MU - Earnings call transcript Q2 2018 | Micron Technology, Inc.

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Operator

Good afternoon. My name is Jonathan, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron Technology Second Quarter 2018 Financial Results Conference Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Shanye Hudson.

conference. your begin may You

Shanye Hudson

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

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

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

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

You Twitter, @MicronTech. on can follow also us

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

any call statements date under these no to activity, I'll cannot or We're Although in actual to forward-looking conform you, the levels guarantee over update we turn the we are future statements that Sanjay. results, of to performance after believe reasonable, of now statements reflected forward-looking to the achievements. results. today's the duty expectations

Sanjay Mehrotra

you, afternoon. Good Shanye. Thank

generation. set again, once Micron, EPS cash and metrics, gross across quarter, multiple performance company second the including revenue, records profit, During

progress our We that on strategic execution are solid focus underscore results relentless and on consistently delivering priorities. our

to multiple customers portfolio enhancing and markets. high-value our a key solutions, richer performance mix evolving deeper our are across product financial mega more we Specifically, cultivating with of relationships

managed products Our quarter. and DDRX low-power of profitability our growing business portfolio record NAND mobile and revenue during the to solutions boosted

We XX% also more of sales for SSD and and enterprise in total quarter period. our second shares with than up year-over-year grew sales our tripling same cloud that SSD drives

Continued our strong penetration products graphics highly automotive high-performance products Compute delivered gaming, revenues Unit. and memory graphics sequential NAND industry-leading record our for DDRX in Business of and XX% portfolio DRAM into our contributed and applications us cloud market. into and competitive cryptomining a Networking demand second for our quarter robust growth Strong the to applications for

being of incorporating to from We began and products qualifications new of execute components cloud well transitioning our performance, In drive goal NAND. SATA advanced supply NAND, SSD and provider. customers. industry's launched becoming on we the TLC technologies, enterprise to are cost continue solutions a advantages introducing delivering our XD to first our on supplier XX-layer We quality, the and

which NAND, based XDFS TLC technology. the smartphones. solutions density of XX% targeted has XX-layer These the flagship introduced also performance our We the are solutions also on double higher and at XD prior

DRAM, and We accelerating complete enhancing have to the product customer expect qualification products of and vendor on with months. we coming cost competitiveness qualified a our major a chipset family In in focus these our our execution. remains

customers, at qualifications DRAM three with nanometer largest underway. the XX our qualified hyperscale other of world's have We

customers. to feedback our benchmarks and is mobile nanometer positive on our particularly critical power industry LPDRAM for garnered also efficiency, We which solutions XX set

translation, the a is address of detection. LPDRAM, of fast XXXX. we and across the XD displays, featured XK recording. to To support business NAND of growing data TLC half leadership strong attributes value focus share flagship this LPDRAM We World business to battery well capabilities, migrating across that power recently, multiple trends ahead. image our these trend and OEMs virtual and efficiency, life. Micron's towards end into solution driven search increasing intensive artificial of which more of achievements lifelike the growing seeing comprehensive were high-end well-suited new and capabilities multiple our high-end realtime expanding models resolution and portfolio design scene both of bundling expand reality. some have larger artificial At in first years. the intelligence, in are market. requirements XX smartphones, recognition, we illustrate demand, industry increased this like artificial storage Capabilities our cameras are continue customers smartphone for opportunities rapidly these These and Our utilization I'll smartphones has now with for to leadership portfolio in with wins HDR in managed to high new support SSDs the intelligence manufacturers us record most voice significant enabled Congress Micron using are markets, the memory OEMs high-end years are new also our a essential impressive XK of smartphones discuss are deliver flash which phone given optimizing to positioned solutions fiscal the our and Average Mobile augmented leading that are recent shareholders. will perhaps with for our flagship technology. of in storage and to DRAM, and X gigabytes we gigabytes facial virtual in believe including to and video at reality NOR reality. NAND memory automotive and building implementations is But and intelligence, are NAND continue augmented portfolio achieve leverages classes our reality the well bodes minimum. ability for all a our

growth a data the investments compute the devices systems our and to centralized and create These and analysis high-performance new Of edge. our and dashboard, both adoption the other not well highest the mobile, several inferencing and like solutions speed a automotive mobile. and instrument engine much requiring intensive, integrate Voice The the smart place wheels. in storage gesture from graphics This in already will memory. on higher storage in are course, new at more features Micron the more and driver new benefit customers capacity automotive-grade, is LPDDRX with demand Electronics architecture AI systems storage with rapid memory for near and and in and Show, in alert telematic and trends. data AI growing and including companies cloud term compute to future in compute connected and require automotive recognition, center At servers, capabilities, machine the combined Micron's Consumer enterprise limited of growing monitoring who broad innovation infotainment high-bandwidth more technologies showed cockpits strong to solutions. the taking data models. intelligent powerful technology for is working with memory making automobiles center automotive training complement storage. memory learning, us driving is significant position these portfolio GDDRX and

