Micron Technology Inc at Wolfe Research Auto, Auto Tech and Semiconductor Conference Summary

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

Question: Chris Caso - Wolfe Research, LLC - Analyst : Well, you've given us a lot to chew on for that. So maybe I'll kind of dig into some of the things that you said there. So you talked about the gross margin decline next quarter being driven principally by mix. So is that a function of -- again, seasonally in this point of the year, you'd expect consumer to be a little bit weaker. So what's driving that mix in this point of the year?

Question: Chris Caso - Wolfe Research, LLC - Analyst : And maybe you could speak to the non-consumer part of the market. And I guess, is this a function of the consumer markets actually turning out to be stronger than you thought? You maybe [haircuted] those because of what was going on. What about the nonconsumer markets? Are they not picking up as much and, therefore, declining as a percentage of the mix?

Question: Chris Caso - Wolfe Research, LLC - Analyst : And that's about the same drag that you talked about in the December quarter.

Question: Chris Caso - Wolfe Research, LLC - Analyst : What about with respect to HBM? That's an area where you're expecting to be ramping. There's a product transition at the largest customer there as well, which kind of has some difference between mix of 8-high, 12-high, and eventually HBM4 towards the end of the year. How are you progressing on that? And how is that going against your expectations?

Question: Chris Caso - Wolfe Research, LLC - Analyst : There's an impact in -- is it really kind of May quarter impact or is this some 12-high -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 1:50PM, MU.OQ - Micron Technology Inc at Wolfe Research Auto, Auto Tech and Semiconductor Conference

Question: Chris Caso - Wolfe Research, LLC - Analyst : And your goal is still to get what your typical share is as compared to the commodity markets, and still second half of the year is still a reasonable expectation for that?

Question: Chris Caso - Wolfe Research, LLC - Analyst : One of the questions we get is that, obviously, the big guy in the block, Samsung, is not participating as fully now as they are in the commodity markets. Stated intention of getting there. They're working out some technical challenges publicly. They expect to be there for HBM4. I guess the question for you is, if and when Samsung enters the market, what does that mean for Micron? Would you still achieve that 20% share whether or not Samsung winds up coming back into the market and taking whatever share they wind up getting?

Question: Chris Caso - Wolfe Research, LLC - Analyst : And the margins and the profitability of the HBM business, you still expect that to be accretive to overall DRAM and the corporate average? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 1:50PM, MU.OQ - Micron Technology Inc at Wolfe Research Auto, Auto Tech and Semiconductor Conference

Question: Chris Caso - Wolfe Research, LLC - Analyst : Is there any sort of HBM impact implied in what you're talking about for May quarter margin? It's like the mix is higher of consumer, but I generally would have felt that HBM would be ramping in May as well, which would be an offset to that. So is that offset perhaps a little less? I don't want to put words in your mouth, but that's probably one of the questions folks will ask.

Question: Chris Caso - Wolfe Research, LLC - Analyst : It sounds like it's sort of a picture where May quarter margins are probably low for the year. Not to, again, put words in your mouth, but --

Question: Chris Caso - Wolfe Research, LLC - Analyst : I want to dig in on NAND a little bit, because that was certainly a focus of the call in December. And I think what you said at the time was that you had a view of the industry [leading] to slow tech migration because of the number of bits that were being driven by the higher layer counts. What's your optimism on that as you go into the second half -- into next year? And again, part of the question is, we heard from Samsung, since you spoke. And Samsung seemed like they took a little bit of a different view than you did. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 1:50PM, MU.OQ - Micron Technology Inc at Wolfe Research Auto, Auto Tech and Semiconductor Conference We heard from SanDisk yesterday. It seemed like it was a bit closer to your view about slowing tech migration. And I guess there's things that you can control, which is your own road map on what you can do and then there's the other is what happens with the industry. And based on what we've all heard over the last 90 days, what's your level of optimism that we get to a supply, demand balance in NAND?

Question: Chris Caso - Wolfe Research, LLC - Analyst : Right. And I guess it's a little different where there's -- the conflicting narratives are that, I think everyone agrees right now, there's oversupply today, which is why people are taking production actions. And the other part of it is that because pricing has come down, there's a view of, well, we need to get our costs in line with pricing. But the problem, and I think this is what you guys expressed very well in December is, the problem with that is by lowering the cost, you're also creating more capacity.

