Earnings call transcript Q3 2023

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Operator

Thank you for standing by, and welcome to Micron's Third Quarter 2023 Financial Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

And now, I'd like to introduce your host for today's program, Farhan Ahmad, Vice President, Investor Relations. sir. ahead, go Please

Farhan Ahmad

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

call me CFO. the CEO, On with and President Mehrotra, Mark and our Murphy, our today are Sanjay

Investor Today's being audio slides. call at webcast our and is investors.micron.com, Relations from including site

addition, call. our results posted release has the prepared detailing along our website, with press remarks the been In quarterly on for this

be can otherwise to is at of on for a visit measures unless financial non-GAAP on on basis attending. information GAAP of results to presented most company, found the website. specified. discussion micron.com our reconciliation financial including Today's financial A you may quarter on We information be financial that non-GAAP conferences the current throughout encourage the website our we

follow MicronTech. at also can Twitter on us You

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

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

conform these actual under to the to duty statements update statements no are to of We any results. forward-looking

I'll now over turn call Sanjay. the to

Sanjay Mehrotra

everyone. you, Thank Farhan. afternoon, Good

customer memory growth industry production continue the with reduce the margin third cuts Micron to higher and revenue range, and demand, supply. EPS quarter above content of The improvement across delivered range. gross driving excess while industry within guidance our help are ongoing fiscal inventories

passed are As improving, have has year-on-year confidence pricing both a trends that bottom revenue for quarterly the growth. and industry and the revenue increased result, we

product markets, memory-centric growth and including portfolio well us leadership computing. technology AI and strengthening Our position across diverse

in calendar return XXXX levels see record more downturn, normalized profitability. expect we TAM of to a along this Beyond to with

Administration of and Micron of China the been impact Cyberspace uncertain the Micron's or by in customers, future on concerning infrastructure the contacted products. OEMs, by Several use the information China The including of of mobile government representatives have business May remains XX critical certain operators Micron decision fluid.

before, the discussed with mainland approximately Micron's China through distributors, Hong as worldwide in sales sales revenue including principal and as As direct a headquartered companies exposure. Micron's and quarter indirect remains for revenue accounts of Kong, well

is time Micron revenue outlook percentage approximately is to our to expects estimate and this variability. and NAND retain revenue, Micron's worldwide China-headquartered half our DRAM revenue, of quarter-to-quarter We impacting being share. impacted. slowing impact mitigate Micron's significant equates over long-term and working This of worldwide that currently recovery. at goal customer low is its which a of is risk double-digit that to headwind increased

Turning to technology. technology. DRAM lead Micron in to NAND and continues the both industry

We demand. are our technology supply while it bit investing reductions and reduce ramps align and our node start competitiveness wafer managing CapEx, prudently with to maintain to

in are products. well on prior ramp of along these specifications for them best-in-class the leadership DRAM of are nodes with been qualifications nodes product leveraged X-beta to a performance achieved yields, positioned any these will portfolio nodes than industry-leading DRAM QX, XXX-layer fiscal ramp NAND and the yield capability, Our that be world-class cost nodes. we power and provide has important XXXX. across and fiscal achieving several strong our NAND faster advanced and nodes These In and

and where preparation EUV introduction EUV-based ramp. progress toward good operating first capability we have our for making XXXX. in in X-gamma node manufactured the also installed are of node will We site, This in our be Taiwan already this

be support plans announced in from first the fab to with our company production. EUV Japan technology for Micron Japan, Hiroshima, will to to recently technology EUV bring government. to bring also the We Japanese

and assembly ability also support an we global advancing next in and long customer our announced operations. order portfolio product our are to In in the the in several our to network approximately our years packaging demand builds deliver China, on and Xi'an in extend test future. We significant Xi'an. in This of on $XXX million history of investment assembly, our over our investment test global operations

Xi'an have As Semiconductor a partner part Xi'an, of equipment of who to inside assembly the our has eight purchase operating years. last Powertech this our decided investment, facility we for been the

us, capabilities. We building from in also Xi'an Xi'an of time, new site provide from add will demand China to to allow over serve at our more customers the intend site. This product construct to the to more a space our

will In of we build facility new the for Gujarat a the support half India, decade. strong of to test and with this address government, assembly latter demand Indian in the

driven in We are increasing memory in in segment and high-bandwidth investments for Taiwan also assembly by wave. test AI demand the we our gear this up capacity for stronger as products

are continued normal markets. our in to their ago. consistent excess customer months Now QX. forecast now, in PC the six turning Customers smartphone our make end levels and to to segments close inventory in progress Most fiscal reducing inventories with

thereafter, traditional end also around of the unsustainable these significantly. center get or levels calendar improving purchase the inventory center additional prices which on at will before can these leverage inventory data Data somewhat prices, distorted and of year are deemed is be spending. growth by to to likely depending Some transient volumes levels, attempts rise customer normalize current and this customer to in