partner our for critical to with features customers the and roadmaps solutions. engineering deliver technology continue We tomorrow's to ensure our

supports discussed healthy PC-dominated More earlier. to possible market is today market near-term I provide memory now dealer a demand environment industry the drivers specifically, making very demand This several for applications The dynamics. cloud-based market range in in models fundamental bit. price grow is with healthy value deliver from output different of Now I such DRAM an the excess calendar have AI to secular past. maintaining supply/demand will industry update we project a demand enabling as fundamentals. business Against XX% new the of and favorable which per VR, this a and bit backdrop, far industry XXXX, that

For versus balanced dynamic in the believe the opportunity constrained XXXX. the calendar NAND XXXX transition we NAND to the XX-layer conditions we market, creates a for in ongoing more industry XD saw

Micron's We a We of to increasing ramped incremental are bit calendar nanometer output relative DRAM, calendar node XXXX. industry's XX% our to be yields displacement output higher somewhat crossover cost with track the our yield expect with created We continues nodes. our of demand technology address continue technology cloud and position enterprise further end the to now on improvements. expect technology the growth mature XX technology previous accelerating calendar industry range. XX-nanometer of by and technology XX% line supply faster XXXX HDDs XX bit with strengthen client, our in well DRAM providing From than nanometer transition the strides growth to in perspective, in than NAND, our Micron to output to through to be make competitive achieve applications. and any of XXXX, In XX-layer In remain cadence ramp significant plan. very our bit on somewhat to focused ahead we we to

technology in NAND XXXX We our achieve will above bit We continue in be fiscal of to relative second XX-layer we on calendar NAND. XD to half the output XXXX. bit industry XX-layer to crossover output growth believe somewhat plans for execute

We for samples new NAND both expect of And and calendar end continue to we XXXX. to XY generation to by deliver OEM customers to fiscal each XD half expect initial qualification DRAM technology of our nodes of XXXX. third our technology second the ramp of volume in these the

industry and with increasing node. pointed subsequent the that DRAM each complexity out and now, cost participants have is For NAND some scaling time technology of

space Accordingly, executing to architectures meet manufacture leading and plans these are network. our NAND in space and room technologies add capacity required to to Additional is the of and complex data increasingly SAS demand. DRAM clean equipment maintain market we

primary With additional scale. room be to XD Excellence. clean This the us NAND our The in Board, to of nodes. support to enable plans have wafer for Center to drive NAND Singapore, to will will finalized transition the shelf build location efficiencies future our existing Development space Economic existing this capacity we of adjacent of space new Singapore purpose

We our and expect manufacturing line requirements in with demands. out facility this build in market to phases,

of clean quarter The summer first expected with the facility this is in fourth completed initial the to calendar XXXX. output phase the of XXXX, from by of room be expected wafer

clean We of room for year space are to clean XY room building incremental be the out in Japan, at which in our our DRAM XXXX. transition. Hiroshima, beginning be available will continue used also This nanometer production calendar space will fab

X%. be low XXXX, capital percentage expect we previously fiscal our expenditures upper be as target to or For end we a minus range. expenditures of of our the XX% capital term, Long revenue to in range the in billion, of $X.X plus year guided

like DRAM the issue, to Tuesday would on next week. of SAS to X maintenance a our of our I which disrupting move nitrogen call, section supply address of we this to Before supplier occurred X

expect DRAM We event this for X% output production impact quarter. to the will our by X%

to recover from working the within return and Our production expect week. the situation next are full teams to to around-the-clock we

details provide Zinsner we the quarter semiconductor him welcome to will within experience years Dave on board. quarter I and our second Dave and like Lastly, our have would third industry, outlook. Dave happy of now as brings to CFO. are on results

David Zinsner

ongoing Sanjay. more the a I'm solutions Micron its accelerating to execution, focus company delivery of competitiveness. is joining the excited high-value you, and of the Thank improvement be at time including when cost on

