Good day ladies and gentlemen and thank you for your patience. You've joined the Third Fiscal Quarter 2019 Financial Call for Micron Technology. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Head of Investor Relations, Farhan Ahmad. Sir, you may begin.

Thank you, and welcome to Micron Technology's third fiscal quarter 2019 financial conference call. On the call with me today are Sanjay Mehrotra, President and CEO; and Dave Zinsner, Chief Financial Officer. Today’s call will be approximately 60 minutes in length. This call, including the audio and slides, is also being webcast from our Investor Relations website at investors.micron.com. In addition, our website contains the earnings press release, filed a short while ago. Today’s discussion of financial results will be presented on a non-GAAP financial basis unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures may be found on our website, along with a convertible debt and capped call dilution table. As a reminder, the prepared remarks from this call and webcast replay will be available on our website later today. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including information on the various financial conferences that we will be attending. You can follow us on Twitter at MicronTech. As a reminder, the matters we will be discussing today include forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause the actual results to differ materially from statements made today. We refer you to the documents we file with the SEC, specifically our most recent 10-K and Form 10-Q, for a discussion of risks that may affect our future results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after today’s date to conform these statements to actual results. I will now turn the call over to Sanjay.

Thank you, Farhan. Good afternoon, everyone. Micron delivered solid fiscal third quarter results despite headwinds from industry oversupply and steeper-than-expected price declines. This financial performance reflects our continued strong execution on technology advancement, product cost reduction, and pricing discipline. Our healthy balance sheet, structurally improved profitability, and winning team set the foundation for us to emerge even stronger when the industry environment recovers. We are confident that the long-term demand outlook for memory and storage is compelling, driven by broad secular trends such as AI, autonomous vehicles, 5G, and IoT. The new Micron is well positioned to take advantage of these trends, with innovative products, a responsive supply chain, and well-established relationships with customers worldwide. Over the last few months, customer inventory improvements have progressed largely in line with our expectations in most end markets. This reinforces our confidence that bit demand for DRAM will return to healthy year-over-year growth in the second half of calendar 2019. NAND bit demand is also increasing in most markets as elasticity kicks in, in response to price declines over the last year. Even as customer inventory levels of DRAM and NAND improve across most end markets, producer inventory levels are elevated. Although previously announced CapEx cuts will start to impact industry supply in the second half of the calendar year, our assessment is that further cuts in CapEx and bit supply will be required to return the industry to a healthy supply-demand balance. I will discuss our actions on this front shortly, but first, let me provide an overview of our FQ3 results. At our 2018 Analyst Day, we discussed our priorities related to technology, cost competitiveness, and high-value solutions. Solid execution on these strategies has now yielded over 2,000 basis points of EBITDA margin improvement relative to our peers since 2016. Unlike…

Thanks, Sanjay. Micron’s fiscal third quarter results were within the guided revenue range and above the guided EPS range that we provided on our last call. We also generated healthy levels of free cash flow and made further progress on our share repurchase program. Total fiscal third quarter revenue of approximately $4.8 billion was at the midpoint of our guidance range and was down 39% on a year-over-year basis and down 18% sequentially from FQ2. Both DRAM and NAND revenue were negatively impacted by restriction on sales to Huawei, without which we would have reached the high end of our revenue guidance. DRAM revenue was approximately $3 billion, representing 64% of total revenue. DRAM revenue declined 45% year-over-year and 19% sequentially from fiscal second quarter. Compared to the prior quarter, the DRAM ASP decline approached 20%, while bit shipments were roughly flat. If not for the impact of Huawei, bit shipments in DRAM would have increased sequentially as we had guided on our last quarter’s earnings call. NAND revenue was approximately $1.5 billion, representing 31% of total revenue. NAND revenue declined 25% relative to fiscal third quarter 2018 and declined 18% sequentially from the fiscal second quarter. Overall NAND ASPs declined in the mid-teen’s percent range, while shipment quantities declined in the mid-single-digit percent range compared to the prior quarter. Adjusting for the Huawei impact, bit shipments came in better than our expectation due to stronger component sales. Now turning to our revenue trends by business unit. Revenue for the Compute and Networking Business Unit was $2.1 billion, down 48% year-over-year and 13% from the prior quarter. Lower pricing across major market segments continued to be the leading cause of lower revenue. However, normalized customer inventory levels led to shipment volume growth in fiscal third quarter, particularly in graphics and…