QX. memory be levels center mainstream in and the revenue industry for storage driving we depressed center, for demand lackluster. while cloud in to driven generative in server higher-than-expected enterprise QX, traditional In servers, fiscal applications data recovery AI from strong of AI saw is for acceleration continues adoption growth some recent fiscal in both sequential The demand and sales by data

products and capture innovative data-centric product both to opportunities inferencing. position AI growth and for Micron's computing portfolio and us from roadmap of architectures training

content. are dramatically demand parameters memory number exponentially growing of for AI models driving higher large Increasingly with an

times a regular of content As we three the server to have times DRAM have and NAND said content. six before, AI the eight servers

In DGX shows AI GHXXX workloads NVIDIA's provides higher striking substantially be; are support with which example by to that just the extends massive, footprint compute deploying AI is shared models of joint low-power some fact, A DRAM development project how capability can memory-intensive of supercluster, to it Micron's developers memory customers a that A class with ability enabled memory is space our memory companies majority XXXTB. giant server significant a between leadership applications. two content.

pioneer to our LP to consumption customers' this data innovation to support significant deliver solutions, reduction We initiatives. power DRAM are helping proud to green DDR-based center in a differentiated compared

seeing year, this generative for used AI. by driven High-bandwidth demand memory, very computing, in high demand is strong performance

HBMX technology, with power offering. We delivers bandwidth by begun X-beta closely The customers have response strong, consumption, we industry-leading packaging solutions our a has our are and competing differentiated than sampling and believe higher performance our working the other supported our HBMX and enabling customer innovations establishes and TSV, new in significantly product product solution. and benchmark been advanced

begin a this to achieve in fiscal ramp and product expect HBMX production XXXX to early for exciting meaningful calendar mass We in XXXX. revenues

DX, latest DDR is position Micron the in also has a the industry which memory. generation of transition strong to

Micron and DRAM of shipping are DX QX end Micron's customers. calendar fiscal more the industry. DX quarter Our expect data QX, shipments XXXX from we of the and to mid-calendar percentage X-alpha at over DX qualified than to XXXX of first modules DX versus volume center doubled to cross for has

progress AI. and making memory-intensive also a on for are die using that with XXX solution optimizes X-beta-based, DX XX We cost-of-ownership cost to like provide workloads our modules high-density lower customers good gigabit gigabyte performance a

in in the ramp to over modules high-density XXXX significant calendar these expect industry. with improvements cost We TSV-based QX expensive solutions of today's

XX workloads expensive high-density Our module gigabyte dual-die versus built delivers the more the gigabyte and TSV die, package-based XX volume shipping XXX of on X-alpha gigabit already technology, in for modules. majority is performance equivalent DX using

data our on portfolio SSDs, entire In demonstrating NAND, technology XXX-layer is product or center leadership. and Micron's XXX-layer now

fast center is strong key data-intensive a position data as these NAND and demand serve progress SSD, qualification we first QX, AI in support world's in at are to XXX-plus to AI for fiscal layer cluster In installations. customers proliferate. launched the applications We multiple storage

product a of already qualification critical have OEM passed server In fact, partner. this we at

versus We also center endurance our and offers SSD, extreme drives. superior affordability hard scalability launched data which

unit In the with levels decline XXXX. XXXX to below pre-COVID PC to expected units PCs, be PC percentage double-digit a in low seen we now year-over-year, last forecast volume by calendar

it are the ongoing about our mix DX excited strong for transition client product early Industry We DX over with XXXX. DX industry lineup. to positioned from calendar to cross and are in expected well DX is

by In SSD shipments, share growth record quarterly bit industry-leading customers SSDs driven in solutions. client adopted we our as fiscal QX, achieved client

XXX-layer world's NAND. a and fastest with Our quarter, consumer consumer. the both launched reached Crucial built our SSD, QLC record GenX growth TXXX, month, we Last bit PCIe new mix third the client in consecutive SSD with for shipment

market, In to across graphics' to the graphics, outpace supported industry applications analysts growth client data continue center. and TAM by expect CAGR broader

to GX year We customer We inventories of expect plan the industry-leading our introduce calendar QX. to our in normalize product half next-generation node XXXX. first X-beta in on calendar

now percentage digit down year-over-year. we mobile, smartphone mid-single XXXX expect volume In a unit to by calendar be

driven are we stronger a units weaker, memory While toward elasticity. phones mix premium are seeing by growth content shift and

launches calendar We expect back sequential half as XXXX. in customers fiscal for the upcoming prepare QX of product growth in

