie Maddock

mentioned Yes, true at demand put if players you seasonal look DRAM the for be no the are on the the all certainly stream, that. earlier is the Sanjay less automobile seasonality deployments NAND that But side. that example, I among you client PCs them far together, and of context that diversification to pattern in macro you and of And of when than also customer. all stream demand specific certainly think datacenter diversified pattern a there for there is when look emerges the at tend key

past. So, as is we've than in has the these demand been think quarter-be-quarter may perhaps the I have seasonality redefined transitioned impactive a to drivers it concept basis on of and less been diversified

Romit Shah

Interesting, thank you.

Operator

Redstone. you. the our And next Jagadish question of from Thank comes line Summit with Iyer

open. is line Your

Jagadish Iyer

decline questions, And you supply, rising ‘XX? my reduction then two at Thanks we decline have first, NAND look expect pace continue as if with to ASP a cost fiscal I do Sanjay, the keep from questions. ASPs for taking to follow-up.

Sanjay Mehrotra

application drive opening of NAND, year drive leads projecting if demand again the technology up many technology I and capabilities, to many well environment. advances fiscal ‘XX these reductions what I'll market for not you which mean, markets the to increased you enable are But and certainly history new cost look ultimately as we pricing point in at is of that elasticity here. the of

cost environment. we the as data of of drivers demand drivers we that projection today are for So, are us, it And at again greater it the when the segments get I industry the in declines notebook, drive demand spoke into these again don't multitude could automotive that's demand a flash of industry, if all large application. these healthy it mobile, repeatedly look about I consider healthy is are while price in to in than market of the each smartphones, strong call of and declines ahead center, client continuing applications whether enterprise NAND data about center, trends all the

Ernie Maddock

But those would that reduction. usually accompanied cost bit We're get to one are with to might around to by healthy be. I as bit that if be specifics that growth as growth important think be would the some well well. as which typically is statements not about approaching levels of industry reduction add good the going XX%; that you it think would fairly associated what of into cost remember I Yes, our thing

Jagadish Iyer

on a been enough. generally how and Then XD spending about has identified think should picture much XPoint, big you. you in for pricing who the ‘XX? are marking fair Okay, I wondering on there? And Thank there we year how customers have was fiscal

Ernie Maddock

is Ernie. in that we XX% which as for any is mentioned this look how have before the And of embedded CapEx the associated our R&D and to XPoint XX% between provide non-volatile expenses, broader estimates at year, said as see So was The our any and we on piece Sanjay we XD markets that. we’re develop, product going total spending. perspective to the CapEx

Jagadish Iyer

you. Thank

Operator

you. Thank

Research. comes the Our next question of Cross Steven Fox with from line

is open. Your line

Steven Fox

gains afternoon. more you to in most quick market us I the you your helpful. gaining know share? be pricing are maybe but Thanks. talk me, how you you quarter, terms for you component you some specifically I get success give had and fixing for in specifically would to secondly, And but then pricing think all good SSDs sort to Thanks some if in Two color not could sales going qualify mentioned you related of and the about where share guidance upcoming mix on can more the that that questions issue, of of of first some was assume

Sanjay Mehrotra

during applications. very enterprise give the obviously terms opportunities into there gain given did market. at call. sometime we not this we with In total us have well on to well. to our have as competitive our as help and point And in believe do should products regarding cloud and gain related we us pricing demand our in applications this get assumptions baked And But well data in are both you, we Really guidance out that solution gained SATA of offerings calendar our course expand share drives are as assumptions during to next we discussion year there year of and that our portfolio and SSD will certain reasons ‘XX. for share center we our continue pricing client and the NVMe share quarter, bring of

Steven Fox

give sorry you, shot. Understood, a it Thank congratulation.