Thank you, Dave. Clearly, fiscal 2019 has been challenging for both Micron and the industry. While we continue to believe that the industry is structurally stronger, the confluence of events that impacted this year was unprecedented. Still, we have fared better due to the tremendous progress we have made on improving our product costs, advancing our technology, and increasing the mix of high value solutions. Recent industry financial results show that Micron’s profitability and balance sheet are best-in-class. Having said that, we are not resting on our recent accomplishments and are continuing to raise the bar for ourselves. Our CapEx and expense controls reflect our focus on profitability and free cash flow. With the economic and trade challenges facing the industry, the near term continues to be uncertain. But looking beyond these challenges, I’m excited about Micron’s future. We are in the early innings of growth in cloud computing, and the value of data in the new economy is going to drive secular growth in numerous memory and storage-intensive applications. AI, autonomous vehicles, 5G, and IoT will drive significant improvements in our lives, and we look forward to bringing the value of our innovative, market-leading solutions to our customers. In April, we issued our fourth annual sustainability report, which details Micron’s commitment to enhancing the world we live in through our products and our business practices. We achieved perfect scores on industry-standard environmental and social audits of our facilities in 2018 and 2019. Our ongoing focus and improvements in sustainable practices is a competitive differentiator for both our customers and our employees, and an important part of the transformation we are driving at Micron. I’m energized by the potential ahead of us and proud of the culture of innovation and execution that we are building. We will now open for questions.

Thank you. [Operator Instructions] Our first question comes from the line of C.J. Muse of Evercore. Your line is open.

Good afternoon. Thank you for taking the question. I guess first question, I was hoping you could provide a little more granularity on Huawei. You talked about the ability to sell subset of products, can you walk through, I guess, where you are allowed, where you are not? They are, I believe a [13%] customer at least quarter fiscal year. What kind of impact do you expect as we proceed in the coming quarters across both DRAM and NAND?

So, as I said in the prepared remarks, after the Huawei was placed on entity list, we began review of our products against the export administration required regulations and through that analysis we determined that certain of our products, a subset of our products that we were previously shipping to Huawei could continue to ship because it is lawful it is compliant to those export regulations. And you know of course, it had impact as Dave noted. In our FQ3, it had an impact because we could not ship at that time any product to them of nearly $200 million. And for FQ4, there would be impact to our revenue. What I would say is, that our revenue with Huawei in FQ4 would be less than what it otherwise would have been if Huawei was not on the entity listing. And of course, as we look ahead beyond FQ4, if Huawei continues to be on the entity list then in fiscal year 2020 as well, we would have an impact compared to what our revenue with Huawei would have been if they were not on the entity listing. Of course, we are a supplier to all customers in all end markets across the globe and we will – and our presence with several of those other customers is growing in terms of our penetration there, in terms of our share there. And we will continue to work on adjusting those, but we would not be able to make up in fiscal year 2020 if this were to continue the full shortfall and all though we plan to make a part of it through other parts of the business.

That's very helpful. And if I could …

And it affects both our DRAM, as well as the NAND side of the business.

Okay, great. Thank you. And if I could follow up on CapEx, you talked about a meaningful cut. I guess, is meaningful meaning [indiscernible] territory? And as part of that, is it more focused on DRAM, NAND, both, how should we think about the implications there? Thank you.

So, with respect to CapEx, we have said meaningful reduction in CapEx from the fiscal year 2019 levels. And we will provide more details in the next call as we finalize our plans. Of course, our goal is to have our long-term considerations in mind with respect to technology and product cost capability, but most importantly to have our supply bit growth aligned with our expectations of demand bit growth. And when we look at supply bit growth, of course, we keep in mind the inventory that we are carrying from fiscal year 2019 into fiscal year 2020 for both DRAM, as well as NAND, which will help us supply some of the demand requirement in fiscal year 2020 and enable us to reduce our CapEx requirements in fiscal year 2020 and our CapEx management, of course, applies to both NAND, as well as DRAM.

Thank you. Our next question comes from the line of Mark Newman of Bernstein. Your question please.

Yes, hi. Thanks for taking my call, taking my question. And the first question really following on Huawei, can you give a little bit more quantification on how much the 13% or so revenue you expect you will be able to continue to export to Huawei? And can you give us some guidance also for your bit growth for this next quarter? I don't think you have mentioned that yet on the earnings – on the guidance, if you can mention about your expectation for bit growth for the following quarter? And I have a follow-up question. Thanks.

