MU - Earnings call transcript Q3 2022 | Micron Technology, Inc.

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Operator

Thank you for standing by, and welcome to Micron Technology’s Fiscal Third Quarter 2022 Financial Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions] I would now like to hand the call over to Farhan Ahmad, Vice President, Investor Relations.

Farhan Ahmad

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

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

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

You at Twitter can MicronTech. follow us also on

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

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

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

Sanjay Mehrotra

records execution revenue team’s for the Micron profitability auto, and SSDs everyone. afternoon, flow, free markets, our product achieved technology strong networking industrial Good with and excellent and industry-leading enabled revenue client. in Micron and by portfolio. data Farhan. delivered and record both in cash center you, quarterly our and Thank

Storage and Business hit revenues revenue, Business delivered also and record Unit NAND our all-time quarterly business highs. Unit Our Embedded NAND

and Our chain control are China, delivered both which as use X-alpha continue headwinds demand several qualify side are impacting and industry and on despite side. to these progressing well demand the NAND team of the our COVID-XX The supply that results excellent impacted XXX-layer business DRAM we supply Micron challenges products and ramps the these nodes. quarters ahead measures QX consumer consequently fiscal and the in outlook. and There inventory-related our new industry

and about is storage, DRAM and represented confident industry However, remain the position of memory opportunity, attractiveness our strong we execution for our the capabilities, market competitive financial NAND demand in cross-cycle model. and Micron’s and excellent both Micron the secular leading and X-alpha continue is we ramp lead QX, also In industry, several DRAM, into and DRAM the mix. X-alpha node in the in are largest this to our shipment fiscal our quarters well-poised node of XXXX. ahead calendar technology,

node, calendar previously track contributing to is of bit competitive FQX, on node newest our portfolio, end in fiscal a product to node qualifications. important product manufacturing and several NAND, to majority mix QX. achieved ramp is in reached This of structure the NAND X-beta, sales, our cost XXX-layer industry-leading in XXX-layer technology XXXX. Our In continues shipments across in having our the grow by of we

record China output NAND by that of from industry, the to control chain, electronics end pressures; continue we improvements inflationary challenges this quarterly progress DRAM to excellent the the making driven outpace also XXXX. assembly supply those QX, stemming enabled by Micron’s are fabs measures calendar production the cost XXX-layer our for supply cost of X-alpha and there our We on our challenges reductions XXX-layer and execution COVID-XX strong supporting are nodes. industry in record chain productivity well-executed year, expect created and in global excellent the our of revenue. ramp world-class ramp Despite to in node and expect fiscal Across however,

China However, to these in COVID-XX QX measures subcontractors and outsourced to fiscal led impacted control results. our assembly test some impact and

to cloud we secular the broader and ongoing memory growth adoption, our EVs to markets. XG are outpace storage several enabling product offered become connectivity by drivers, end established momentum markets. significantly has demand turning product attractive Micron’s Now industry and stronger, AI, strong industry. semiconductor in the the ubiquitous and portfolio have

markets. stable to of the driving revenue of XX XX We to to split end XX a to Several shift in markets favor stable mature growth are growth graphics of is and markets. toward a expected more fiscal mobile, shift, also data industrial, higher more portfolio Fiscal markets mix and consumer networking in more exhibit favor XXXX’s higher XX also and split by profitability. the XXXX, auto, center, these PC

sequentially growth second new world it cloud more of In that growth. and product year-over-year. ensures than execution center revenue is the year-over-year Our center strong memory AI the from driven machine-learning the end ways customer achieved macroeconomic growth pare the component We calendar center milestones. well remain In shortages workloads the to largest have achieved Data record this DDRX; demand investing revenue Despite launches fiscal memory-intensive fiscal efficiency around shipments of through driven expectations. and QX, by over enterprise non-memory and of of inventory QX in revenue server fiscal in this HBMXE, demand, of driving storage improving center product data several of prior rapid a half is extracting DDRX the by the quarter. Data in AI and we and qualifications value and primary XXXX, will reflect product and delays the and and in grew the in data, for industry competitive of advantage. new fiscal ramp Corporations customer versus are QX transformation. workloads. volume solid by expected more Micron portfolio categories, the memory and digitization one today, slowed some XX% approach double-digit strong strong a in toward began end to new third to sustain Data storage decade. remains CPU percentage and wanting and due seeing concerns. of continues their the to we however, the robust customers growth rollout SSDs, and lead platforms CapEx the we end doubled one are back OEM market fastest-growing

