Micron Technology Inc Q1 2025 Earnings Call Summary

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

Question: C.J. Muse - Cantor Fitzgerald - Analyst : Yeah, good afternoon. Thank you for protecting the question. I guess first question, could you speak to what gives you the confidence that we're going to see a make quarter kind of a seasonal pickup and/or cyclical pickup across both DRAM and NAND? And I guess if there's any sort of sense of magnitude we should be thinking about for each would be very helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 18, 2024 / 9:30PM, MU.OQ - Q1 2025 Micron Technology Inc Earnings Call

Question: C.J. Muse - Cantor Fitzgerald - Analyst : Very helpful. And then a quick question to Mark. Can you help us with a little more granularity in terms of the impact from NAND under loadings into the current guide as well as whether there's an impact beyond that? And then for all of calendar '25, is there a framework for thinking about the tailwind from increasing HBM mix in the revenues?

Question: Timothy Arcuri - UBS Equities - Analyst : Thanks a lot. I'm trying to get at what the magnitude of the revenue ramp is going to be in the fiscal back half. And I'm sort of looking at what you were saying about CapEx. You had said that it would be mid-30s of the full year revenue. So if I take the [14] and which was a little better than what people thought, I think most people were thinking [13].5. So you actually are doing a bit more CapEx. And if I divide by the mid, I get to a number like $40 billion for the fiscal year. I'm not asking you to guide the fiscal year, but I'm just asking you to provide some sort of magnitude for like the fiscal back half versus the fiscal front half?

Question: Timothy Arcuri - UBS Equities - Analyst : Got it, Mark. Okay. Thank you. And then I want to ask on the share repo. So in the 8-K last week that was related to the chips at it contained language that you can only buy back to offset dilution during the first two years and really you're only free to jack up the repo more than that during years three to five to bring down share count. How do you think about that in sort of in the broader capital return? Thanks Mark.

Question: Vivek Arya - BofA Global Research - Analyst : Thanks for taking my question. So Sanjay, you upgraded the HBM TAM by, I think, about 20% or so. What has changed to increase that estimate? And I think you kind of kept your target share to be the same as before, even though I think you kind of shifted it more to the second half. But what is the bottleneck? Why can't your share get to the target level earlier? Is it just a matter of rolling out in different products? So just what changed the TAM estimate? And then what is causing the change for you to get to your target more in the second half rather than I think you said sometime in '25 before?

Question: Vivek Arya - BofA Global Research - Analyst : Got it. And for my follow-up, Mark, just a few questions on gross margins. So you are guiding Q2 sales down, but gross margins are only going down by 1 point. So is that some of the tailwinds you're seeing in in HBM right offsetting some of the unit impact. So if there is a way to quantify how much lift is HBM providing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 18, 2024 / 9:30PM, MU.OQ - Q1 2025 Micron Technology Inc Earnings Call And then the other thing I just wanted to clarify, did you say gross margins higher than Q2 gross margin despite that NAND headwind? I just wanted to clarify that. So just how much lift from HBM and then is Q3 higher than Q2 from what you said before? Thank you.

Question: Joseph Moore - Morgan Stanley - Analyst : Great. Thank you. My question was also on HBM. I guess how do you think about market share there over the long term? Should we think of your natural DRAM share as being a limiter given that one of your competitors is struggling there? And at one point, you had talked about maybe having a premium pricing because of the quality of the performance per watt. Is that something you're still able to extract? Or is the focus continue to be more on supply?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. Thank you very much.

Question: Krish Sankar - TD Cowen - Analyst : Hi, thanks for taking my question. I had two of them, and sorry to harp on this point again, Sanjay. Just to clarify, you raised your calendar '25 TAM estimate from $25 billion to $30 billion. maintaining our market share, but price and volume is fixed, but the yields are improving. So simplistically, should we assume three months ago, if you thought $5.5 billion to $6 billion in HBM revenue exiting second half of 2025. That's more like $6.5 billion to $7 billion now. Is it the right math to think about for Micron's HBM revenues in sometime in second half calendar '25?

Question: Krish Sankar - TD Cowen - Analyst : Got it. Very helpful. And then a quick follow-up, Sanjay. You're at HBM3E 8-high, so when you go to 12-high, the trade ratio increases, and you go to HBM4, it's also bigger die size, trade ratio has increased. So as you make these transitions, wouldn't it have a negative impact on your gross margin purely because yield will kind of get reset? Or do you think the transition will be seamless that it should not have any impact on gross margins?

Question: Krish Sankar - TD Cowen - Analyst : Thank you, Sanjay. Very helpful.

Question: Chris Danely - Citigroup Global Markets Inc. - Analyst : Hey, thanks guys. I guess just a bigger question on DRAM. So if supply is going to equal demand next year and there's excess inventory out there, like how is the market going to do well? And then as a portion of that, you said that high-end DRAM and HBM or leading-edge DRAM and HBM are doing well. Can you just define what leading edge or what percentage of the market that is and what's going to happen to the rest of the market if it remains an oversupply?

Question: Chris Danely - Citigroup Global Markets Inc. - Analyst : Okay. Thanks Mark. And then as a quick follow-up to that. So what gets the non-leading edge DRAM market healthy again, because it is still a part of your business.

Question: Chris Danely - Citigroup Global Markets Inc. - Analyst : Got it. Thanks guys.

Question: Toshiya Hari - Goldman Sachs Research - Analyst : Great. Thank you so much for taking the question. I had two as well. The first one is on China competition. Sanjay, you mentioned LP4 and DDR4 for the rest of the fiscal year is 10% of your business. What are your thoughts on their ability to compete in DDR5 and LP5, not in the near term, but as you think about the competitive landscape over the next, call it, 18, 24 months? What are your thoughts? And how do you intend to respond to that?

Question: Toshiya Hari - Goldman Sachs Research - Analyst : Great. And then as my follow-up, you talked about high-capacity enterprise SSDs, displacing nearline HDDs over the next couple of years. I know this is a view that you've held for a very long time. I'm just curious if you've seen anything recently that would drive an acceleration in that trend? You mentioned NAND front-end cost downs for you guys in fiscal '25 being in the low teens. That seems pretty similar to what your peers in the drive business are doing so. I'm just curious if anything has changed recently as you think about that dynamic.

Question: Toshiya Hari - Goldman Sachs Research - Analyst : Thank you.