Operator

Pitzer the from of Suisse. Credit with comes John question line next our and you, Thank

is open. line Your

John Pitzer

Yes, from strong you at the a just you I curious and/or guys being able gross you a maintain good sequentially single-digit is upside down under to question to bit your I congratulations margin rate kind Ernie where pricing am margin given NAND parameters afternoon to gross or margins that the significant cost scenario low we on relative the little and say gross cost sequentially, let’s to there of guys, mix maybe that can mix single-digit enough ask gross here. differently. from a about on opportunity results. had How grow grow continues around low decline for think availability margins should and here? pricing maintain

Ernie Maddock

environment to ongoing Yes, the down couple the our contracts into scenario as solutions, sales fiscal our component continuing of see I ample we include partner and as which both room our pricing XXXX. high sort of reduction as course for gross wind so transition if think of margin or we’re well some framing ‘XX expansion the -- as redirecting value to is of to into the cost as a per value would continue solutions over redirect in marginally well of higher added future as there declining points so quarter result

in is pricing scenario reasonable you forth, there So think that for I gross room set we have margin that believe expansion.

John Pitzer

half front, first the a of helpful. on you in second expect comments than more in bit growth fiscal the year half. mentioned DRAM similar DRAM That’s your your that And question you the prepared

here? into have of margins transition we to gross levers from As half how the many mix DRAM sort second do side be you how able in on much the -- higher to progress

Ernie Maddock

with story continuing higher again think I value to toward solutions. Yes, add the respect move same to general

as managed offerings, a example very as our if pattern automotive. breadth Sanjay strong here server speak NAND for of well heard look You you the increasing that growth at too certainly

expect number deliver of remarks. output be still course there would would So to optimize articulated NAND And bit going able some reduction DRAM best bit gross margin be a us growth I opportunity. our of would prepared we though lowering to as continue toward, the there where our give even to is than are to we cost in to the output segments expect think I that meaningful

John Pitzer

Congratulations. guys. Perfect, thanks

Ernie Maddock

Thanks.

Sanjay Mehrotra

you. Thank

Operator

Newman question from you. Thank take we the our of And Bernstein. line final with will Mark

open. is line Your

Mark Newman

question CapEx in. had on Hi, thanks a squeezing for me I and capacity.

roughly bit as significant under about My particularly actually of was is year is the What brand So is a quite the but building Hynix a capacity to greenfield some CapEx your fabs of how more have years, goal wafer from DRAM question NAND? fab kind available both you how of more Samsung. need layers of Micron about, do quite much Micron ride longer still in also as fab you keep that now thinking you speak. At roughly you technology fab NAND fabs flat need stayed DRAM space to I well. is from to as requires status you flat for for of course top DRAM terms you course we the in capacity term previous this is this grow term, of are and more migration. longer And point keep shrink spread space and Samsung understand as in both question, space more and Micron need the what right more and because new gigabytes and spending space of

any So would do are the what and you you be have how plan Thanks. thinking that? fabs new plans for about

Sanjay Mehrotra

technology to clean deploy order that implement So in nodes. to tools like of need technology the your the you realize space room advance in do you noted to transition are course required the

to we for said, from well planer more well. in in technology at clean fabs I and fab for I clean our as very as transition. of DRAMs space something because in XX-layer similarly is is past Singapore nodes the So in the going technology to And carefully needed space just XD mean, room room for had transitions have look here space as going terms deploying from example XX-layer for NAND Singapore

the additions, looking plans looking technology transitions are room ‘XX. -- have we at remarks, I Fiscal at in as my space room year assess transition new new technology and said new So future not capacity continue implement any clean do needed prepared for that our are meaningful in assess clean to ‘XX, we we space requirements. I continue our to mean, to year required any not wafer are any fiscal scenarios

to transitions various DRAM up my as both in for takes well to and in share these requirements yet, qualify at things. it new and -- than to and time clean products. the into implement the to clean firmed build it Remember we deploy that it months will when takes in new beyond months several assess build we as scenarios No technology any construct you a it remarks the we equipment roll and said the as NAND. in room going continue plans and I As few building equipment, to room build and look

be that evaluating things term looked are for horizon these we are to So at scenarios. the longer and those are

Mark Newman

Okay, thanks very much.

Operator

participating you. in today’s a disconnect. Thank conclude may Ladies the Everyone and all have you today’s concludes does session. and program day. thank And conference. this you for This great gentlemen, question-and-answer

Micron Technology (MU) 19 Dec 172018 Q1 Earnings call transcript