help center XXX-layer product XXX-layer world’s data volume completed factors In mid-teens we We QX, OEMs. revenue client driven our strong and qualifications in various are and center data category. of already fiscal we range SSD. excited will by three by SSD, SATA sequentially, in are demand sustain SSDs, which consumer reception shipments fiscal first launched the growth production, QX, the achieved in the with gains industry-leading impacted in PC recently A our We this share have of in industry NVMe geographies. leadership number client which percentage in DRAM

calendar calendar PC nearly As sales XXXX calendar This year. start industry XX% sales to from our forecast is year-over-year unit the in and consequence, flat strong sales a calendar XXXX the to unit XXXX. decline of for this forecast PC unit by very of now at roughly expected compares customer an

growth trends up as to Micron Apple’s shift architectures which strong DRAM. a well-positioned is PC expect storage content by to enterprise gigabyte features Ultra remain mix calendar has in portfolio and in toward MX platform, and XXXX, memory such this PCs XXX increasing We driven per content healthy and of in a the unit new market. product

DDRX-based of the availability as customers multiple bill non-memory leading launch Increased will improve expect modules. are to materials client We continue DDRX transition next-generation DDRX our also notebooks. to our revenue ship and to ability grow of

addition, in relationships. Micron’s In by we lead fiscal percentage of The and other strong to In per and this memory bit performance. a industry XX bandwidth QX, twice percentage at the GDDRXX continues to to technology than in products industry and shipments in level XXX-layer PAMX fiscal output features is sequentially fiscal the GDDRXX QLC signal No strength groundbreaking capability peak which gigabit vendor Micron’s performance the as offers gigabit graphics. of graphics transmission a revenue previous beyond. second the Xz customer double-digit possible We year-over-year, performance to rate announced and XX client QX, our QLC by be or and in generation. Micron continue capacity SSD driven Xy expect QX made increase leader new the of grew higher of XX% up technology. of volume

due We to and revenue meaningfully also strong our sales QX of quarter-over-quarter volume partnerships to GDDRX year-over-year expectations our shipments began newest XX declined product Xz customer Fiscal largest Smartphone customers. calendar grew have for but XXXX. slightly unit execution. product declined gigabit graphics mobile

XG percentage industry earlier year. growth. are XXXX, to penetration expected percent and and XG mid-single-digits well unit in expectation the year projecting of this The the mid-single-digit range growth the NAND customer grow volume smartphone by unit DRAM We unit of decline sales year-over-year higher smartphone calendar in reach now are and will units XX% to content. of TAM also drive approximately below

qualifications deliver first X-alpha customer industry’s on We In with ramp continue key LPDDRX. to leadership leading QX, we and X-alpha expanded strong our ramps fiscal our mobile mobile nodes. the product LPDRAM of

has demand featuring the XXX-layer BMW addition, and and through sedan, announcements higher in changes SUV F-XXX in We EQE mobile achieved In adopt driven architectural there by in ADAS, markets Micron In auto profile gross stability production. content new constrained were significant and QX, been markets, end both. quality market our These the margin auto content-rich we of that support remains leader also record including cycle. made NAND growth ADAS, NAND see to in electric fast-growing EVs growth vehicles. robust Mercedes and the robust Auto revenue as share unit industrial Ford QX, up fiscal bit fiscal by and shipments. iXX. and Lightning, several the OEMs over is XX% EQS exhibit of auto infotainment their

overall in strength and auto to broad-based CAGR long-term record QX, the demonstrating roughly IoT that the NAND DRAM increasingly in expect achieved Industrial twice strong a markets, market fiscal growth growth and of in our become and this revenue consequently important. end various the CAGR We market NAND DRAM bit will with is market have applications.

growth tailwinds secular customers digitization. increasing from as drivers and in see industrial to factory continue automation invest We

Turning outlook. to the market

in of of consumer expectations consumer we our been have demand attributable PC impacted a smartphone. Near the significant in weakness the in XXXX bit industry growth macroeconomic PC primarily calendar industry world. inventories, bit in primarily and since demand the and XXXX. spending exacerbated for half and rising customers. saw is smartphone, COVID-XX we customers, the Several end calendar Our the war, caution in China, by in Russia-Ukraine fiscal and have the markets China to around These mostly have consumer including challenges and earnings place for markets, last certain environment end expect QX, also weakness control moderated their to take near-term in these amongst adjusting chain demand, reduction call. inflation customers, some measures some are creating supply adjustments second

be of long-term bit DRAM cloud, While bit for consumer CAGRs demand end and high-XXs of year-over-year to markets of industrial trends mobile, resilience. for and unchanged expectations. industry secular showing demand weakness, weaker calendar demand now the Despite are and weakened, remains near-term in half in demand DRAM and below and we NAND. markets second NAND XXXX percentage CAGR the view networking, remain mid-to-high-teens automotive Due strong, the XXXX, has growth demand expect the to from percentage prior calendar long-term PC our