In shipments LPXX fiscal started X-beta-based QX, Tier-X and our achieved on OEMs. revenue qualifications key we customer high-volume to mobile

XXX featuring In ramp in qualification the uMCPX high-capacity UFS addition, DRAM with of achieved gigabyte and NAND. and milestones significant of a we of gigabyte XX

UFS new product based which We our for have enables sample started a XXX-layer on technology, X performance NAND handsets. flagship also to latest industry-leading

industrial represent over contribute more profitability. and our I'll revenue auto stable markets, end and cover revenue the and which of Last, XX%

for fiscal year-over-year. grew QX, high which automotive, single-digit driver reached in a lead a record and to continues quarterly In key percentage auto us. by growth market Micron revenue is and another

driven continue levels, semiconductor of the non-memory by vehicle. increasing customer second inventory expect memory and content memory calendar XXXX, growth for auto in per We half easing demand supply, normalizing to

customers. levels The industrial majority in the and distribution at early are at recovery market of Inventory of our stabilizing QX. saw fiscal partners signs

of As expect in demand half an a in we improvement the calendar second XXXX. result,

and We machine in learning in AI, the this to are growth as IoT, excited continue about customers adopt implement industrial market, our factory. and prospects

turning Now, to outlook. industry

to XXXX below low are range long-term and growth DRAM in NAND. percentage Our of further expectations for digits to and DRAM demand been reduced digits XX%s NAND, mid-teens industry mid-single range in calendar well high-single which CAGR to in bit expected low- in have the

server three demand smartphone lower. AI-driven are traditional PC, While been forecasts now than months the expectations demand and the ago, our has stronger

inventory. expect NAND by year, stronger We improvement in secular customer to and and the of industry growth in continued shipments content for half bit the continue second calendar driven DRAM

started While be calendar XXXX negative XXXX the growth the industry for industry growth. as NAND and have demand reductions supply supply now to market. year-over-year DRAM is for the the stabilize utilization industry in both impact across cuts supply to and We industry significant see across forecast calendar the lower, the CapEx

to due cash reduction sustained flow time. in well for inventory, excess Market improving, is calendar into are further some XXXX. the and is cuts if these While profitability can balance extremely supply industry challenged demand recovery production will accelerate remain and there

industry the to our environment, in balance response supply Micron decisive has In bring actions taken back with demand. to

be We supply expect negative Micron's bit growth DRAM. meaningfully year-on-year for to

calendar NAND in produce to fewer expect bits also We XXXX. in XXXX than calendar

XXXX down than fiscal of down CapEx with year, $X XX%. billion WFE is from more Our more plan than XX% last

year-on-year. to currently well We on and wafer approach we will our and we down managing down as continue be XXXX into We focused DRAM starts our remain expect to controlling NAND. supply. to wafer further in continue expect have XX% inventories reduced fiscal calendar XXXX both WFE reduced starts Recently,

Mark. I it will now turn to over

Mark Murphy

everyone. afternoon, Good Thanks, Sanjay.

than the gross margin Fiscal QX exceeding our were with above of range high the and guidance revenue end EPS results better to range. of and line coming in midpoint the expectations, in

and insurance QX an sequentially $XX X% revenue approximately billion, XX% the fiscal $X.X included provided million settlement down Fiscal up time was revenue we guidance. from QX disclosed year-over-year. at Total

range $X.X QX in billion, declining revenue sequentially, DRAM increasing by with prices X% of revenue revenue. approximately XX% XX% bit total and Fiscal was declined shipments DRAM XX%. representing the

in Fiscal XX% XX% revenue QX total prices billion, $X NAND percentage in NAND upper was XX% range revenue declining mid-teens the sequentially, increasing revenue. of and the Micron's range. with increased representing shipments bit

to turning unit. business Now by revenue

X% in decline a up Networking in server Compute offset revenue by sequential and was Unit billion, graphics was and Strong sequentially. revenues growth client. $X.X Business

Embedded sequentially. On Unit was up basis, Business a automotive $XXX and sequential revenue consumer were strong. million, X% revenues

million, $XXX shipments. was due Unit timing to of Business Mobile the sequentially for XX% down Revenue

As Sanjay QX. expect fiscal growth mentioned, revenues mobile in we in

$XXX most XX% portfolio. Business across shipments Revenue for sequentially driven million, Storage was by and up increased of the Unit the

This sequentially. margin impacted The negative produced with fiscal quarter. consolidated gross result points XX improving million was $XXX QX percentage of XX%, for points or percentage write-downs by negatively was associated in XX approximately the inventory

and gains sequentially. million QX from expenses expense-reduction ongoing $XX roughly of sales were million, assets. on Operating down in OpEx fiscal $XXX initiatives benefited certain

