Micron Technology Q2 2005 Earnings Conference Call Transcript

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

Question: Michael Masdea - Credit Suisse First Boston - Analyst : Good quarter. I guess the first question is a bit of a surprise on the production side and also on the spending coming in a little bit lower. Could you walk us through the details of what happened on the production side and the spending side and the sustainability? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Michael Masdea - Credit Suisse First Boston - Analyst : And then if you look into the May quarter those are all sustainable? And what kind of production growth are you looking for?

Question: Michael Masdea - Credit Suisse First Boston - Analyst : Great. And Mike you had mentioned bit per box. It sounds like it was a fairly normal change in bit per box. Is that fair? And we should we see that increase given the price weakness here recently?

Question: Michael Masdea - Credit Suisse First Boston - Analyst : Last question real quick. On DRAM ASP are we getting near the level where it's a critical paint point for the Tier 2 players? And do the Tier 1's, given their flexibility capacity, do they have a little bit lower pain point when you kind of blend the whole picture?

Question: Michael Masdea - Credit Suisse First Boston - Analyst : Thanks. Nice quarter.

Question: Chris Danely - J.P. Morgan - Analyst : Hi. Can you comment on what you're overall wafer starts did quarter over quarter? And what you expect them to do going into fiscal Q3?

Question: Chris Danely - J.P. Morgan - Analyst : Up to 60?

Question: Chris Danely - J.P. Morgan - Analyst :

Question: Andrew Root - Goldman Sachs - Analyst : Just on the OpEx controls, and I what you're saying for the run rate for SG&A and R&D. Are most of the pressure points to that budgeted to the down side in the next couple of quarter? Or was this kind of a unique quarter where you were able to keep things under control?

Question: Andrew Root - Goldman Sachs - Analyst : Okay. The - - Mike, it wasn't clear from the discussion on NAND Flash if there was a chance for significant revenues in the May quarter for NAND. The market is very tight right now. And probably the operating income profile is little better.

Question: Andrew Root - Goldman Sachs - Analyst :

Question: Krishna Shankar - JMP Securities - Analyst : What percent of revenues this quarter would you describe as CC DRAM? And are you still able to maintain that $1 sort of ASP premium relative to contract ASP?

Question: Krishna Shankar - JMP Securities - Analyst : Yes. Are you still able to maintain sort of $1 premium in terms of your blended ASP versus sort of the street contract ASP? You talked about that in --

Question: Krishna Shankar - JMP Securities - Analyst : And what gives the connection that the weakness we are seeing in DRAM pricing is seasonal and what kind of data points do you see that would suggest a strengthening in DRAM demand and price firming going forward?

Question: Krishna Shankar - JMP Securities - Analyst : And final question. By the end of this year would NAND Flash be you think 10% to 15% of revenues?

Question: David Wong - A. G. Edwards & Sons, Inc. - Analyst : Thank you very much. Did you mention just now what the cost differential for you is on DDR2 versus DDR? And if you didn't can you give us some idea?

Question: David Wong - A. G. Edwards & Sons, Inc. - Analyst : But DDR2 does cost more for Micron even if you're not giving us the exact number, is that correct? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Gus Richard - First Albany Corporation - Analyst :

Question: Gus Richard - First Albany Corporation - Analyst : Okay. And any more granularity on the CMOS image sensors as far as the split of revenues?

Question: Gus Richard - First Albany Corporation - Analyst : Last final one for me. On DDR2 RAM's, it would appear that pricing was very weak on DDR2 early in the quarter. Was that attributable to like a slow ramp in notebook conversion to DDR2 or was there some other explanation for that?

Question: Gus Richard - First Albany Corporation - Analyst : Okay. So that ramp was as expected. Okay thanks a lot. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Bill Gazellum - Davidson Investments - Analyst :

Question: Bill Gazellum - Davidson Investments - Analyst : I can hear you. I don't know where the static is [inaudible].

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : I still hear the static. Can you give us a sense on average selling price? I guess last time you said that you expected ASP's to down for DRAM is about 10% to 15%. What's your expectation for this current quarter?

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : Okay and then a followup. What percentage of your business was in the spot market?

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : Okay. And just for comparison sake, what was that level or percentage in the February [inaudible] and the November quarter? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : Okay. Thank you.

Question: Alan Davis - McAdams Wright Ragen - Analyst : A couple of questions. I was wondering if you can give us more detail on contract prices since the end of the quarter just in terms how much down is it? And then secondly, you know, considering the Infineon/Rambus settlement one could speculate that perhaps Micron at some point is more likely to pay royalties to Rambus. Can you just give us any information there, whether that would be a correct assumption or not, would be helpful.

Question: Bill Gazellum - Davidson Investments - Analyst : I think the last time the operator was on the line having me to requeue. When you asked for me last time. Sorry about that. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Bill Gazellum - Davidson Investments - Analyst : Is it a collect recollection that you all had said that CapEx would be front end loaded this fiscal year? And if that was the case does it continue to be the case? And then the second question for those of us who don't follow plant by plant what's going on: Would you walk us through what recent comments or announcements there have been from competitors relative to production outlook changes that they have?