supply. to Turning

discipline, use Given manage to are and protect immediate action supply the through period we weakness. To change growth to profitability, pricing trajectory. in a demand reduce taking buffer navigate this our of as will we capacity inventory utilization, market maintain conditions,

industry reductions in for DRAM year. are expected part impacted. Additionally, will shipment and supply supply bit are Manufacturing supply to equipment new to expect enable approach to CapEx over reduce of fiscal Murphy, prior year-over-year. it growth limit the XXXX nodes we and all discipline CapEx supply wafer challenges of being us technology decline This our These of evident growth demand. the fab XXXX supply fiscal also now help fiscal over inventory wafer equipment and turn for the some in to supply level fab the planning impact Overall I market versus will the a next Chief ramping is will some Financial now use quarters. offset to will next our XXXX industry few weaker demand delays, year of reduced Officer. for Micron’s we industry in plans, in Mark equipment

Mark Murphy

was revenue $X.X markets. fiscal strong DRAM Thanks, in and end Sanjay. up sequentially revenue year-over-year. Growth over NAND bit was by XX% bit DRAM declined Total strong record QX billion QX free total Fiscal shipments cash and marked was Sequential while Micron most quarterly increased billion, XX% billion, revenue of up of QX Fiscal QX, revenue XX% $X.X ASPs slightly billion, results up fiscal NAND revenue. delivered by XX% XX% representing XX% of was declined sequentially across and flow. $X.X Sequentially, the slightly. $X.X revenue year-over-year. revenue year-over-year. and in and representing XX% was slightly. ASPs Micron’s increased revenue. XX% shipments high-teens increased increased up total was percent, XX% sequentially

Revenue in challenging the deliver billion, SSD achieved highs. XX% trends up was center Now sequential Business revenue turning Networking center, to contributed year-over-year and sequentially all-time and revenue, environment. down and to Unit smartphone year-over-year. Business Revenue more QX business year-over-year. and $X.X Storage execution growth. XX% center $X.X Business up both was Mobile and data We client Revenue Unit $X and sequential X% Strong fiscal XX% the unit. the record by up XX% demand X% Unit to sequentially revenue MBU momentum than billion, year-over-year. up sequentially our was SSD for with networking Data both Data up reaching doubled product for growth billion, revenues graphics and market year-over-year. allowed approximately a and Compute for SSD

below were the at of Finally, set automotive end of decline. benefited in down points Both quarter. technology NAND $X.X OpEx for of QX we record approximately $XX industrial Unit approximately XX guidance product in down year-over-year. million, the An low qualifications approximately variable QX and and from Operating mix achieved consolidated $XXX from revenue compensation. our the and was to fiscal revenues the up and million sequentially. range up basis sequentially the sequentially. records Business gross expenses XX% fiscal timing and Embedded XX% for margin contributed lower increasing XX.X%, The billion, the

were qualifications. OpEx actions increase resulting up was QX billion, operating the taking of due to approximately points margin basis in sequentially an in basis $X.XX up XXX market to an the quarter. basis $X and points technology the EBITDA year. QX approximately share earnings versus year. approximately per up EPS Fiscal resulting billion, XX.X%, product sequentially conditions, XX points Fiscal Although current expect margin up down from the over fiscal timing adjusted operating $X.XX, fiscal are points and of income Non-GAAP EBITDA OpEx QX of was to basis we prior sequentially light year-ago prior reduce from from we and XX.X%, of in $X.X in in XXX up QX in and XXX $X.XX

Turning in $X.X quarter. to $X.X during cash were capital We generated from Capital revenue. flows and representing billion billion in QX, cash fiscal of expenditures spending. operations the XX%

XXXX expect be CapEx approximately We $XX billion. fiscal to

was fiscal for flow cash free QX Our billion. $X.X

$X.X in returned have deployed Since our XXX repurchases During approximately of million an of shareholders QX, $XX share million at of we we average price shares billion per inception approximately $XXX share. the quarter, Including to or shares. completed XX.X fiscal program’s fiscal dividend payment, end toward QX. share repurchase million in through $X.X fiscal the we billion repurchasing XXXX the

at committed through expect quarterly more a share, prior dividends, directors July we the we shareholders generated to bigger on discounts as be trades on As discussed over XXth. at repurchases be repurchases. to to a intrinsic Board increase over we dividend and approved share record programmatic XXth of are of the the Day, July On opportunistic, of our XX% a to dividends to per returning $X.XXX free paid the of cash Share value. all shareholders stock of combination Investor will purchase to cycle both and and flow dividend,

