Micron Technology Inc Post Q3 2024 Earnings Analyst Call Transcript

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

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah. Thanks for doing the after call and let me ask a question. So going on the HBM discussion a little bit further. I guess two quarters ago, I think you guys reported some prepayments. Given the agreements that you're establishing on HBM, I'm curious, is there any update to the prepayments? I think it was $600 million previously these last two quarters. And then I guess as part of that, how do I think about the capacity footprint of HBM? How that's evolved over the course of this last quarter? And is there any flexibility to move that higher? Or are you just pretty much completely set for fiscal '25 at this point?

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Thank you. And Mark, just a quick follow-up. How do you think about operating expenses as the fundamentals improve from here? I know you gave this quarter's guidance, but just curious of how you would think about the glide path beyond this quarter?

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Thank you, Mark.

Question: Srini Pajjuri - Raymond James - Analyst : Yeah, thank you, guys. My question is on inventories at your customers, maybe just looking at your PC and smartphone customers. There is some talk that some of the customers prebuilt some inventory ahead of the price increases. If you can talk about what your view based on your visibility as to how much inventory they are holding. And then on the data center, it looks like the inventory correction is mostly done. And I'm just curious, you talked about some optimism about even standard server demand picking up a bit, so I was wondering if you can comment on that as well.

Question: Srini Pajjuri - Raymond James - Analyst : Great. Sumit, maybe one quick follow-up on that. You mentioned the high-cap DIMMs as one of the strong areas in the quarter. Just curious, I mean, how does high-cap DIMM, I guess, compare versus HBM in terms of the proprietary nature of the product and the complexity? And also given that it's higher margin, seems like, than in DDR, is it as good a margin as HBM? And also, do you think that sustains? And also, if you could put that into some context as to how big the SAM is, what the applications are for this particular product. Thank you.

Question: Srini Pajjuri - Raymond James - Analyst : Thank you.

Question: Brian Chin - Stifel Nicolaus and Co Inc - Analyst : Yeah, it's Brian Chin here. Thanks for taking a few questions. Maybe just one kind of near term. First, the -- I know you don't give detailed P&L's between DRAM and NAND, but maybe just kind of in terms of a crossover, was your NAND business profitable in fiscal 3Q? Or if not, do you expect it to be in fiscal 4Q? And is that low single-digit bit shipment growth guidance in NAND reflecting more of the pull-forward of smartphone demand? Or is that somewhat reflective of your increasing bit shipment constraint as utilization rates there fully recover?

Question: Brian Chin - Stifel Nicolaus and Co Inc - Analyst : Got it. And that part about the floor guidance for bit shipment growth, low single digits in NAND?

Question: Brian Chin - Stifel Nicolaus and Co Inc - Analyst : Okay. Great. And maybe just for follow-up, I think other folks have maybe tried to get at this somewhat as well. But at the expected level of CapEx you're currently communicating now for fiscal '25, understanding that more than half of that increases for construction CapEx, is it reasonable to expect Micron will be able to increase bit supply in that mid-teens for DRAM, maybe high teens for NAND next year? Or would more investment be needed to grow in line with the market if bit demand is at that level or even stronger next year?

Question: Brian Chin - Stifel Nicolaus and Co Inc - Analyst : Okay. Thanks. Very helpful.

Question: Harsh Kumar - Piper Sandler Companies - Analyst : Yeah. Hey, guys. And I kind of look at your long-term model and I look back a little bit, I saw that your peak margins are somewhere in the 61.5% range. Now you've got contracted pricing for HBM, sounds like, for '24 and '25, but it's hard for me to think that your pricing would call for HBM gross margin to be in that range, in that 60% range because that's what logic commands. Could you -- I was wondering if you give us an idea of what your aspirational gross margin is? And if you can't -- for HBM. And if you can't give us a number, maybe help us think about a framework so that we can try and get an idea of where you might be -- what you might be planning for margins for HBM?

Question: Harsh Kumar - Piper Sandler Companies - Analyst : Understood. And just a quick follow up. You've talked about pricing locked into '25 fiscal. Could you talk about your design visibility? How many years? Is that also 2025 is an indication of design visibility with large GPU vendors? Or is your design visibility longer than that?

Question: Harsh Kumar - Piper Sandler Companies - Analyst : Congratulations, guys, and super helpful. Thank you.

Question: Vivek Arya - BofA Global Research - Analyst : Thanks for the follow up. Just a few clarifications on the CapEx side. So the mid-30s CapEx intensity, is that gross or net or any chips funding? And are you assuming any depreciation benefit and gross margin benefit for like Intel has been doing?

Question: Vivek Arya - BofA Global Research - Analyst : Yeah. So the mid-30s is a net number and gross CapEx could be higher than 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. JUNE 26, 2024 / 10:00PM, MU.OQ - Q3 2024 Micron Technology Inc Post Earnings Analyst Call

Question: Vivek Arya - BofA Global Research - Analyst : Got it. And then on WFE, can you give us a sense, Mark, on what mix in CapEx in fiscal -- or what is the mix in fiscal '24 and how should we conceptually think about the mix in fiscal '25?

Question: Vivek Arya - BofA Global Research - Analyst : Got it. And anything you can comment on EUV -- sorry, please go ahead.

Question: Vivek Arya - BofA Global Research - Analyst : Okay. I'll get back in the queue. Thank you.