So, with respect to Huawei, as I've said before, our revenue expectation in fiscal Q4 is less than what it would have been without Huawei being on the entity list. Beyond that we don't really get into specifics in terms of revenue etcetera on a customer by customer basis. Of course, our revenue expectation with Huawei is baked into the guidance, revenue guidance that Dave provided for FQ4 of $4.5 billion plus or minus $200 million. And your second question, with respect to …

So, on DRAM bit growth, we said it would be up meaningfully in the fourth quarter, NAND will be more modest given the environment.

Okay. Thanks, thanks very much Dave and Sanjay. My final question is really taking a step back and looking at the industry, you know clearly it has been the quite challenging year, this year with the oversupply, but just looking forward to 2020 with the pretty severe cuts, you guys are making on utilization and CapEx and with similar cuts from some of your competitors in Asia, I'm just curious what you think for next year, I guess it very much depends on the economic outlook, which is a little bit unpredictable at the moment, but looking forward to 2020, do you not think that there could be a danger of potential under supply at some point next year? I'm just curious how you're thinking about that because to me, this level of utilization and CapEx, it seems like inevitably there will be a period of under supply coming, just a matter of time.

So, as we have said, the industry is in oversupply right now, both in DRAM, as well as in NAND. And while demand is increasing in the second half both for NAND and DRAM, the oversupply situation does persist and we have talked about in DRAM, challenging pricing environment and therefore it's important that CapEx cuts are made, as well as supply bit growth has managed to bring the supply bit growth in line with the demand growth, as well as over time to bring inventories in line with expectations as well. So, we are not providing a fiscal year 2020 guidance at this point, but all of the actions that we are taking here are really targeted to restore the industry demand and supply balance over the course of next few quarters.

Thanks.

Thank you. Our next question comes from the line of John Pitzer of Credit Suisse. Your line is open.

Hi, guys. Thanks for letting me ask the questions. Sanjay, congratulations on the solid execution given the industry conditions. Just going back to the CapEx questions, I would argue Sanjay that one of the biggest strategic initiatives you’ve had has been to try to close the cost gap with your peers. And clearly CapEx is a pretty important tool in which to do that, you guys are sort of bucking the trend this fiscal year with CapEx actually up slightly versus peers that have actually taken it down. I'm just kind of curious, help us get some comfort level that despite the cuts you're talking about for the fiscal year 2020 you're still very much on plan relative to closing those cost gaps with your peers?

So, certainly as you noted, we have made tremendous improvement in our cost position and with respect to our peers and that reflects in our financial performance. As was noted in the prepared remarks, our margin improvement, relative margin improvement from previous times has really improved by 2,000 basis points and that's because of our execution on the cost front, as well as on the execution on the high value solutions front. And of course, we have more room to go with respect to cost competitiveness, as well as strengthening our high value solutions portfolio. So, we are extremely focused on this and you know as we look at driving our future opportunities, we of course when we make our CapEx decisions, we make them based on cost competitiveness off our supply in the future and of course, keeping in mind our free cash flow considerations and most important is that our total supply available to us coming from our inventory and coming from our supply bit growth should be matching with our demand expectations going forward over the course of next few quarters and to continue to improve our inventory position. But on the cost side, we feel very good about the 1Y and 1Z progress on DRAM, as well as we feel good about our 96-layer. And overall, even with the CapEx reductions that we’re talking about, we'll be in a good position with respect to cost both in DRAM and NAND next year. Of course we have talked about in NAND, our first generation replacement gate node will be a small node, in the sense that it will be deployed across a small set of products and we will not have any significant cost benefit from that first generation replacement gate node, but the second generation replacement gate node will give us meaningful cost benefit, compared to the last generations of floating gate node. So, we absolutely are on top of the game in terms of managing to our cost objectives.

I'd just add that, you know, Sanjay already mentioned this drive to high value solutions. In other way we can improve our gross margins, but also the node transitions isn't the only way we affect the cost of the product and so one example is, for example, the back-end we're very acutely focused on the back-end we are bringing some of that activity that we were doing that was being outsourced internally. We think we can improve our cost structure in that regard to. So, there are many ways we can drive the cost to improve it.