XXX with cash down inventory average for inventory $X.X investments quarter. the was last days $XX.X ending of were of days liquidity. the from XXX of billion to billion, ended billion total quarter We $XX fiscal QX quarter days and Our and and

$X Our fiscal billion. QX was debt total

our project Now visibility. and business near-term objectives. in constructive; outlook impacting be pricing to We fiscal weakness the trends doesn’t from our turning and and remain for Long-term maintain and do our NAND to DRAM select walk fourth demand discipline for are sequential fiscal bit outlook however, we intend QX. quarter. both uncertainty macroeconomic away to which meet Currently, shipments pricing down market

the steps taking QX we to become more actions these guidance and these While of control as expect be fiscal in the With QX is and to OpEx in impact are all proactive fiscal fiscal limited factors to CapEx, year in we material mind, non-GAAP our ‘XX. for follows.

XX.X%, gross to margin to plus plus of or We be to expect revenue million; the in operating minus approximately $XXX basis $XX or or XXX billion, points; range plus expenses be billion, million. and minus minus $X.XX be $X.X

X% free tax expect for X.XX fully minus strong deliver of or year fiscal profitability flow fiscal rate on headwinds be QX, and our track in diluted revenue QX. record share plus a to billion QX non-GAAP results on $X.XX, fiscal are closing, solid EPS count we our approximately In XXXX. be and outlook. approximately fiscal We shares, $X.XX. our remain to expect Based impacting delivered We to cash we but near-term in

we financial near project event Beyond areas as cross-cycle revenue our and of our XX% that of free term, of for robust and and we business: strong cash DRAM operating the Micron. data Day key Investor approximately the other At the XX%, digits, attributes growth Company support exceed growth reflects margins a strong cross-cycle performance financial robust by model center, out margins high revenues. CAGR flow drivers healthy month, cross-cycle secular laid automotive a last that NAND of growth single to such and

more shares aggressively back QX. we strength and will attractive financial balance to our it levels, at turn see to very as of long-term in the price share now and, current repurchase the I sheet, Sanjay. our Given intend outlook these fiscal

Sanjay Mehrotra

by continuing the an and frontiers memory portion puts and possible with XXXX the aspects is to memory The are billion The what is us grow of increasing on long-term to business excellent near-term the all semiconductor market of in become we that of technology, Mark. leadership extremely an position Micron’s TAM and manufacturing are opportunity storage environment notwithstanding, within storage. you, market. our product $XXX capitalize and executing to well expected on and the extend control. to Thank

navigate to focused near-term generating and we cash us value supply headwinds, cross creating for discipline on shareholders and for today. continue through to free healthy Thanks appropriate flow take will remain and actions We joining exercise cycle. the

open now questions. will We for

Operator

comes from of [Operator question Harlan Instructions] first line Morgan. Our the JP Sur of

Harlan Sur

taking Good my question. afternoon. Thanks for

center as China guys from mean, the these are I -- your of the spending hearing CIOs and data pullback into get cloud and the providers, you channels strong. mentioned, elevated, you on the then, that there’s guys business, from segment? cloud a again, in service your within inventories strength your can cloud cloud U.S. that, pulling enterprise in continued back on the customers business, level the you outlook the Cloud spending within inventories are but to On Because Are enterprise remains feed discuss segment? that customers. that the seeing on pretty wanted But continue we’ve to dynamics similar that of heard And macro concerned in budgets. but side, kind supply the cloud cloud within also channel their at we’re views.

Sanjay Mehrotra

before Business the well. Officer for and Chief I that to Harlan, just question, wanted I And have we here Sumit as answer Vice Sadana, here President Executive question. our note the Thanks,

I would be the recall, add in may thought good color have specific environment us the him given it to questions. was As to Sumit market related you here in call. to earnings environment, last any the with And

the their There, the enterprise as noted macro some certain as seen as inventory you well have So, with shortages on concerns business. they particularly asked server regarding adjustment, the the given be respect we supply we question of environment yes, chain experiencing. side may that that OEM to

server However, as us well. healthy, end enterprise well is is end side side, be And on continues on healthy for the as relatively market demand cloud to cloud the the to cloud the that well. same OEM market demand healthy demand thing as

out some have from consumer respect overall down to of of plays memory levels specifically, the pre-COVID in investments well. in we their cloud and course, course, But elevated Sumit, as trend that of you in cloud at the carries a technology weakness inventory and investments inventory. earlier, important China, storage to data as And driving storage. between comment level clip the be versus do weakness China of also demand China and and I uncertainties terms macroeconomic what’s world. of continue terms and digitization today have world of cloud we is be versus But really strong course, infrastructure, the are on use customers pointed level seen parts particularly not with And U.S., efficiency pre-COVID the of at bodes greater out as businesses, in again, Of continued in of and CapEx overall for of drive healthy well to the demand. well to the memory backdrop the this and well U.S. we is breaking that as point. overall want across that’s in side inventory? trends think of productivity And adoption greater and certainly that any in helpful on the is the with it China other the where in industries, help channel facing add end and to