Question: Chris Caso - Wolfe Research, LLC - Analyst : That's the difficult situation. It's hard to understand how that gets resolved quickly unless that tech migration slows.

Question: Chris Caso - Wolfe Research, LLC - Analyst : To what extent is -- are there potential disruptions from China? And maybe I'll start with the NAND market, because NAND is one of the areas where the Chinese supplier there is perhaps a bit less impacted as compared to DRAM and your ability to get process equipment and migrate to the next node. How much of an impact does that have on the market? Because we would assume that REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 1:50PM, MU.OQ - Micron Technology Inc at Wolfe Research Auto, Auto Tech and Semiconductor Conference they will not slow tech migration, because it's not in their interest to do so. And are they big enough in the market to have a sort of persistent effect on pricing and supply, demand?

Question: Chris Caso - Wolfe Research, LLC - Analyst : What will be the principal product on 1-gamma? I assume, that goes in HBM first or --

Question: Chris Caso - Wolfe Research, LLC - Analyst : I'll also open a question if somebody has one in the audience. We've got about 15 minutes left. I don't think there's a mic, but I can say it. If you want to ask one, sir? Oh, he does have a microphone. Sorry, I didn't realize. Unidentified Participant I was just wondering if the pressure is mainly driven just by NAND, which seems to be problematic in terms of the gross margin pressure? Or do we also see pricing maybe for commodity DRAM as a source of gross margin weakness for Q3?

Question: Chris Caso - Wolfe Research, LLC - Analyst : And a lot of that was driven by China in general and competition there as they put up some capacity. And you talked about your D5 performance. And I guess as one of the other fears is that, I guess if this China impact is isolated to D4 and LP4, the market is moving on from that pretty quickly. So if you maintain that competitive advantage, it means that China would be, therefore, less disruptive going forward. There's technology restrictions they have in doing that. Do you think that that plays out that way, that it's more difficult for Chinese competitors to be more disruptive on D5 and LP5, and that provides kind of a floor to pricing a better supply, demand balance as you go in the back half of the year into next year?

Question: Chris Caso - Wolfe Research, LLC - Analyst : What about from an industry capacity standpoint?

Question: Chris Caso - Wolfe Research, LLC - Analyst : I think what we've been hearing from a while from yourselves, your competitors is that in DRAM, there's a reluctance to add bit production. However, there's still spending associated with HBM. And sometimes it's a little hard to disaggregate that, right? That there is capacity being added, but it's being added to leading-edge node. As you said, it's being absorbed by these leading-edge products. What's your level of conviction that the spending of the industry right now is kind of leading itself to, as we get to the second half into next year, that we get tighter supply just because of -- maybe it's a function of supply and bit demand, right?

Question: Chris Caso - Wolfe Research, LLC - Analyst : Second half.

Question: Chris Caso - Wolfe Research, LLC - Analyst : From a demand standpoint, I wanted to dig on NAND a little bit as well. One of the bull cases on NAND is eSSD applications for AI. And I guess the question, and I know that's going through a period of digestion now, but how big can that be as a percentage of the NAND business? Is it big enough to move the needle in the absence of some of the price elasticity we've seen in the past? How impactful is eSSD in your view?

Question: Chris Caso - Wolfe Research, LLC - Analyst : I mean, with that achieving that multibillion, can that be done irrespective of kind of an overall recovery in NAND? In other words, rather than pay attention in the broader NAND business, should I be paying attention specifically to the eSSD business?

Question: Chris Caso - Wolfe Research, LLC - Analyst : Out into next year, and I mean, this is the difficult question where we've been waiting for this cyclical recovery, the improvement in margins for a while. And it's not just you, it's pretty much every company I cover. We've been sort of working through this. What's sort of the end game here? If you're right, we've got this kind of recovery in the second half of the year. What's the kind of outlook into next year if it goes as you're hoping right now?

Question: Chris Caso - Wolfe Research, LLC - Analyst : So it's a function of getting the inventory cleaned out, letting HBM grow and assuming that the CapEx commentary doesn't change as a result of DeepSeek and (inaudible). I guess it sounds like, but what you're saying right now, it hasn't.

Question: Chris Caso - Wolfe Research, LLC - Analyst : It's just interesting how that news sort of came out about the same time as very aggressive, very favorable CapEx numbers from the end customers, which is something we have to digest, but that's what we do for a living here. All right. I think we're at time. So I think we're going to leave it there. Mark, Satya, thanks for joining us.