We in an negative $X.X in improved the had roughly of from operating XX% of XX%, operating fiscal prior margin quarter. an negative in resulting loss billion QX,

million, $XXX guidance, driven at expectations were taxes discrete our items. of QX by Fiscal the than higher time one-time

a geographies. mentioned quarters, still certain payable previous consolidated we despite geographies a levels income As in taxable taxes in have those to worldwide due in loss on reported basis,

per from down Fiscal with loss of $X.XX of quarter included share non-GAAP a in year. from QX The QX loss EPS per the $X.XX in in prior share the prior the approximately share earnings inventory in and $X.XX, per the write-down impact of fiscal was quarter. of losses the produced associated inventory $X.XX

flows Turning spending. capital cash and to

during Our $X.X operating were cash approximately $XX flows the quarter. billion million. were Capital expenditures

was improved fiscal in year, negative and $X be capital thus expect in near from quarters. two quarter QX. flow to billion the $X.X Free fiscal continue We expenditures to cash $X billion for previous the billion approximately the

QX fiscal of present or we $X.X in $X and steps complexity, to would levels billion process equate was increases at XXX days. days, now ending XXX inventory product inventory approximately to Our target which Due around billion.

Our levels build-ahead risk inventories associated mitigation. strategic with approximately optimization $X target over product cost stocks of for and current billion include of

held cash and including billion, billion $XX.X $XX.X total and had At quarter-end, facility. untapped our of of liquidity credit we investments

in We facility, $XXX term net long-term $X.X to the $XXX down and, loan issued resulting of million. increase a proceeds, debt debt billion paid in part of million with of our those of quarter

debt ending billion. QX fiscal $XX.X Our was

Now quarter. turning fourth for the our fiscal outlook to

outlook. is As the and decision our mentioned to in today, headwind our filings comments CAC a

global see demand quarter, we by shipments. Over we We quarterly expect a CAC from than industry on fiscal our business despite vary QX both bit market share in as goal improve time, QX, In retaining of the to still to the and half impact first the the fiscal the in the NAND. impact less continues with being revenue fiscal the of impact in XXXX. and our DRAM record effects decision, have

be profitability is weak and in variability business and margin current will our Fiscal large by In gross impacted product in mix underutilization, drive costs from between NAND QX the can margins. gap the the gross mix. and pricing levels environment, significant, DRAM changes

does gross inventory. of not Our write-downs contemplate additional margin guidance

fiscal operating and remain aggressively the less track We manage $XXX expenses continue to our on million. to at year than exit

as R&D fiscal QX, beyond XXXX increase million employee expense timing we reductions end. over OpEx to Looking expect QX program to compensation on $XX in and fiscal

our follows. QX in as With non-GAAP mind, all fiscal these factors guidance for is

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

tax X.X of expect a EPS to $X.XX. of $X.XX, expect shares, million. Based share on $XX approximately expenses loss approximately or plus a we of billion count We minus be

focused while leading environment, improving and on free act flow. this quickly investments to navigate and closing, cash sharply products, In solid continue to technology, the and profitability remain we In manufacturing maintain downturn, to our tenaciously making this sheet. we preserving across capabilities balance our our

Despite in model to of will decision, on impact the hold As drive cash productivity to flow shareholder and to CAC and financial profitability, market gains. deliver downturn efficiencies our this and long-term of effects the continue returns. improve, our remain we conditions confident ability we

I over will to back now turn Sanjay. it

Sanjay Mehrotra

you, Mark. Thank

qualified proud we across I are team products the and key we portfolio quarter. progress multiple released Micron this The and of the execution leadership made the am Micron's of markets. strengthening

ahead dramatic I excited leverage product us discipline, for customer well we growth introductions headwinds, manufacturing portfolio of excellence, am financial technology to will the relationships, several planned I our and for near-term enable the combined position are this us. excellent us have there am is that that will further in which future. momentum, While quarters, the AI new capability, next that about the confident with

our underscores I to you governance aspirations want we XXXX innovation, and environmental, to the report which encourage across and website. and report communities also our Micron's the to published report, to our review progress environment, continued call outlining social operate, sustainability attention people full our yesterday. programs. commitment Micron's The I on the where

Thank today. you us for joining

now We questions. open will for

Operator

line comes C.J. the question Instructions] Muse Evercore of from ISI. And from [Operator our Certainly. first

Your question please.

C.J. Muse

Yes, how pricing months Thank behavior I -- taking first normalize kind very with in those perhaps for good expected be question, that quarter, change how clearly we're are seeing you We'd given inventory trough afternoon. the coming question. soon? hitting purchasing customer guess to you the love hear to might a discussions of changing.