Sumit Sadana

complete customers. had have manage cards NIC customers products getting these the strategies hands there impacted their is I to higher challenges in inventory. focus on better and Sanjay and shortage said, of data how the customer of smaller they it the is challenges that relatively center some compared are on data highlighted. consumer And I channel think business the The a on Yes. on have as some business the center But mean, to the cloud that bigger more customers server are different particular than place cloud side to Sanjay side pre-COVID. on builds, the the smaller course, compared their more side in was level, where getting channel customers the of on generally different inventory products in that like

Sanjay Mehrotra

mean tell in with here, you I our partners very work customers our ecosystem China U.S. I’ll team engage here in and I mean, with we well worldwide. customers. that Harlan, very the here as closely myself, we Sumit, really closely our as And across

course, how environment on tabs we is of the are So, keeping business close evolving.

Operator

from C.J. comes question Evercore. next Muse of Our

C.J. Muse

I both and question, you of thinking the for in NAND, larger DRAM be see it’s of correction and magnitude it? the here maybe guess, DRAM think first to how that for out? to right the can about side much Is speak down I’m kind bits that playing on assuming a impact the you should you that the low teens. way

Sanjay Mehrotra

adjustments So certainly, in in market. on inventory are smartphone the -- happening of the the terms that and primarily PC

we Of below high definitely year, well said are in the we we course, as to for had it teens. -- NAND terms happening demand DRAM of as earlier those for well see mid-teens And term as inventory provided longer this as overall guidance in in the clearly, below DRAMs CAGR DRAM. projection that adjustments for have as

year-over-year earlier PC had that market. trajectory. are ‘XX the that sales of that at smartphone we year was that below see with same that. projecting be nearly respect in just we unit high we below in growth, year of digits. in down smartphone we that and that mind decline XXs, coming ‘XX And in year digits the terms to estimation to that inventory both And year-over-year happening earlier will in worldwide in calendar for total mid-single now to and grow calendar of in start now, at expected see keep PC year and in in is of said compared So, NAND, thing terms XX%. a Again, mid-single the adjustments CAGR one looking is are the PC Similarly,

in smartphones swing a well. of XX% So, as

units, in versus to bits, as into similarly change terms units course, XX markets, were a storage million for like happening the versus well half translate projections as in expectations PC the worldwide this reduction and And let’s units the year. kind versus memory that prior of primarily in of in PC, DRAM represent demand and of is million half the clearly combined it of say, it for this earlier second reduction amounts terms earlier to of year expectation And smartphone. you two right? in the growth. If year-over-year resulting XXX year in demand NAND with So, smartphone in of in adjustment these total

C.J. Muse

helpful. Very

of should As into in about Mark, lower how Can fiscal magnitude we there? idea give ‘XX. overall you the a fiscal think trending then, about follow-up, talked an ‘XX? And you CapEx trending WFE

Mark Murphy

Yes. C.J., expect as fiscal around at in the so mentioned to CapEx. we billion, prepared $XX total remarks, on ‘XX -- end

So that statements. uptick previous that’s And would be in consistent QX. with an

the off Now, WFE actively assumptions to previous coming view, confident with that down. say, versus supply here fiscal in bit down as as growth be you spend we’re group ‘XX. -- we’re working spend bring And sit will we today,

construction We’re also evaluating spend. and of other large areas

nodes, things. CapEx dynamic. We’re market shift production and looking to of number reduce And to is for drive utilization cost-effective a and more on doing some older supply nodes to use maintain the

WFE not point, just is to point this But at I’m at moving. that this we’re this it’s year-over-year. because reduction size time. still decline will So, going year the real next confident

Operator

of question from next Cowen Krish Company. Our and comes Sankar

Krish Sankar

have ones. quick I two

kind Sumit, I of different or of the Sanjay question. cloud asking one, way First have

PC seem slow, As year but center next data to mobile is it are the second said but optimistic high. you but like inventory the half and center mentioned, yet, cloud you drop, strong seems to about in remain also you XXXX, data

it which if consumer center is, is CapEx it data seems like So, spending a drift. slows,

this And one, then in a for for was on to why May quarter of love half half the second was second maybe hear Micron? quick the impact it of year? in what overall, the and you what China Mark drop think Shanghai trends, output U.S. COVID-XX cloud the question your quantify lockdown. way So, Is follow-up the there to thoughts means to it a

