Micron Technology Inc Post Q2 2025 Earnings Analyst Call Transcript

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

Question: Vivek Arya - Bank of America - Analyst : I had two of them. First on this HBM sales increase to $35 billion. Is that unit or content driven? Like do you see more GPU units versus before? Or is that more content, faster move to 12-high or whatnot? And is there flexibility to raise this number further?

Question: Vivek Arya - Bank of America - Analyst : And for my follow-up on gross margins, I think, Mark, you mentioned some start-up cost headwinds in Q4, if I recall. Can you help us quantify? And do they persist beyond Q4, into Q1, et cetera? And kind of related question on gross margins. Are you shipping bits from higher-cost inventory? So when does that headwind go away?

Question: Srinivas Pajjuri - Raymond James Financial Inc - Analyst : Thank you. I have a couple as well. You talked about price premium as we go from 8-high to 12-high. Can you clarify if it's like-for-like price premium? Obviously, you'll get a better price because of higher capacity. And then also on the same topic, as we go from 3E to 4, can you talk about -- at a high level, can you discuss the differences and similarities of that transition versus when you went from 3 to 3E and 3E, I think, you went from 8 to 12. I'm just curious how difficult of a transition HBM4 is going to be from a manufacturing standpoint.

Question: Srinivas Pajjuri - Raymond James Financial Inc - Analyst : Okay. Got it. And then on the TAM, you raised it last quarter and this quarter as well. And at the same time, you're maintaining your market share exiting this year, even though, I guess, you've been at least -- you've been talking about getting sold out for the year. I'm just trying to reconcile those three items because -- is it because of better yields that you're able to kind of maintain your market share targets exiting the year? Or is there -- I'm just trying to, I guess, reconcile that. And then the follow-up to that is that as you go into next year, obviously, one of your competitors is still struggling to qualify at NVIDIA. So if an opportunity arises, if more market share is available in the market, I guess, how quickly can you ramp up supply if there's an opportunity for you to capture more market share? Thank you.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : I guess, Mark, I want to double-click on one of the comments that you made in the Q&A around. I think some of the gross margin impacts. I think you had mentioned that you expect all-in DRAM costs down to be more or less flat this year. I think your last kind of description was more of like a mid- to high single digit, albeit only the front-end cost structure of DRAM. So just a point of clarification there. Is that -- is the new flat number of projection based on inclusive of HBM? Just if you can help us understand that.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Okay. And then as a quick follow-up, a lot of focus on HBM, but I think one of the other areas that you guys have done very well in is LPDDR5X on these AI servers. As we move to the SOCAMM architecture with the GB300, do you guys envision yourself maintaining your strong share position? And is there an ASP uplift that comes with moving to a module relative to the solder down solution in the G200 cycle?

Question: Vijay Rakesh - Mizuho Financial Group - Analyst : Just on HBM, I think your market share has almost doubled from the beginning of the year by 4Q, I guess, exiting it in a DRAM market share in HBM. And so as you look at 2026 as HBM4 ramps and given that market share, your revenues in '26 could probably double. Is that fair? And is your capacity on HBM still going up similarly in '26? And I have a follow-up.

Question: Vijay Rakesh - Mizuho Financial Group - Analyst : And then on the NAND side, I hear you guys were a little cautious on the NAND side. But as you look at the AI servers, are you seeing a faster pull-through on your QCS versus hit, I guess, as uptick, as you said?

Question: Vijay Rakesh - Mizuho Financial Group - Analyst : Service side, yes, on the service side. Are you seeing much faster uptake on your QLC SSD?

Question: Vijay Rakesh - Mizuho Financial Group - Analyst : Right. Thank you.

Question: Brian Chin - Stifel Financial Corp - Analyst : Let me ask a few questions. Could you maybe expand a little bit more on what you're seeing in the enterprise SSD market currently? I think customers clearly digested some in fiscal 2Q, but your guidance for fiscal 3Q, I thought stated that data center NAND shipments do improve Q on Q. So are you starting to see that tick up some? And is that helped by Blackwell shipments also beginning to pick up for all the discussion this week?

Question: Brian Chin - Stifel Financial Corp - Analyst : Okay. That's helpful. And then maybe a question about sort of the China memory supply that clearly negatively impacted pricing on legacy DDR5 DRAM, as well as the NAND kind of in second half last year. There's more consumer bits or bit demand crosses over to DDR5. Are you seeing that immediate supply and pricing risk from China start to tail off given the bigger technology and quality hurdles posed by the more advanced products?

Question: Brian Chin - Stifel Financial Corp - Analyst : Great. And it sounds like -- the tailwind of that question was just that you're seeing less of that direct competitive overlap in DDR5.

Question: Karl Ackerman - BNP Paribas - Analyst : I have two. I'm curious why you believe the industry will ship below end market demand for DRAM and NAND this year given your commentary about shipping below demand but not losing share. I guess does -- should we assume that higher mix of HBM is helping offset some of the competitive dynamics from Chinese players for consumer DRAM and NAND? And I have a follow-up, please.

Question: Karl Ackerman - BNP Paribas - Analyst : Got it. Just as a quick follow-up to that because it's related. So I suppose if the industry supply is being restrained by overall capital investment and the HBM trade ratio continues to increase, as you've indicated, does capital investment need to increase from this $14 billion annual rate to support your market share goals on HBM into fiscal '26? And do those two factors limit margin upside from a growing mix of HBM sales?

Question: Mehdi Hosseini - Susquehanna International Group - Analyst : Thank you. A couple of follow-ups from my end. The first one is for the team. Sanjay has been talking about how Micron is currently best positioned in terms of competitive advantage. And I want to better understand the underlying assumption, especially as we look at the historical earnings trend back in calendar '18. Micron had the best earning for calendar year '18. Micron was able to recognize more than $15 of EPS. So when Sanjay talks about and refers to best competitive positioning, should we assume that the earning opportunities could be double digit, setting a new record? And any color there would be appreciated. And I have a follow-up.

Question: Mehdi Hosseini - Susquehanna International Group - Analyst : And I appreciate all the details. I guess, what we're struggling here, given all the secular trends that you detailed here, we're struggling with better understanding the longevity and earning opportunities that these secular trends are offering. Obviously, until the mix increases dramatically, you are susceptible to market condition as we have witnessed in the past quarter. But we're just trying to understand, okay, as the mix increases to include more secular trend as capacity is allocated to higher margin, how is it going to play out in terms of operating profit? Your revenues have already exceeded prior peak with earnings, and sustainability of earnings would also happen. I guess, would it be fair to say that we just have to where they see how it plays out? Because there are also variables that holds you back from providing specific targets.