Sanjay Mehrotra

somewhat closely for customer most by of are data with we expect our And of work thereafter, to Data as that other C.J., Thanks, we that improve we or our year And to inventories -- said customers. normal said work this to course, We, our of are continue centers, with end closely end Except markets. improving. as for inventories in continue question. we inventories well. shortly customer data close thereafter center to center, customers.

Some some the business on month-to-month customers for outlook of basis. the of customers in and definitely interested operate other the longer-term

of overall, the But we strengthen closely as products are to well. Micron our to downturn is our China impact to value their much of on course, for decision address bringing and through that current navigating with the demand. of future continue through the and customers some the very mitigate to And working continues customers we focused the

that are general, directly as prices that third in chain, volumes And levels well. given additional down coming may at of the who end-to-end you the customers supplying their And customers, of to the pricing across may customers well continuing suppliers add begin inventories the be said customers. as But parties inventory the substantially, at of some is in as supply some trajectory and my improvement exists as purchasing this the know, as the in looking low we before the to industry at in be the remarks increase time. today,

C.J. Muse

revs over you meaningful of could fiscal to what of quickly kind guys on like for I means? you 'XX. real Can Thank three And what HBMX, just that a could look us Very time, you. helpful. size years? sense of kind guided you give to in follow-up five that at looking If

Sanjay Mehrotra

lower on has HBMX, early in expect to of we are excited XXXX. and that respect of begin in performance, Well, bandwidth this this significantly Micron product power. volume HBMX higher very focused ramp a early bringing with product stages and product. sampling production we is that product to significantly is industry-leading and about It product has an

it is ahead In product, generational is fact, a to that the market. in anything as else close of leap a

received endorsement in of this bring the this growth strong opportunity expect be rapid, a for and this have and product We to year market volume XXXX, strong revenue for us. fiscal in in, steep ramp be for the us we to product our ramp will

So we driver product. are a Micron. very this be excited will It for standout about significant growth

that and on is our done everything applying course, course packaging, technology we industry-leading packaging of TSV And X-beta of it, built have and to capabilities. advanced differentiated here

going of well. is the share this expect So a would than we in industry-leading product average we to us. kind for -- believe standout share that with we industry with DRAM And product as be HBM this be our a higher target

Operator

you. the UBS. moment for One our from Thank from our next Timothy question comes Arcuri And next of line question.

please. question Your

Timothy Arcuri

half. said the you guidance for from out the Thanks like would ban gets looked a of lay I fiscal impact of one know you first lot. net worse QX wondering was that if Mark, I first actually you. can in had I fiscal the ban. the the the what have two. sort is

as like in QX. fiscal it QX, said had maybe big fiscal sounds as but So it probably impact, low that double-digit simple bit it's you is

and rather? number to then in range of and of us half that fiscal first for in So Can for you a less -- QX you XXXX than sort 'XX that that shape the something expand handicap something it of us? in sort fiscal

Mark Murphy

a It's had We expect -- Yes. QX. material the QX. to impact very We a small small in more in impact impact increase. do

but time, will However, -- effect. a But and clear. our help really, that's at mitigate that the there's headwind, actions to offset it's this

fourth what actions it's quarter, evolve we taking in are contemplated on our will impact the mitigating continues impact the uncertain, we see the again, And it's However, in and guidance. very be. to that

Timothy Arcuri

ask in I'll you But my second question for is follow-up. Got the it. Maybe Sanjay.

last So, this I asked too. Sanjay, you call,

that you we out your you this see at today. could take kind change last ways out and talk least we in at tightness you some this Can customers of pushed a relationship can advantage talk what point. So data how be be But are low. where during when customers they over of away, center months, your about so Thanks. can mean, with in opportunistically trying coming the time, maybe that so alluded you might of in the to past to just could discussion of with tone smartphone just broadly a pricing maybe the talk downturn? your has far peers asked the and know we maybe the about to about that particular maybe being front of customers downturn wanting I where they're given more LTAs get kind customers situation maybe of headed what is toward the changed? center data some the three I I you

Sanjay Mehrotra

customers, on our they term, work be course, with but for the year, supply commitments And longer generally. speaking, LTAs customers involve as demand while the on sides. forecast operate term from and us have their LTAs shorter LTAs and other relate on And may we some or to operating two generally customers LTAs. Well, of said, yearly

adjustments course, with customers those regards. made the either Of on work on changing environment demand the closely on to with in side, be there sometimes industry our we LTAs, side, supply can the and or those

we had with the customers. relationships have close And

very momentum. We have a strong product

addressing particularly growing about data center, tell in let center. particularly data that in me in the data are you product AI, portfolio our of And with You momentum center strong interest inquiring with big and for big be AI becoming year we storage positioned a memory and it Micron for for and and generative look AI, opportunity, at well as a XXXX product. this will solutions,

in to of when requirements. production discussions the investments to And these. necessary our their we we terms mix really related requirements, customers when help on their address and we manage of die we with all And our work in course, future our of these requirements, purchases are address terms our need parts and of assembly test LTA requirements closely