Sanjay Mehrotra

our earlier, on provided color view some So I cloud. regarding

that. Sumit, I the take on ask to think well. And maybe will just color some I you question as just can China further Sumit add

Sumit Sadana

sure. Yes,

So, on the Krish, quick very cloud discussion.

continues the to in the As for demand cloud services pretty be end in strong continue mentioned, robust. the Sanjay CapEx trends the to our growth services those cloud and for and space cloud be customers

the so, pointed And you to compared levels are out, mean, were course, they like higher I also where of pre-COVID. inventory

is their we remains pretty trends will if that tightening time. value become kind the if cloud more the means to there continue data, an some stabilize. from anything, belt seen to efficient, of be be extracting macroeconomic think environment to Now, it ways secular, spending environment things more strong. digitization competitive even as macroeconomic improve cause pretty to the continue. to But do to And how on trends modulate going become it Even going come look is are companies that impact, will back spending over to that this focus in profitable, for strongly positioning. their trends more cloud And

kind time of has are to But are things, macroeconomic on that a question. your depends how may have we going environment that those to to guidance pretty contemplating compared FQX China sustained Switching happen. through customers. environment impact staying significant of latest we provided. to a evolves, the lot why course, been we that’s were quarter FQX This when and trajectory with last our well So, to trajectory. feel the very that be China close our we our

XX% revenue by a approximately company-wide our Our the in come China revenue. has has consolidated down XX%. reduction roughly And China in view for reduction that revenue caused

It’s QX. and that environment COVID has the economy. driven And largely PC the weak the smartphone so, the different of weakness, been is of the China due to impact percolated weakness, there has that’s And general shutdowns, to consumer the substantial. pretty to parts course, impact by,

weak. environment economic the So, is

the conditions, know, quarters improve hopeful weakness feel like ahead. the improvement and unclear. demand But in of how Now, optimistic come that are the time, China economy, kind and the it issues The provide further that given to in in things. we stimulus does we that and improve in plays timing do tend consumer and you is as COVID-related back out financial China forthcoming with economy economic be that and stimulus remain to we the over that will of will

Operator

of next Timothy UBS. Our comes from question Arcuri

Timothy Arcuri

two had questions. I guess I

it bigger But that The I picture now The going the say of was buy -- one I stock first buyback But this is sort I guess back Mark. around guess you and you, question did quarter a opportunity more you in with for where you’re is. great. an to have had August.

of technology. think take cash balance leadership advantage I could have weakness? a of we sort significant to price you willing buy opportunistically of of You this back take be mean, of where in to that sort Company? of there Where would fairly is balance can you minimum terms cash the a a piece

Mark Murphy

comment Yes. on pace. about our definitively and not to Tim, going I’m rate

got cash. of of We’ve markets a As $XX.X about stronger in point a is there to here. what’s of I out, XX%. sheet $XX we than And that’s had that billion important investments billion you in liquidity, liquidity out, the position And as that which is point you great softer set bit above think a long-term sustain ever. is target the most balance we’re

that. is over We’re position. gross XX a on points low, in Leverage X.X% and cash net we’re

So, no out XXXX. near-term maturities, average debt maturity

shape. So great we’re in

think business. long I balance maintain to on sheet the to the want to term able of a we be focus

levels these focused high cash growth, importantly, just historically free share and we then on we’re flow levels, returning excess out, investment-grade shareholders opportunistic shareholders there, to from rating. increase. to price we did return in At third point repurchase cash quarter. And you to project As maintaining

So, higher I’d at a now quarter. have ample repurchase liquidity we rate to say, this

Timothy Arcuri

in And your data also, sort Cool. think that how in remain bet if holding around sort Thanks August? center you. keeping do guess, inventory I cloud for of bigger the What on the your will stay assume of about strategy you inventory how strong? should that. August does guidance some you about of And strong of believe and the think sort that between and we picture sort second for Mark, does for inventory balance some inventories question