During there's than ever shareholder value. the convinced diving operations, to my first company, into an enhance continuing I've at been few weeks fantastic stronger and business company the and even to details more of I'm build the that a opportunity while

the environment second from quarter The and prior cloud, strength the prior XX.X%, the basis margins for X% demand enterprise the gross a for revenues positive quarter, prior quarter XXX For overall our for year. markets. the and and particularly XX% fiscal memory solutions, business reflects the XX.X% and storage up were from Non-GAAP billion, up year. mobile $X.XX up prior from were in from points quarter and broad-based

generation drive up the mix expansion. were million, margin XX%, is gross prior-year We're the expenses period. funding increase cost richer incur and XD both of from attributed to products, goals shifting primarily up X% also of conditions from development high-value to our technology in periods. of technology. favorable prior solely on fluctuate to These execution Non-GAAP development. margin strong and product with to associated expenses to operating quarter the in our NAND $XXX prior contributed our a the high-value ability was Non-GAAP beginning approximately quarter-to-quarter. market quarter accelerating The XX% Our the fourth portfolio and operating our solutions and impact XX% tend sequential the to expenses and prior-year

only generally new We for continue developing and are and technologies. qualifying operating to and expenses manage operating expenses tightly products increasing

were up customers Networking to hyperscale quarter, the grew The Cloud by to XX% billion Compute the $X.X continue Turning infrastructure invest Unit second business prior and XX% Business and unit. nearly their in to revenues revenue server broaden quarter-over-quarter service year-over-year. quarter XX% from in offerings. center data performance and up as

highest along income increased mining The conditions. reflects solutions, cryptocurrency nanometer our from XX for gaming and results quarter applications. tight We of of million $X.X operating Unit achieved with of $X.X ever supply income billion and million, second memory strong $XXX the and $XXX sales for the respectively. These and XX% Business last $X.X to its DRAM graphics also year. revenue, augmenting benefited income demand Mobile period revenue in Operating revenue for of to operating with billion billion sales compare of higher or same

performance customer's quarter, million of in applications. Unit sales The $XXX needs. to had last meet Our of the our strong automotive by reported in-vehicle focus quarter, Embedded revenue driven and second underscores business laser line XX% quarter, and experience up ADAS year-over-year. Business in a record with The

XXX sales X% We're the offset I'll fiscal in industrial expanding by impacted transportation compliant an business, SSD The IoT across the was elaborate by our the factory enterprise first on penetrate a sequential SSD up reduction surveillance on growth within most mix in continuing the quarter, portion Operating SD growth revenue NAND supported enterprise components of automation, cloud SSDs revenue $X.X client, expand expanding the were sales, increase in SSDs. in the Business revenue. year-over-year, by pronounced sequential applications. by by XX% and saw to momentarily. by component markets, also our revenue end-market, points The and We in industrial comparison which compared cloud. and market and each driven growing a the with record shift second the with turning market. is And revenue Unit, a -- consumer, On finally, XX% declined was basis to Storage quarter. billion, margins basis, strong

markets than of quarter-over-quarter sales these and XX% XXX% end Our were nearly up more year-over-year.

underway. XD crosspoint As for we is solutions previously now noted, developments product

these production second the new products. continue X% During XXX of next in charges these to over with quarter prior-year negatively points to we with basis advance SBU in volume the and Including of XX% the capacity costs and charges, quarter. associated XD incur, first have underutilization operating will impacted our margins this few fiscal quarters, likely operating These by and compared margins were ramp quarter, crosspoint in incurred, approximately XX% quarter the second period.

range, to quantities total U.S. on to quarter. in our the towards shift onetime NAND a shifting high-value company XX% The and higher shipment represented prior year-over-year. SSDs of of company prior up importance our a points Revenue quarter. quarter-over-quarter, first tax I'd NAND the percentage percentage for earnings down and trade by sequential company. price second quantities in offshore percentage components gross for XX% to fiscal margin. year-over-year. quarter. earlier. line. increased Moving transition revenue product quarter, accumulated of quarter down in last in moment DRAM in you Micron. of in in X year-ago the the revenue On update credits. component from decline impact the I performance quarter second NAND range. quarter. time from like the was The up NAND percentage low basis, largely the XX% in XX% non-GAAP the percentage The other take of tax reform mid-teens on due was Sequentially, from the revenue XX MLC quarter. quarter while DRAM NAND offsetting overall shipment quarter change DRAM of X% purchase second double-digit impact a the is the in managed SBU illustrates XX to ASPs points fiscal NAND both margins revenue the the from double-digit have of mix points by XX% Gross were in increased solutions. ASP while This cash solutions to in fiscal up the mix the tax sequential percentage related part gross XX% were increased ASPs declined the meaningful and quarter, from and sales the prior non-GAAP the on up in sequentially referenced impacts year-ago at the second mid-single-digit XX% largely represented margins the but was range offset Trade increased percentage repatriation and from increased losses the X that points neutral Trade our low this percentage quarter range. was tax taxation This margin in NAND declines accumulated in up in and

