Micron Technology Inc Q2 2025 Earnings Call Summary

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

Question: Harlan Sur - JPMorgan Securities LLC - Analyst : Yeah, good afternoon. Thanks for taking my question. Back in mid-February at an investor conference, I know the team had walked us through the dynamics on a weaker gross margin profile during the May quarter. That's playing out, but you did anticipate an improved gross margin profile beyond this quarter, fiscal Q3. So is that still the case that we should see gross margin improvements maybe starting in fiscal Q4 and potentially beyond? And is that a possible data center and your consumer-related products? Is that across total DRAM and your NAND segments? Any color here would be great.

Question: Harlan Sur - JPMorgan Securities LLC - Analyst : I appreciate that. And then, Sanjay, you increased your industry bit demand outlook from mid-teens last earnings to mid- to high teens this quarter for calendar '25 for DRAM. I assume part of it is the HBM related dynamics as you increased your TAM outlook for HBM this year. But is the team seeing any other segments within DRAM that are driving the better industry, this demand profile as the year unfolds?

Question: Timothy Arcuri - UBS Investment Bank - Analyst : Thank a lot. Mark, can you give us a little detail on the fiscal Q3 guidance? You're guiding revenue up about $750 million. How much of that is coming from DRAM versus NAND? And I know you said that bits are up in both. But can you give us a sense of how much bits are up in each of those two markets? And then I had another question as well.

Question: Timothy Arcuri - UBS Investment Bank - Analyst : Okay. But I guess, Mark, can you say that you expect revenue growth in both DRAM and NAND as well?

Question: Timothy Arcuri - UBS Investment Bank - Analyst : Okay. Cool. And then -- so Mark, I mean, obviously, everything you're doing here is great. I think the bugaboo obviously is -- margins are still a bit low, certainly into the fiscal Q4. So I guess I had like a two-part question. One, I know you don't want to guide fiscal Q4 margins, but do you think you can get back to what you just did in fiscal Q2 in fiscal Q4? And I guess, broadly, when does this stuff clear and sort of we begin to see the true goodness flowing through from HBM and from all the cost downs you're doing on the non-HBM DRAM side? So sort of when do we start to get kind of a clean gross margin number, if you will?

Question: Sreekrishnan Sankarnarayanan - TD Cowen - Analyst : Thanks for taking my question. I have two of them, first either Sanjay or Mark. You've seen some of the memory prices improve of late. I'm just wondering how much of that is true end demand versus actually tariff-related pull-ins? And how sustainable do you think the industry pricing dynamics today are?

Question: Sreekrishnan Sankarnarayanan - TD Cowen - Analyst : Got it. Thanks, Sanjay. And then a quick question on the gross margin side. Clearly, HBM3E 8-high is obviously a mature technology as you move to 12-high in HBM port. Would the yields might be lower than 8-high? Just kind of curious, does it have any negative impact on gross margins? Or is it de minimis at this point?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. Thank you. I wanted to make sure I got the inventory targets right. So you're at 153 days and you'll be below the target model, which I think is 120 days in two quarters. And I guess if that's right, that seems like a lot of reduction. Can you talk about how much volume do you need to do that? How much is the inventory kind of impacted by some of the HBM supply trends, things like that? Could you just characterize a little bit, how you reduce that much inventory?

Question: Joseph Moore - Morgan Stanley - Analyst : Okay. Great. And did you guide inventory for this coming quarter with -- I assume that starts to come down now?

Question: Christopher Muse - Cantor Fitzgerald & Co. - Analyst : Yeah. Good afternoon. Thank you for taking the questions. I guess first question, one to follow up on gross margins, Mark, is there a point where we're thinking about the underutilization charges and the period cost into kind of May and August on the NAND side? And then is there also a way to think about the incremental construction cost as we go into August and November?

Question: Christopher Muse - Cantor Fitzgerald & Co. - Analyst : Very helpful. And a quick follow-up. You revised your HBM industry revenue outlook higher. Curious if there's a framework and how you're thinking about kind of first half versus second half for the industry?

Question: Christopher Caso - Wolfe Research, LLC - Analyst : Yes. Thank you. First question is with regard to the lower end of the market. And if you could tell us about what the exposure is, particularly on DRAM side, LP4 and DDR4. And I guess as you start to see growth in HBM, get some normalization in some of the consumer markets as you go to the second half of the year, I guess, is that going to be kind of -- have a de minimis effect on revenue and margins as you go into the second half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 20, 2025 / 8:30PM, MU.OQ - Q2 2025 Micron Technology Inc Earnings Call

Question: Christopher Caso - Wolfe Research, LLC - Analyst : Yes. It's just -- does that have a de minimis effect on margins? I guess the point is, does that cease being a drag on margins as you go into the second half as other parts of the business grow?

Question: Christopher Caso - Wolfe Research, LLC - Analyst : Thank you. As a follow-up on HBM, what you said in the past is you sold out for the year. But yet, your TAM assumptions have moved higher for the past several quarters. As we look into next year, presumably, the higher TAM this year translates to your entire TAM assumptions as you go to next year. Do you still have the capability to increase your capacity to maintain that market share in HBM, which is equal to our overall share of DRAM as you go into next year?

Question: Christopher Danely - Citigroup Inc - Analyst : Thanks, guys. So if we look at the May guidance and then just going back the last three quarters, your revenue is between $7.8 billion and $8.8 billion per year. And the last time that happened was about three years ago, that was the last upturn, but your gross margins were 10 points higher. So why are gross margins -- because depreciation hasn't changed that much. Why are gross margins like 10 points lower at essentially the same revenue base? And does this mean that we can forget about your gross margins ever going to the 50s again? Or maybe give us a path to getting them back there, if you think that that's conceivable?

Question: Christopher Danely - Citigroup Inc - Analyst : Thanks, Sanjay. Just one brief follow-up on that. So you talked about increasing the mix to higher-value solutions. And then in the commentary and also in the press release, you said that part of the reason that the gross margin was lower was this increasing consumer exposure. And your NAND actually was down a lot more than DRAM. So are you seeing increased consumer exposure in DRAM? And why is that happening? And how do you guys change that?