Mark Murphy

in And heard about It’s talk this briefly Sanjay prepared remarks. Tim. his question, you a good

through inventory Our to bit supply is strategy a bit. reducing a did we as manage growth assumptions supply buffer about and talk

starting third sort in are place. this billion from softer We inventories, pretty down We good quarter ended $X.X XQ. of days days, in a period XXX the of XXX

it’s in that And will do as optimize So, leading built to much on flexibility this build to to we our some on of nodes. it inventories up cost-effective products. we quarter. want I expect go inventory, note, price work

earlier And the CapEx, where use optimize footprint it and build question, be year. decisions WFE next revisit long then, lower also to gives competitive so, some spend more it this a CJ’s us we And we defer to manufacturing can for that CapEx And can. time. we’ll inventory will confidence

it to in we’ll in quarter. -- So, and have develops we a up couple From days weeks the go fourth and the moves. market expect to there, of the see how way which it

have we’re adding stock better offsetting the pressure and and we more some of with days, that forth. complex We do but processing are cycle on so levels sort wafer also that time, lower -- module complex more are products

with number a days So, a we be talked we in I XXX high to -- around is uncomfortable the days level. past, about think we’ve that the that too start that’s would where

quarter, go see So, definitely in would from go up we’ll fourth there. levels the inventory then where and we

Operator

Our Arya of Bank from next question Vivek America. comes of

Vivek Arya

bottom calendar consumer you the can you this I’m at Sanjay, is the is half levels. continue or inventory the QX? headwinds do to that could risks into do and curious, of the during Because the of elevated cloud think year think outlook out QX the you extend cycle, also because play second mentioned

be So, I you down do more guide much as is, more likely flat, as sales sequentially? question to margins specific up guess, think and are you don’t a realize quarter my or out than QX I

Sanjay Mehrotra

of here. be So year. course But clearly, the in out second the I of themselves remarks prepared pointed these working to half don’t the QX we we guide expect as out that inventory adjustments to over

balance, here, I’ll that to the them question, -- begin in part PC We for once And to in environment. certain a when demand have are well, that customers taking the demand the about is out We to sharing will you taking inventory our past estimations takes segment, to pointed immediately growth the And last smartphone by a inventory in macroeconomic can like here of rapidly the uncertain for course, with work supply-demand look been normally are And It you And in what we but does see, uncertainties actions CapEx year. that Mark sometime just fiscal when we, as environment. demand. understand keep will out. versus that in with our out And return more earlier. when in we pointed to ‘XX address supply-demand importantly, be changing have at in and demand why, really that see our of using well. a we mind are out point And just think our primarily our we terms with and bringing to as market. in balance. when fiscal that’s adjustments of have couple their place then quarters has of history rebound, curtailing overall we from will that this to year adjustments we supply the plans ‘XX it the continue the ‘XX closely inventory it’s is down respect terms response fiscal next of is

important an We And has discipline also course, shown believe will sooner. in that as well. toward health that’s industry So, step. CapEx actions of that it returning DRAM has our industry contribute the

rapidly But well uncertain So, look, store demand sometime environment, highly industry supply environment. as again, this healthy will to changing as our I a out year fiscal a is expect rebound will that I that, there’s in would ‘XX demand point a level.

-- any course, are, responding see. terms changes we of in of and fast We

at and you again, important balance this on that pointing So side I product, strong is we from sheet, we of the well quarter really time. be emerge And other to mean, manufacturing, to stronger strong. downturn. this technology, Micron are customer think continues not also look any of specific to relationships poised are execution what’s our been course, I whether

really fast again, really our and end we understand can, positioning shared the out trends demand long and memory we plans long-term to as term. as segments long-term latest and well, the necessary working our closely So, are with pointed storage. absolutely Company for overall and the executing trends Sumit earlier, various market I bode adjusting in and with -- healthy well you, customers growth the as for as also trends And in the

Vivek Arya

of How you. Any that, how million, can into so much normal we much above $XXX of incremental rough headwind account? a cloud take of level, that is million? kind $XXX Thank inventory estimation is

Sanjay Mehrotra

details right? of it mean, Look, varies those really by customer So mean, you some customer, we I can’t give here. exactly to I

Operator

Ambrish Our next BMO. comes from Srivastava question of

Ambrish Srivastava

also respect much industry? the large way what so, least one demand, Sanjay, good down CapEx within how two heading demand heard ramping I supply that, to from from is supply ‘XX. financial at think and Because your the in think consistent be ago to production -- And What’s growth to or see seems you lowering growth? from to into fiscal will the about the production do the for growth, industry coming supply growth fiscal versus of the you’re discipline. think and week the With supply CapEx. a inventory competitors right be we meeting

think So, well, growth? participants the about should good had three Mark the what supply sheet the as for And to that’s part. how please. balance quick on I follow-up of a But production inventory -- we adding the then,

Sanjay Mehrotra

of Micron year DRAM more mean, mean, plans. well calendar time our around industry it, talking details in course, our I That cost I when And nodes, for to up appropriate be firming of September, highly production some us with So will But the thing as our process ‘XX. are will is as to FQX quarters inventory and call important note earnings in our more fiscal have ‘XX. we is the We are we our year look, with that is about ahead. we share the be effective. again, right? NAND several leading you