Question: Bill Gazellum - Davidson Investments - Analyst : That sounds like that's tying in with many of the advance projections which are 50 % plus or minus increase.

Question: Mona Irabi - Bruzeta Group - Analyst : I wanted to ask about the ASP for the quarter. I don't know if you already said it, what was the ASP for the quarter?

Question: David Wu - Global Crown Capital - Analyst : Can you just - - I missed point you said about the Q3 where in fact the increase in yields that you got from your top PC OEM's is a function of them having more, what do you call it, more memory content or a little bit better than seasonal demand makes out there. The second one, I was curious about is with NAND Flash pretty much sold out for a good part of this year: how does that affect the swing capacity off of the largest dealer manufacturer? And could that tighten and lessen the pricing pressure on the DRAM's?

Question: David Wu - Global Crown Capital - Analyst : So when would it show up in DRAM pricing, or lessening of the supply?

Question: David Wu - Global Crown Capital - Analyst : Okay. Thanks.

Question: Matt Gable - Calypso Capital - Analyst : My question has been answered. Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Manisch Goyle - TIAA - Analyst : Just a clarification. Did you say the gross margins for Flash were the lowest among your product mix and then DRAM was marginally better than that?

Question: Manisch Goyle - TIAA - Analyst : And next quarter you be increasing your capacity for Flash is that right? That's correct. We're on a rampup to about somewhere to between 3000 to 5000 outs a week by summertime. And similarly you will also be increasing capacity for DDR2 for next quarter?

Question: Manisch Goyle - TIAA - Analyst : So overall product mix will shift towards lower margin product. Could you give some idea as to, is it like a 5% swing or a 10% swing from this quarter versus next quarter?

Question: Manisch Goyle - TIAA - Analyst : Okay. So you expect the Flash margins to improve. And could you just, from a capacity perspective what will be the - - from a production perspective what will be the swing between these two from this quarter versus next quarter?

Question: Manisch Goyle - TIAA - Analyst : Yes, for flash and DDR2. Or maybe if you can provide that separately. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Manisch Goyle - TIAA - Analyst : Thank you very much.

Question: Ben Lynch - Deutsche Bank Securities - Analyst : Sorry if isn't perfect conditions. Hopefully you can hear me. Could you maybe comment on the - - if you haven't done this already the sort of supply and pricing environment for 1.3 megapixel in the census currently? And what you're projected resolution mix is for Q3? And then I have a followup please.

Question: Ben Lynch - Deutsche Bank Securities - Analyst : Great thank you. And the second question I had was, sorry again this was asked. If ASP's were kept flat for this quarter from where they are now, sort of three weeks into the quarter, what sort of Q on Q decline would that imply?

Question: Ben Lynch - Deutsche Bank Securities - Analyst : Okay. Can I try another one, since you wouldn't answer that one. I heard you say I think that in the market DDR2 cost premiums are anywhere from 10% to 20% and that at the moment the ASP premium is about 10%. So unless you guys are at the low end of that cost premium range it would sort of suggest that you would be hitting lower DDR2 margins than you are DDR1 margins. Is that right? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Terry Nguyen - Susquehanna Financial Group - Analyst : Could you give sense in terms of your NAND Flash is it right now on 901 nanometers? And is it a 2 gigabit?

Question: Terry Nguyen - Susquehanna Financial Group - Analyst : And what is your road map? You have - - what's your plan there you're going to have a single [Dye] 4gigabit coming out later this year?

Question: Terry Nguyen - Susquehanna Financial Group - Analyst : So the 3000 to 5000 wafer per week that's comming out the current quarter that is the 2 gigabit?

Question: Terry Nguyen - Susquehanna Financial Group - Analyst : And then currently on your DDR2 are you also on 90 nanometer? And could you give us how's the yield coming out on that?

Question: Adam Parker - Sanford C. Bernstein & Company, Inc. - Analyst : Hi. Can you talk a little bit about what you think is causing the share gain in DRAM?

Question: Adam Parker - Sanford C. Bernstein & Company, Inc. - Analyst : Just more volume, that simple?

Question: Adam Parker - Sanford C. Bernstein & Company, Inc. - Analyst : Can you talk about your cost positioning a little bit versus your competitors? I know in the past you've pretty much consistently stated that you're the lowest cost producer. But how has that changed recently. How do you think it's going to change toward the end of the year? And is there some point here where you may be having a lower percentage on 300 millimeter for DRAM's is going to hurt you guys?

Question: Adam Parker - Sanford C. Bernstein & Company, Inc. - Analyst : Thanks.

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : Can up give us a since of fiscal '06 CapEx. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Hans Mosesmann - Moors & Cabot, Inc - Analyst : Thank you.