Micron Technology Inc at JPMorgan Global Technology, Media and Communications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Harlan Sur - JPMorgan - Analyst : Great. Again, thank you for joining us this morning. I'll kick it off. You're nearing the end -- the team is nearing the end of your May quarter. Coming into the quarter, you had anticipated quarter-on-quarter bit shipment growth in both DRAM and NAND as excess inventories in the more consumer-oriented smartphone. PC markets had been cleared, calling for record revenues. On the gross margin front, the team guided gross margins to decline slightly, 140 basis points to about 36.5% on a higher mix of consumer-oriented volumes. Obviously, NAND underutilizations and lower calendar Q1 pricing trends, which I think have recently turned, obviously offset by strong execution on the HBM front. Since then, DRAM pricing has been strong, both DDR4, DDR5, contract pricing, and spot pricing have both been strong. NAND pricing declines have started to stabilize. And so good trends overall over your May quarter. And so much so that, at the end of March, the Micron team did issue a letter to customers indicating your intention is to increase pricing as the team was seeing an increase in unforecasted demand, right, across various of your business segments. So relative to your guidance in March, I mean, it certainly seems like pricing has come in better. But wanted to get your views on how the May quarter has played out so far. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 15, 2025 / 12:40AM, MU.OQ - Micron Technology Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JPMorgan - Analyst : On the pricing inflection trends, is that more a statement around DRAM because we have seen a strong upward trajectory of DRAM, but does that include NAND as well?

Question: Harlan Sur - JPMorgan - Analyst : Perfect. And then I think on the earnings call, you had given us a little bit of a sneak peek into fiscal Q4, right? And off of the -- and I think the view there was that in fiscal Q4, your August quarter, you would see slight improvements in gross margins. With the better pricing trends here in the May quarter, pricing inflection certainly seems like both DRAM and NAND pricing remain on this positive trajectory, at least as we look near the midterm on a forward basis. Again, you had previously anticipated fiscal Q4 gross margins up slightly. But it would seem that the gross margin trajectory in Q4 could be -- could improve at maybe a slightly better trajectory than what you had laid out in March, I'm not sure if that's a fair assessment or not?

Question: Harlan Sur - JPMorgan - Analyst : Perfect. We'll have a lot more discussions around some of your end market segments but obviously, a lot of your here -- a lot of us here in the room are extremely focused on the dynamic of accelerated compute and AI. The Micron team we know has been designed into NVIDIA's next-generation GB300, which will be starting to ramp in second half of the year. Concomitantly with that, right, the Micron team did start production of your HBM3E 12-high just recently. Maybe you could just give us an update on the ramp, the yield? Is it tracking towards expectations?

Question: Harlan Sur - JPMorgan - Analyst : I'm going to go back to the near to midterm environment because in addition to the strong pricing inflection that we've seen so far here up through your May quarter, much has changed, especially on the tariff and trade and geopolitical front, right? And as you mentioned, AI and accelerated compute demand trends remain strong, strong cloud, hyperscaler, CapEx spending trends, even in the non-AI markets, right, smartphone, PC, general purpose server memory demand trends have been relatively good. And as you guys had predicted two quarters ago, right, demand combined with the discipline of the industry has driven excess inventories down, and that's part of the strength that you guys are seeing. But I think with respect to tariffs and trade, the big question is how much of the strength in near-term demand and therefore, strong DRAM pricing increases and stabilization in NAND ASPs are due to tariff-related pull-ins, right? I know one of your large memory competitors recently called out

Question: Harlan Sur - JPMorgan - Analyst : The other side of the potential tariff-related dynamics, again, a view by a few of your competitors during the earnings call that -- was that these pull-ins are potentially pulling from demand in the second half of this calendar year and therefore, could potentially drive a weaker bit shipment profile. Additionally, end market trends in second half, PC, smartphone, general purpose server forecasts have been -- are being trimmed, right, by the big Wall Street firms including our firm. We recently cut our smartphone forecast, our PC forecast, and our server forecast, a little bit less seasonal, right, in the second half of this year because of tariff and trade-related uncertainty. If I recall in the last tariff and trade war back in 2018, 2019, the semi industry and the memory industry did enter into a downturn, coincidentally or not, right after the final large round of tariffs that were put in place in August of that year. Are you seeing any indications by your customers that they're starting to plan for a sub seasonal, maybe slightly weaker environment in the second half of this year?

Question: Harlan Sur - JPMorgan - Analyst : Post- tariff announcements, there was some news around the Micron team reaching out to their US customers on the potential for passing through tariff-related price increases. But on April 12, the President did exempt SSDs, memory modules, chips from tariffs. So I assume that the team has not had to increase prices to your US-based customers. Number one, is that an accurate statement? And then the second question is, what percentage of your overall revenues is for shipments of SSDs and module form factors across the US border? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 15, 2025 / 12:40AM, MU.OQ - Micron Technology Inc at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JPMorgan - Analyst : Yeah. And maybe as a follow-up to that, the US administration's goal has been to fast track a return of manufacturing back into the US, right? And the good news is that the Micron team is well into the $15 billion expansion of your Boise, Idaho fab, right? And can you give us an update here? The original plan was to bring Boise online in 2027. Where you -- where are you in this build-out? Are you potentially accelerating maybe your plans here? And have you seen a step-up in potential customer commitments, right, to Micron longer term because of your US bit supply capability?