And well supply that LTAs of into and course, as, overall the demand go as mentioned, in product of a considerations. just keep well, as the new and I that mind -- lot considerations as volume

course, the LTAs, investments the both that, really plan help alignment HBM, products as of products help in and, capacity of product on high-density because things, end. with such end, kind engineering, MCPs, parties. They the at So like mobile considerations really our sector, us product us modules in are et the customers. at things our our the LTAs cetera, like these our help back-end have different back all plan And roadmap, like

Timothy Arcuri

much. so Thanks

Operator

next our Cowen. question. Thank our line from Krish of comes you. One TD moment for Sankar the from next question And

please. Your question

Krish Sankar

first these my about servers content more is congrats strong demand is for and center having data question replacing a view X DRAM ask times regular some of DCs the over AI weak. the was good X to server Sanjay, while DC question -- I to servers. you taking of There's the AI on demand that are Thanks wanted results. you spoke that traditional servers and XX

follow-up. I kind grows AI but think DRAM overall about some So of demand center regular your And data curious to how cannibalizes then, DRAM have a server I'm content? as just probably of

Sanjay Mehrotra

us, demand, growth growth. what into is of of and So demand and DRAM look, as somewhat Other end growth. when markets, look absolutely the is course, we TAM, of overall that at overall CAGR of certainly of has the demand, been AI enterprise look driving -- of trend we mentioned, for enterprise driven drives driving the mobile AI the in our some Automotive, DRAM such continuing. the of the trends, impacted projections we we end in consumer, is by at healthy Yes, demand when macro in recently but PC, their whether has we growth. have somewhat XXXX trends AI terms data lackluster. demand that definitely is center, server account. the and data memory been more or it terms those in have the And center taken -- memory that's and ahead The

and the enterprises large very in, Because would may This enterprises not will models. models parameters. and language tending be their applications, due examples as towards language applications such be applications, for but super et are you models confidentiality you It's course, AI them AI, too. pervasive. of of innings know, early AI large large as be cloud the such to all really building number as is everywhere language very, may And really enterprise while in as is of large own generative of enterprise see, data, as server greater clusters, cetera,

That Now we into long are range. more too millions generative memory. ago, Not XXX trillion requires talking to about in parameters range. even parameter of with AI used getting these be

increase. DRAM And that just compute script, in content server is configurations, AI hundred memory than course, requirements are we So to we supercluster mentioned that applications, side, I'll requirement as the regardless of cloud the the a higher the out Xx server as the is in point times multiple the whether it on is server. Xx we that continuing DRAM you, enterprise have side to on the example or of that versus server. standard required there many highlighted few of is where And are gave such standard the

are the products. requirements memory storage well, including inferencing to and applications, machine-to-machine think very exciting. grow cycle look when data is applications, will I communication, and continue to for Micron we at edge and with look automotive, really, various scale training for virtuous that ever-increasing the be us will we for the ahead at our here that the going So of at when journey And be driving well positioned opportunities

a our from be XXXX Micron be to memory graphics. for to of will And big And modules, HBM to and with even including consider LPX AI, well portfolio strong to capture this positioned storage. to year we banner for DX high-density products

Krish Sankar

it. helpful, a And Got for Very follow-up Mark. then Sanjay.

You said write-down is current Mark, quarters view inventory past no quarter to the pricing mentioned right, out. tight if inventory write-down your also you remember on in in that the expected. And three

that sales is to that assume you're pretty if inventory much Thank worse expecting get agnostic write-down, XX% to is decision fair it that to is quarter? of any of pricing you. does your the impacted, or really CAC risk this And more XX% So down? write there inventory drop a the gets

Mark Murphy

Yes. few spend because spend very of the a topic Krish. a lot with covering moving on maybe complicated just a of bit Thanks, a topic. I'll minutes parts, Maybe time it's

view our outlook, period which reduced gross costs function associated market So volumes changes These changing results these it's of slight environment are inventory as just more many lower which starts our pricing. leverage our or continuously profitability, we've course, of And or include The increased margin, of such in today, -- then as heard forward quarters, our reported utilization, factors, stated discussed are of and and incorporate and write-downs, actions. in as you do our our wafer forecast at on margin a effects pricing. further. and levels including I've factors And to assumptions sensitive price. of previous mix. before due to The