So, inventory. this highly cost-effective is a

Our manufacturing well. operations running are

et supply, be to we year the that bring CapEx demand our to fiscal inventory front-end demand ‘XX. in to what I production plans pointed how growth overall, positioned new and the earlier bring into of the will we’re So, sometime inventory continue out meet is course, to into this adjust balance technology as as ramps, well on and and fiscal ‘XX cetera, balance combination using which necessary that our wafer that’s of in and as

Ambrish Srivastava

still number Thank please? on percentage? you. Mark, year, the respect But quick for that so to one in ‘XX. the WFE us it. this be expected what’s the versus And plans non-WFE, a real I fact flux, And number give are you for can’t what’s Got the

Mark Murphy

the question. hear I’m I couldn’t sorry, Ambrish.

Ambrish Srivastava

front non-wafer spend the for versus end front wafer end this the what’s was, in CapEx year? question My Sorry.

Mark Murphy

of year-to-year the availability WFE, spend. I and is CapEx of development and depends and of is mix cycles, give an generally and product half other and because other CapEx between fab won’t half split Okay. the mix from manufacturing number exact Over the got I construction. on facilities factors. then, varies space

Ambrish Srivastava

when for will the about as you is is development, what well could what’s construction down looking construction well, kind of continue if to means -- think the take the or you So, as way as things you say everybody be right that to… playbook

Mark Murphy

We market Just though I commit the specific, to out and year-over-year to supply to down and that going would development. say we’re was how year-over-year. be down manufacturing, for bit addressing construction, did the at optimize nor forth, amount I footprint. plays look technology here on depending on on what not that’s WFE our go continuous did talking we process to spend. and levels growth That’s and continue inventory so of about a

is construction clear, that’s half, spend -- the sure again, and for So, WFE over assembly to just equipment test. R&D rest and make then spend and

Ambrish Srivastava

I Got Thank it. Thank you. apologize if again, comments. misinterpreted you. your And

Operator

Wells comes Please go of next Fargo. Aaron from ahead. Rakers question Our

Aaron Rakers

kind customers supply you correction at long-term all previously as through those the has that changed correction this amount quarters in back kind on agreements Have kind of you you’ve as committed Analyst you at at emphasized last your Have of changed gone curious, much pushed how of characterize line we’ve environment, couple and now? business all? downturn, these the How they had or commitments? this long-term taking terms of you from your of go of this guys. how we in through of I that Day, just sight established. discussions kind wanted to would the ask right I’m on of of

Sanjay Mehrotra

and have question, I it. address will great a That’s Sumit

Sumit Sadana

that. talk to about Happy Yes.

the talk shared agreements, take-or-pay more these meant in are past, to not long-term have out the quarters, about go be generally, in volume So, for and agreements, we as And I pointed quarter. and assumptions meant out on. planning four but so each

and purchase had to significant that are was there continue when spending of certain consumer our purchasing in customers shifts the is customers with causing But, possible. type press the world especially We as stick fast-changing to environment. smartphones, have established much based sometimes industry discussions. et the obviously such having assumptions We Then to exogenous possible different. PCs, LTAs electronics for to the cetera. customers ongoing it of that some the SKU, demand, were impact of situations happening are as the that et highlighting, agreements Sanjay extensive that in shock causing the to about happening, very is We with extraneous such environment cetera, the are the our events on our environment quarterly not unpredictable that dialogue the were when given products, and are around reductions that keep end

And has in is come up views best have center terms ourselves forward-looking of work is position where we recent to to how out that the I mentioned feel revenue data to We quarter purchasing had with like doubled best goal so, product their most our our in the of our the then and out year-on-year. with this customers just SSD that the approach momentum really played patterns. well. figure And

all momentum portfolio product of products. tremendous have We our across

We HBM are in shipping volume, products.

and power really low one world’s number in capability with the product, networking. DRAM share to DRAM auto, and strong have fastest mobile We automotive, market graphics first in industrial and

with So, all to customers. strengths these play our our

market more enable the focus helps steady more profitable, our transition strength we to That’s to more that where or more optimized pool. So, our own in and portfolio want time. portions improve our really improve stable with more customers our profit are areas are over business then position, make portfolio on. in of And they we the share because industry the profitable segments they where

engagement we customers. with then that those LTAs have goals to So, customers. we And drive the use longer-term that’s with that we have those

Operator

you for gentlemen, you. does time. Thank we Ladies participating. call. today’s conference have our That conclude reached and Thank

You may now disconnect.

Micron Technology (MU) 30 Jun 222022 Q3 Earnings call transcript