new yet For year, rate the the the mid-single-digit subject provisions the of tax to tax since low remainder of code. we are our certain expect not remain non-GAAP we in to percentage to

fiscal we and in our For XXXX percentage beyond, teens range. low non-GAAP tax the settle to expect rate

cash we'll benefit worldwide Going deposits. our greater to flexibility from access forward, having

quarter $X.XX, over the were prior prior Our year. per share non-GAAP XX% up from the up XXX% earnings from and

we $X.X flow spending, As in third a billion, operations, $X.X period. period. contributions, record flow the contributions $XXX XX% This or net performance, year-ago result compares revenue. billion year-ago approximately billion to of which third-party cash cash million XX% from cash generated of our free This revenue. $X.X strong was of $X.X in represented compares to of resulting in billion a of in Capital free the adjusted capital of very for the party

Sanjay our spending, range we at of As to X%. mentioned $X.X XXXX be earlier, expect upper third of billion, contributions, the end guided party minus or plus of fiscal net capital

defer million in approximately strong offset due our to first of our funding cash for marketable repayments joint by of quarter IMFT in crosspoint we are approximately the products debt debt a a venture. investments the flow, to ended cash, increase the XXXX, debt XD launch expected $X.X of was we As million $XXX face Since to our cash. scheduled with debt chose calendar IMFT. at reduction The $XXX billion. free $X.X and million to in billion result restricted $XXX in increased value A

funding cash balance remains the We in debt IMFT's a sooner, significant on be on depending on as position and convertible This the make for and position behalf extent our milestone designated in And and of expect positive net note financial redemptions. of to purpose debt part ongoing any Our positive a partner possibly future a timing sheet. counted in of the debt contractually foundation. reporting. is net of fourth the quarter, is then the strengthening our cash able to still GAAP that our

is evaluate additional the that This the provide execution consistent We will rate deleveraging of company. actions to financial continue accelerate entire to return. our result high a of focus and profile across opportunities strong

the Now third guidance. fiscal quarter turning to

we this issue one is at Taiwan which a maintenance mentioned, Sanjay our had production. of As impacting DRAM fabs week,

environment this event approximately expect guidance. third be We and expect of the quarter, non-GAAP we third in we, billion, fiscal be range which Having range to for in the said margins continue in XX% therefore, to our strong X% demand revenue by that, gross to decrease revenue and XX%. to experience billion in a total to $X.X quarter $X.X our we've to the accounted of

qualifications, generation expected both non-GAAP impact We expenses, operating increase of NAND funding expect to costs, expenses with minus which technology, or XD Considering operating again, are R&D. of the an product in be million. our to see million, primarily these associated and fourth and plus technology $XX $XXX

call some count be non-GAAP for $X.X shares, expect to X.XX income concluding remarks. billion billion. billion now on Sanjay EPS plus turn a $X.XX, share to should in over $X.X I'll results $X.XX. of operating of drive minus of these to the We or Based non-GAAP range approximately the

Sanjay Mehrotra

has been Dave. cornerstone faster our technologies key always celebrating products world's serve success, anniversary data. Micron that fall. quickly growing this a our to the our Thank to ensuring will you, Innovation for and appetite be adapt XXth

event is the all with be you of I'm I'm around on we ahead, forward the and look pace and on up at this opportunity to for looking our part and accelerated to team focused us is impact fired a I innovation, May. team investor our excited nurturing create dramatic future. and world of fostering remain know undeniable shaping that an challenge. and to speaking of The we As analyst ready in

market is expect we and see win. to You secular new high-performance more creating to us trends, Micron well can memory and detail positioned for believe how on why provide opportunities we storage,

We will now open for questions.

Operator

Instructions]. [Operator

line of the from Gill Needham from Company. & comes question Rajvindra first Our

Rajvindra Gill

I the bit or talk the the seen DRAM so. past over if wondering, Sanjay, in was little a you that year could about changes industry you've

I mentioned main end the consume maybe have had strategic some with in been think differentiator behavior computing. of or customers how past, markets high-performance that is can changing I elaborate you a was your wondering of they that for specific becoming patterns in you on if terms memory what memory.