And another quarters, inventories. lowered on-hand the Yes, pricing we'll we've of lower quarters have thus took our those billion, price the pulled income trends more would without and costs, than carrying view current Now a this inventory otherwise inventory forward took material future the cost write-downs, clears costs, second the in as charge. we realize value in as million quarter this we we $XXX quarter. these in with $X.X and on given write-down reported

quarter also an quarter considering So inventories on inventories the And write-downs example, through impacted volume of near views the million latest we second this selling our $XXX million for realized write-down. cost produced. took as we third in additional of from by a benefit mix, lower $XXX

-- out call want benefits levels, I write-down in at complexity all and to quarter far the that in off we it's and third the our sensitivity with So that estimated these guide. uncertainty, profitability were do what had not our we the

the I good what's happening reflection a handle of So think of that's our business. in

which year. We of of impact adding front also 'XX costs. will Most we've end. higher got project the roughly that costs FY creating in effects, associated inventories P&L the Now period underutilization with impact billion are this and $X.X underutilization in

have of next because But over over to will Some year accounting, the otherwise. year. to it carry the will effect carry would than of write-down less of it next of

the impact margins of and lower higher the Beyond higher is to the then digits this effect increase. cost as between the starts period period single revenues inventories, single on down and write-down of digits lower on wafer mid effects, cost margins,

lower reported quarter, said quarter inventory all that considering a in guided happened, we a this, of sense to just last And XX a last sequentially continue pricing, third improvement or on be quarter, better forecasted we but also, current the improved fourth Again, than to reported in give write-down, driven you our last points $X.X expect quarter. quarter changes. the said that to about than quarter gradual margin expect that points. third margin mentioned estimates the pricing -- much we as With that lower second these turn quarter the on trough, And profile we on quarter, a of be had then So to your margin we margin which X we third to by would a a said write-down. we are hence, question, billion better in as basis. charge we and sensitive today was -- view, -- and expect

be about out negative we'd our to take effects still the third if still -- margin you at were benefit, normalize, two XX%, portion things settlement which strip you gross the we third both write-down we negative be and the XX% quarter, to the realized Now and we had non-GAAP in gross largely so and also would the of strip margin. quarter in insurance write-down those third out quarter, offset,

net and the the $XXX settlement. again, benefit same write-down realized million insurance over than then over million inventory less roughly million million $XXX $XXX the $XXX effects, So

and pricing is -- a So the function which guide. properly think, of in environment, this we, I our captured

that adjusted clearly which, Now quarter the margin, about down is is XX% down recall, points. adjusted that as X%, adjusted second so margin XX% XX -- versus I

we off So would under margin through levels improve these low few and then over we this on the view, adjusted would gross 'XX. FY quarters, trough next

levels is bit and though profile lower that's are this before, a consistent bit a So we've with a the discussed delayed. what

see playing that and some hopefully, puts with how see on takes. out we and all so And both provide pricing you the gross how we color margin

Krish Sankar

lot, you. a Mark. Thank Thanks Yes.

Operator

Harlan line next moment of for our our comes the next And Thank from JPMorgan. you. Sur One question question. from

question Your please.

Harlan Sur

Mark, gross XX%, a underutilization you underutilization incremental Thanks a And afternoon. that for it good maybe with on utilization the contemplating cut are Hi, a CAC question. guidance wafer another could X primarily that, fourth no for in step-up of taking as or but guess write-downs, then if cut there know sequentially? your in margin to result charges follow-up I costs right charges the is follow-up, quarter, quantify in underutilization as X% you percentage charges? is the my inventory And starts I a associated because your step-up is restrictions? to points period

Mark Murphy

to not. that's and in driver. Supply to It's out come of get given dynamic of discipline needs more is the supply the intent industry and market market. levels, the our It an principal inventory

quarter is $XXX this far As already the costs million. the The guide. the incorporated of they're period guidance. effects about contemplated in are as it fourth in utilization, in again, And

Harlan Sur

you. Thank Perfect.

Operator

question. you. moment One Ambrish our next the from next for comes Capital of Srivastava BMO line And Thank our Markets. question from

Your question please.

Ambrish Srivastava

detail. very Thank guidance quarter, And us you industry thinking? Mark, had walked much all the I XQ through would you now given out Am the X.X%. in to much. reading what back were out I stripped as So said wanted and you When the margin. right that the gross you had this come XX%, than it's worse you right? at negative adjustments that write-down, Hi. this had be stripping we for to

Mark Murphy

don't worse No, think I thinking. than it's we're much what

insurance of If what keep you underutilization said, out you sort we to just you're the that settlement, in but close the X%, effects, X%. strip

there. was consider. need you that said in So had that to We

Ambrish Srivastava

Okay. either And Got for you then or follow-up it. Sanjay. for a

the some for in On regions so China, loss out XX% or just based other suppliers (ph) I there that] assumption (ph). -- pricing Is to they'll the I'm here -- leave be of the China how meet pretty will recoup element are that? share in hit to demand if how loss able Is that bit bit a supply bit sure demand, constrained, understand after? that [you you to [big not two go that? basically round] XX% you and other growth on the number, do