Question: Harlan Sur - JPMorgan - Analyst : Before I'm going to start talking about products and markets and overall end market dynamics. But before that, I wanted to open it up to the audience to see if there are any questions out there. (Conference Instructions) Any questions from the audience? Okay. So let's talk about AI and accelerated compute. Obviously, a big driver of the business, the mix on the accelerated compute and data center side for Micron has richen significantly over the past few years. In addition to tariff and trade-related dynamics, there's been recent concerns around the potential for AI compute demand normalization, maybe some compute digestion. Although we have seen -- we haven't seen any pullbacks from cloud and hyperscalers on their cloud CapEx spending intentions. And so have you seen any signs, indications of a pullback in accelerated compute demand? In other words, has your HBM TAM outlook, right, greater than $35 billion for this year, changed at all?

Question: Harlan Sur - JPMorgan - Analyst : If I rewind back one year ago, you gave us the update on your HBM3E 12-high ramp. If I rewind back a year ago during your June earnings call, you did say at that time that you were sold out on your HBM supply through calendar '25 and that the majority of that committed supply was locked in from a pricing perspective. One year later, where are you on negotiations for calendar '26 HBM supply and pricing discussions? I mean is the team's supply outlook for next year maybe almost fully committed?

Question: Harlan Sur - JPMorgan - Analyst : And it's been a great trajectory, right? You guys did over $1 billion in HBM revenues last quarter and on track to exit this year based on our estimates at double that rate, right, at roughly about a $2 billion per quarter annualized run rate. So very, very strong ramp and execution by the team. Let's --

Question: Harlan Sur - JPMorgan - Analyst : Yeah. Let's switch over to data center SSD. We're seeing, as you mentioned, as you mentioned, numerous AI GPU, but also a lot of XPU programs coming into place, right? All these ASIC programs that are going to start to ramp into what we think is strong second half of the year, right, which would be good for DRAM memory product but should be good for your storage solutions as well. And I always tend to remind people that your data center SSD share has gone from 5% to 7% in 2022, 10% to 12% in 2023, and you exited last year at 15%, right? I think either number two or number three global market share in enterprise SSD. So strong share gain performance over the past three years. You've got your next-generation 9950 PCIe Gen5 SSDs out there. What are we going to see your next-gen G9-based data center SSDs come to the market? And more importantly, does the team still expect continued share gains in enterprise SSD going forward?

Question: Harlan Sur - JPMorgan - Analyst : On the last earnings call, you had -- the team had anticipated data center SSD bit starting to reaccelerate over the coming months. With a bit more visibility versus the March earnings call, would you expect maybe that data center SSD re-acceleration to start maybe in the August quarter, your fiscal Q4?

Question: Harlan Sur - JPMorgan - Analyst : Maybe you can just give us an update. The team is doing a lot of technology upgrades. You gave us the update on the HBM3E 12-high ramp. Your team is starting to ramp your next-gen 1-gamma DRAM EUV-based technology. As I just mentioned, you're starting to ramp your Gen9 NAND technology. Can you just give us an update on these new technology ramps, yield, cost downs and just more importantly, just overall ramp execution?

Question: Harlan Sur - JPMorgan - Analyst : You talk about the 30% power reduction relative to your competitors, 30% better power performance on HBM. And I think it has been a big differentiator for the Micron team. As you move to gamma, can you give us a sense, are you anticipating a similar, not only power consumption savings, but better performance dynamics 1-gamma? And maybe where does that intersection point come? One -- you've got your HBM road map here. You've got 1-gamma. Where do you think 1-gamma lines up on your HBM road map?

Question: Harlan Sur - JPMorgan - Analyst : China domestic -- let's talk a little bit about the competition. China domestic memory suppliers, we estimate account for about 6%, 7% of total

Question: Harlan Sur - JPMorgan - Analyst : Lots of questions that we get from investors as it relates to the largest memory supplier out there, Samsung and what happens to HBM supply and demand dynamics when they finally do get qualified on HBM3E 12-high, right? What's your sense on how the pricing power dynamics may or may not change when they become the third large and qualified supplier of mainstream HBM?

Question: Harlan Sur - JPMorgan - Analyst : And maybe even in some cases, a full-blown rack scale.

Question: Harlan Sur - JPMorgan - Analyst : Got it. I want to talk about something back in mid-April, the team announced that it was reorganizing its business units to a more market segment focused based structure, right, our business units, more transparency on your data center focus. Walk us through the rationale and what you will be disclosing on a quarterly basis, starting with your fiscal Q4 results.

Question: Harlan Sur - JPMorgan - Analyst : Yeah. Manish, Samir, thanks for the great participation today. Always appreciate the support.