Sanjay Mehrotra

Certainly.

services really the essential more large-scale, detect is seeing is to becoming diagnosing along memory businesses the fastest to centers. we our I the is fraud with computing life-threatening to new and flash Bottom data becoming high-performance and And with cloud the which fast this processed. coaching storage, in memory tailored to solutions as needs business consumers Whether requires transactions is more think truly to such provide And training that data computing storage in individuals data AI realize well we hyperscale this and as sector, memory realtime fast realtime means you DRAM and where absolutely through go and are are It centers. financial to fast models. DRAM. or alike, levels from that be growth and education essential starting new and these barely training needs for to and be full analytics, applications diseases. the are the trend more and at line driving of as business processed of in individual to millions or model going AI, of impact to cloud and toward and more or treating

server by with So to X terabyte server XXXX project server something storage, we at you XXX when look XXXX gigabytes terabyte average flash you in Similarly, by trends, tremendous seeing look that XXXX. if at timeframe. And to gigabytes if each we XXX are X.X XXXX, about average about going like per per growth. growing

were in talked memory to as massive, hyperscale secular are at script my World well Mobile and AI models these AR actually So that Similarly, storage. that I being and as SDR leverage new our in about leverage flash VR trends for in XK for into Congress, application mobile, capabilities introduced introduced demand that even built it. several and going processors that unit computing that the for are mobile phone have cloud the

are and memory. data-intensive run how performance to you're So requires to of high of much imagine now gigabyte then order lot being X just DRAM now gigabyte X And users experience. applications provide starting the smooth see in in phone. That phones,

said driving my the make even memory autonomous again timeframe. fast trend kind center mobile driver talking well. efficient autonomous also So of to is in barely DRAM it It's large safe with and comfortable mean, of large whole to of is then driving pundits driver on And a memory. and taxis, are means, capacities maybe I starting. another continuing average all course, and is decisions I realtime being intercepting as And increase industry wheels. data about for XXXX-XXXX And as requiring autonomous flash driving for remarks, providing introduced in robo more experience. driving the

I and VR these So features. with applications. are continue a these other low-power indicated, I are features gaming DRAM nature increases these very I there of our trends solutions we really with markets all of which And increasingly DRAM, in the DRAM ahead. will of are for portfolio PCs And industrial positioned important and in focusing years multitude well continuing and competitiveness, on X.X believe initiatives. for massive to for with more mean, as cost product And ones, what are mega across are secular technology becoming DRAM. as course, advancements course, our are these in well demand multiple capacity average strong drive

Rajvindra Gill

That's very Sanjay. helpful,

XX% put on that Last rate the a about little now were could quarter supply. As temporary tightness bit of talk wondering a talk that a was Can my this client follow-up, your we're revenue a of SSD year? they specifically? for about you you into up SSD about attach year-over-year. because little if year, pause I was

Sanjay Mehrotra

down rates going and as last the to of of mean, XX% flash as computing, severely client slow maybe And somewhat notebook towards and XX%. constrained higher computers. SSDs XX% rate towards computing I in SSD in capacities did maybe well XXXX, cash the XX% around slow that march SSDs client attach year's was in for down in

next timeframe rate the to XXXX-XXXX toward this Over attach for XX%-plus SSD. continue expected to few years, by to go is

client, is a applications. driver talked large as And we all the SSDs of future So these in enterprise markets SSD we computing our of course, gain opportunities in to again, our focused significant this market. as the consumer product at growth well We SSDs. across-the-board on we progress And in in SSDs roadmap. about expanding look share portfolio of client continue to for our are on, execute further in of as

Operator

Our comes next question of Citi. from from the Danely Chris line

Unidentified Analyst

for question in M&A context fit Micron provider? NAND how This of would to the on Loeb [ph] talk into wanting And you the a would your line My the what be plan does for Wayne is plans Chris when your something? Danely. about acquisitions, is buy be criteria solution that make you

Sanjay Mehrotra

on again, initiatives And for to this rule of capabilities kind acquisition course, anything we'll out, continuing with we any future, core for not we'll M&A in future, terms expand always of course, of market not the in And looking matters technologies are the may of ROI But focused on for we to that point. the opportunities. do product on look we opportunities have and We're of very any pleased of advance speculating Micron. always leveraging initiatives. entertain be not to our value going course, solution. at speculate the course, the portfolio M&A growth but of respect we here toward in with And to

Unidentified Analyst

this NAND reductions follow-up a question, and Micron's DRAM As cost can year? are you talk about for what projected

Sanjay Mehrotra

that good tell we provide is can reductions don't we specifics on you progress what So technology. making on cost I our but very are