Sanjay Mehrotra

that. take will I

on we at And focused those is CIIOs in of that is decision, course, approximately with XX% decision. China So impacted. are customers said CAC by of customers mitigating business impacted with CAC -- who or we have getting of not loss are what global share as any risk our of a result

XX%. DRAM that is in share our mind in keep in share and So approximately XX% NAND approximately is our

over gain obviously, and as focused share this are is So It variations to it said, business. And our It as opportunities I other share. have take But will decision to with quarter-to-quarter result customers. we is target what our on. the time, CAC can our term, have is in It recovery. hurting is maintain our we some can we longer slowing mean, -- well.

challenging, with So history will working customers. while customers long decision longer who -- customers increase near impacted we CAC who our term, impacted work are not term, of And our is to not decision CAC we share. global our a with are have by

product in marketplace. value portfolio tremendous of our innovation roadmaps the our and brought supporting have supply, We innovation, our their

to a want customers Our strong see Micron.

on a share to consistent our is And our share want with our continue longer investments, of improving with our of as value see because, they understood work strong our the will with customers. we'll to so and of And course, of over we are from target our products this. we term product Micron, supportive focus current to current as and focus business again, levels customers profitability our customers our we certainly by well. will portfolio, our strategy keeping on bring Our on they ROI

to think course, So industry that in is ecosystem. multiple understand players strong mind. the for multiple a strong we customer to it's keep a benefit reasons Micron that I partner our of customers will, again, is And our profitability in important customers. And

Ambrish Srivastava

All right. Sanjay. Makes you, sense. Thank

Operator

from Thank question. of moment comes today from for our O'Malley question final Tom our One you. And for next Barclays. line the

Your question please.

Tom O'Malley

saying market that today? And to a Hey, to are you an fact there tailwinds starting of is, guys. there's Xx some that just of as seeing AI second service when see to are the about much. assume some Thanks see my guess the really you're ability Recently, taking A part series change of where market given limited that HBMX. that servers picking question. HBMXE some up use one you're about I HBM, we've that contemplates question then, talking DRAM today I is been part you servicing but content. AI the that in is, for guys the Xx you're capacity not

so talk are a seeing you ex-HBM you could product? can center just multiplier are get DRAM effect how helpful. today the about of the they that So ex data what on seeing as today, you're picture we That would where really in guys be improvement

Sanjay Mehrotra

technology well So part million to market, calendar actually HBMX+ us which several us year a certainly, we to had time. during as of is have ahead going early of is in fiscal bring of volume called 'XX, the that and strong the in of hundred product, shifting course over starting 'XX, -- position is revenue the contributing as dollars generational leap our HBM. and experience production HBMXE production as HBM in to industry anything has Micron's we product into mentioned, shifted that opportunity with -- The I marketplace bringing capability our gave up I

our DRAM we average industry-leading opportunity with to market believe will AI growing solutions, product market, want be than to capture, share I with and that of an I part positioned high-density And year, well of and be higher to capture, HBMX HBM with very industry we respect part targeting respect our I that the bandwidth, clear the absolute to that's want share. modules that as to in respect be that yes, and to this we'll with it's that, is mentioned, high

it only So served as DRAM HBM where also or is in this -- high-performance is DRAM gave large DRAM DX by well. well. in it's that our examples is but memory being used the some by understand And LP and industry-leading by DX products, compute with served you A as script platforms. LP being not amount of being we is but AI LP important DRAM modules, high-density to and

terabyte of mentioned that in GH And DRAM we DRAM. solution a XXX, positioned terabyte LP very LP DGX, our today. XXX about well there is the that is In with fact, Micron of XXX differentiated

made high-density it's HBM, element made DDRX, is think market the LPX important DRAM of some of up AI is understand to and includes memory I of up modules, as So it's also made of well. server it graphics that up --

of well portfolio. as we positioned on well And I participate and AI have I'm is we I capture really the in high-density broad as production, DRAM And AI. very be growing to into opportunity and you emphasized, And in DX. sure extremely a know, XX% DRAM getting well So, do in we'll with today modules believe XXXX HBM servers DDRX.

products, we fact, with DX on technology X-beta built industry led our here. In again, the

Tom O'Malley

And in. appreciate Sanjay. I you, you Thank guys me sneaking

Operator

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

You may now disconnect. Good day.

Micron Technology (MU) 28 Jun 232023 Q3 Earnings call transcript