And ramped to XX-layer I our history that we mature use technology have yield our indicated, similarly, well XX-nanometer well do in on in yields, well. achieved technology, technology, to of mature our continuing, we has the as ramp mean, and the company. DRAM it fastest to rather XX we As the we DRAM course, very are of

at the cost course, pleased very to costs. technology costs SSD of as focus very products. advancing progress on focused much our are on we with such technology products nonmemory also and nodes And level, So our and continuing our next-generation in nonmemory continuing

that progress making into of all good provided. is our So baked guidance that and gross we margin have

Operator

question Delaney of from line Goldman the next comes Sachs. Our from Mark

Mark Delaney

you detail scrap more growing compared with issue the a line hope production? in us quarter. to output guidance quarter about wafers reconcile to nitrogen about I DRAM little question, you you idle that bit can year have help or bit mentioned. for industry can last a you little Did comment next And with full the just about less the First now

me. think, slightly Micron -- going below, definitely to excuse was grow before I

Sanjay Mehrotra

So this vapors. has not or maintenance issue caused slowed idled production. down It nitrogen trapping has of

to DRAM we in As estimate output. our our that said, for quarter's output of calendar as this X% effect in that impacting And well. line with of XX%, remains it's XXXX, expectation and year X% growth respect production industry our already is included this to with of the

Mark Delaney

full Is a this the in nitrogen that the now industry it assume Micron despite with growing fair Is for nanometer to issue? year is better how XX line yield?

Sanjay Mehrotra

on as line that our well node the and production with as is node. of the Yes, is, XX-nanometer XX course, to our industry that expected output result of is excellent a yield correct as grow that nanometer in

Mark Delaney

you I Okay. as of parse about too and getting net was Micron, for had nodes one for lot company need been And range. space factory wafer a I the is strategy new because commented XX% understood as clean of all don't Day. the I to keep its that that starts closely, you about extra the CapEx-to-sales think could. I me, last trying if words rooms. there's the the flat low associated DRAM other want XX% Analyst and to for in then costs need having new it But question with of it, a Sanjay, these to target

managing Just given is this CapEx your the about that CapEx? its thinking enabling net and how to toward year about higher comments Micron, thinking the change in more just thinking really there of starts how is about need strategy of about end a the next expensive? there it's coming in change the terms be of any is comments And ratio, those range getting getting wafer about DRAM? are nodes in Micron we which about Or to --

Sanjay Mehrotra

will at if of and Micron's at the Micron's few the that well. Micron's of look low over those last in CapEx, revenue you few years, think last last look is I few XX% as and the range years course you you look at you CapEx, see years over revenue

actually So also. and you And look been what over at we course the if that range is the years. itself fact, fairly you the of you with over few course is actually in said at you the players of see has industry the the and few that last what have look same that, here the well as industry for CapEx, years, look at of will industry the today revenue last at case Micron in the average consistent

our of own on terms in So our spend strategy is transitions. focused CapEx absolutely for technology accelerating

capacity, geared is us. wafer it for DRAM transition our NAND cost-effective not technology production toward capacity nodes about toward And for and is our CapEx products. technology So realizing increase more advance

Operator

next line Karl comes from the of Our question Company. and Cowen Ackerman from

Karl Ackerman

DRAM that is you know Dave, signs beginning questions, We PC My welcome you mobile that what in if please. than look all assess that is to higher are please. curious, question DRAM I DRAM price particularly to I for two some I more to NAND from demand. on team. to have sensitive more first ASPs, the environments? demand demand but have destruction than a inelastic hyperscale see are environments follow-up, and in was are

Sanjay Mehrotra

the totally I to didn't sorry. So me? can I'm you clarify the question. question get

Karl Ackerman

I'm demand ASPs over next Yes, destruction demand few issue? an higher PC we from and the DRAM environments there potential be assess quarters, if in the just were to how curious should mobile in

Sanjay Mehrotra

more that DRAM. of the is about business we the in absolutely enables. absolutely all require is experience XD gaming, realize it that I and users VR, to data-intensive essential seamless to So -- what I such experience DRAM think phones, applications is AR, in requires models experiences, it experience talked expecting mobile these have Whether the multitude applications that

model essential. model in it it's not that less the DRAM I good same a with still mean, have can and DRAM a expect like users less experience. it So in you a offer it, with will a high-end is

models And hyperscale talked they about become imagine as can end what a that data-intensive data their really already element for mobile. same, and their has at they earlier, essential capacity a enabler into look I When DRAM enable of So the knows for customers, centers. and I of retailer being what goes on and retail needs applications. those retailers, are very consumer are mean, the a built store all about key consumer.

realtime needs has DRAM means, which requires lot means that again, realtime memory. retail, data been it that which fast, processed AI more of All applications, -- of for

cost it when hyperscale about centers, not anymore. it's look at is actually, So data of DRAM the you

applications to I any these in it the hyperscalers is DRAM per enables of bit. far cloud excess of think aspect price that value and

So different in part. is has DRAM become very from really time the This any past. an essential

David Zinsner

indicator DRAM demand is best this strong DRAM pricing the and that is is right strong now. And of

Karl Ackerman

helpful. That's

we on next I trajectory my for quarters. of could follow-up, about comments few was As OpEx hoping think spending you the as your elaborate the for

Elpida from XX Specifically, maybe do planned or balance together savings the timing coming Micron XD for assumptions you reinvesting plan make OpEx the think And when the first QLC we you time expect should on any NAND of for of DRAM XX expenses how achieve XXXX? and the we on development? prequalification about deployment to for for

David Zinsner

of and kind me the back go sure let So to clear. make it's commentary

quarter. on the of of the kind continues qualifications of So of kind we second Those experienced around in in kind expenses over the of time. of the most together, that technologies came quarter. all quarter, various second it third vary And kind increase into was all

be a to kind pretty activity happens is couple just this of of heavy. which so quarters And in that

lift set portion settle are I experiencing of in come the next back expect of it kind qualifications again. will and of when it would that required, of we're to a so down. kind up expenses, of And And kind

our of We'll million ourselves. on relate was quarter, half effect the us piece the about we're and that hit About to that other really have as $XX quarter. fourth-generation in the that the announced second of in quarter's earlier, expenses we third quarter. The full XD where, taking NAND on full a

million lift second $XX $XX the about So in quarter in million the quarter. left third and

Operator

from next the Our of comes line Gerra Baird. Tristan from question

Tristan Gerra

look based continued outlook the at the we supply/demand on of the half you 'XX? in the second Should NAND the demand data of you the see to rest calendar in should initial that currently strong for how trends pricing continuing for we center, see expect stabilize? commentary flash Any that Given year?

Sanjay Mehrotra

calendar or So we is are market drive not trends going more somewhat what That the or you industry have -- but more to client available, end that as as The such part can that that flash aspect changes. in penetration pricing SSDs thing quarter. imaging it And to be well of comment center NAND important we go an industry becomes data tends its value in drives in deeper proposition devices applications. in as I certain even stronger of first USB supply does in most as at forward, retail. as look to cards gives enterprise is the seasonal tell and on

expanding packages which And what are this where course Micron increase as well. in is with such our DRAM-based discrete of as of in increase of multichip opportunities our So that with average mobile with is I flash is are expand continue and talked NAND capacities course, to well and stages customers. shares packages as uniquely And UFS the about our of we NAND, we well expect smartphones, year. during NAND qualification the the as the of solutions phones, and in our DRAM multichip NAND solutions portfolio positioned to that

industry look business revenue. product very because the focused the of qualifications we customers with part those drivers for ultimately on growing introductions our toward execution of will drive of ahead NAND opportunities and as our NAND high-value year solutions success NAND new for And all our the year our mix remainder for of the here. year, at strong in with and calendar So demand

Tristan Gerra

And useful. That's is that is follow-up, calendar growth rate it then that quick fair NAND again double-digit center better in possible to year? in the this for assume as data demand a high something Okay. is for

Sanjay Mehrotra

mind, center for year, industry. Keep center faster the XX% in same is the for expected consumption absolutely, or center, is demand to higher. SSDs be of average than calendar XX%, where Yes, range bit of thing for as in will data Basically, NAND grow this data the well. a data client in

Operator

the of Our Hosseini line from Mehdi next question from SIG. comes

Mehdi Hosseini

Sanjay, have follow-up. a I

and excess DRAM DRAM just the keeping as industry opportunities industry to You cost-effective just margin capitalize same enterprise the customers in the follow-up. most are discussing to the we business the some their navigate At the up capacity, avoid is XX%; And and trying what's up NAND and making move the been assuming others stack. gross in stack. And the XX% in and gross bit the your focus not rational also XX%, XX% and is? with of time, moving in wondering, and have I I'm have wrong is to can't Your that memory on the is profile? why a margin margin on way

Sanjay Mehrotra

revenue, of strengthen DRAM market about NAND. competitive All that to mean far So And the have revenue. the competitiveness increase is solutions -- course, of let our things high-value high-value managed we as opportunity that mix and course of over of And strategy the products DRAM NAND and well such provide to here. our excited as management clear gives well the as to that solutions solutions. as solutions NAND been in in me we unique are are because for more as by so and very have both we about be more continue and opportunities we the talking today's solution our such last us SSDs that for minutes XX our cost needing a smartphones

strengthening in capabilities the cost the -- nobody portfolio are core these absolutely is cost taking DRAM solutions. reductions, And there no rest is to I NAND, implied focus the on of our so on company that drive their us. on competition high-value engine in for our with we and up regards catch of we but of leveraging eye doubt strengthen focused So the have have the off we greater relentless execution that the opportunity the have the ball through ahead opportunity demonstrated already strong It's and us. even ahead of results far there is tremendous and

Mehdi Hosseini

and you? Is either lowest think SSD. there discuss particular technologies? about NAND we displace penetrate recently product SATA you QLC due or XD a to introduced gigabyte cost, how costs, its way that the XX-layer any existing should qualitatively per this you to And quantify offers of cost terms In ability, can

Sanjay Mehrotra

what starting and an I is a before, mean, said it is QLC years Micron QLC SATA more as we And certainly opportunity, a like the opportunity not in recently is SSD. for So development XXXX ahead, introduced the XXXX stages. phenomena. something we in XXXX that that's is exciting bit XX-layer have TLC in is And timeframe.

Mehdi Hosseini

per just But you number, this a less give offer $X.XX should we cost? of customer could assume to than offers going it a gigabyte I'm still perhaps, that you,

Sanjay Mehrotra

can course, somewhat future, that value get cost our write will of develop solutions profitable QLC. build discussions. toward of not them value of in solutions, bringing into these in would get toward goal pricing especially very pricing going applications. be don't well. I'm focus, to into is be a -- our or of speculate customers going the to in for And balanced QLC to value intensive that And going read fashion course, our in and we build these terms of that the be, to and applications solutions We in aspects market, storage drive as selling so more the are strong these high-capacity

Operator

Securities. Our Rosenblatt from the line next Mosesmann question comes from of Hans

Hans Mosesmann

clarify, a market? I in before concise. Are question just or And have DRAM more NAND any the I'll you despeccing it just can you I if somebody follow-up. make seeing but think Sanjay, asked

Sanjay Mehrotra

the We're go not seeing given any capacity despeccing. in arena. end requirements the the If markets to again, continue application, of anything, average all nature up

Hans Mosesmann

midterm expect Okay. DRAM the you to hit of more many you transitions have if industry XY before And or then you will? do and or longer-term a node more the a world, half how After follow-up, wall, you a question. in transitions

Sanjay Mehrotra

continue DRAM technologies have And are look for to well. at engineers further opportunities about engineers, technology We in and scaling. our always our talked on the concurrently, XZ that. on And of node advanced of working course, as other working we future are

Hans Mosesmann

there's XZ point? after this But Okay. at no letter

Sanjay Mehrotra

alphabet no Z. after letter the in is There

Hans Mosesmann

you XZb or plus, plus. can or add plus You plus, can plus, go a to

Sanjay Mehrotra

you up Thank you. We'll suggestion. on take your

Operator

Rakesh line the of question And our comes Vijay from from final Mizuho.

Vijay Rakesh

enterprise. was and XX% Just good on wondering mentioned percent of NAND the it NAND grew what year-on-year your side, know I seeing I you SSDs? traction was

David Zinsner

We don't give breakdown. that

Vijay Rakesh

away? And on the go ramp it. you do crosspoint. you to just margins. I bit what know think be -- wondering, talked would proportion that by end There's you of NAND? as the the Got was When see do that And by about drag start drag look I a at of XD you year-end, your

David Zinsner

So XD in sometime -- crosspoint products in calendar come to are expected year XXXX. out

that we'll those sometimes -- will obviously have underloading the take our some We have wafers -- help would of It's so might charges. possible on of that partner the underutilization.

XXXX, start as help wafers release we'll products, to those we out that late about course, some will those Of to start the of build as and on underutilizations well.

Sanjay Mehrotra

SSD. earlier And I want regarding your to comment on question just

with the clearly, the Of portfolio. pleased very of it's SSD fast our our made mix of increasing we don't in that and SSD large And provide in we progress revenue. but course, portion increasingly is have the growing specifics

Operator

This the any like session. to for back hand I'd does the further to conclude program remarks. question-and-answer management

Shanye Hudson

Thanks, Jonathan.

be I'd can for interest found As you. this always, remind that website webcast of Micron. you Relations as we a replay the Investor our as appreciate the well remarks support on a your prepared of Thank copy section and later afternoon.

Operator

Technology's call. Thank you. This release quarter conference today's financial concludes Micron XXXX second

disconnect. now may You

Micron Technology (MU) 22 Mar 182018 Q2 Earnings call transcript