And one thing I would add is, in terms of our overall CapEx that you mentioned, of course, as you know that in fiscal year 2019, we had meaningful part of our CapEx around $2 billion that was actually tied to facilities, cleanroom expansions to enable technology transitions. And this facility spend, may not be the same from one manufacturer to the other manufacturers, but for us that was a meaningful part. Again, as noted in our remarks before, to prepare us for technology transitions and not targeting any of that cleanroom space for any meaningful capacity, but really for technology transition.

Thanks Sanjay. And then David, just on inventory, it's clearly a key metric that investors are looking at. I'm kind of curious is how we should think about inventory levels exiting the fiscal fourth quarter? And as you answer the question, clearly the inventory is somewhat a reflection of where we are in the cycle, but you've got sort of the added burden of wanting to build some NAND inventory as you make this transition to replacement gate. So, how would inventories look if you sort of normalize for that? And then lastly as part of the question, I apologize, utilization coming down, CapEx coming down is a good way of controlling inventory, so was the potential for write-downs, can you just talk about how you're thinking about the value of the inventory in this sort of environment?

A three-part question, John. Okay, so the inventories obviously are elevated right now. As you point out, one of the big drivers of our increased inventory level is in NAND. And that is kind of by design for us. We are trying to build up some inventory going into 2020, fiscal 2020 for us because we are going to make this transition to replacement gate. Replacement gate doesn't drive very much bit growth for us in the first node in replacement gate. And so, we'll need to draw on our inventory in order to meet demand, and that's – I don't know the exact number, but that's a decent chunk of the [overage] in terms of days. The other aspect of the elevated level of inventory is in DRAM. That was a little bit more a function of pretty good bit growth in the first couple of quarters of the calendar year of 2019 and of course we had had customers working down their inventories and so inventory was building up in our balance sheet. We do expect now that we're in a place, Sanjay mentioned that we're seeing inventories get to be in a good place in the cloud space, in the graphic space, in the PC space. And so, we would expect to start to see inventories start to come down now. We think we'll be in a relatively good spot by the end of the calendar year, may not be at quote unquote optimal levels, but certainly in a healthier place and then quick quickly after that I would expect DRAM to be in a good place. From a write down perspective, we did write down about $40 million of inventory this quarter specific to Huawei. We finished goods inventory with Huawei that does not look like that's going to get sold, so we did reserve that. Outside of that, from a kind of an obsolescence perspective, we don't see really any risk with the inventory we're carrying. We think it's very good inventory, it got a good cost position, very good demand with that inventory. So, unlikely to have any issue as it relates to obsolescence. The other of course area, you have to concern yourself with is the, any sort of lower cost to market issue with the inventory. I think you can kind of guess by the quality of our gross margins that we are not really in danger of having any write-down associated with lower cost to market. So, outside of these kind of one-off issues that we deal with from time to time, like we did with Huawei this quarter I don't really see a big issue with inventory in terms of write-downs or reserves.

So before going to the next question, I just wanted to make a small correction. In the prepared comments, I mentioned that QLC shipments were up approximately 75%, I meant to say that QLC bit shipments were up 75% quarter-over-quarter. So, just wanted to make that correction. And now I think we can move on to the next question.

Thank you. Our next question comes from the line of Ambrish Srivastava of BMO Capital. Your question please.

Hi, thank you very much. Sanjay, good to see the discipline here on the CapEx and also with Dave’s focus on free cash flow. I was just a little confused, I want to make sure I understood this. If we go – and I appreciate that you don't want to talk about any specific customer, but if you go back to the reported last two quarters and if you triangulate that if you exclude Huawei that will mean that bit shipments would be at best up single-digit. So, the question is in your CapEx thinking for fiscal 2020, how are you handicapping the Huawei impact? Are you expecting this to continue to be on that list and hence your CapEx, lower CapEx includes a certain amount of capacity being taken offline because of that, what's the right way to think about it? And then I had a quick follow-up.

So, I think we will be able to provide you more details related to fiscal year 2020 CapEx etcetera in our next earnings call. I would just point out that there is obviously considerable uncertainty here. As you can all see from the rather fluid situation with respect to Huawei, as well as with respect to U.S., China trade matters and of course we are just staying focused on optimizing what we can control, and really remaining nimble in our actions. You have seen that how over the course of last one year we have for fiscal year 2019 managed our CapEx down from $10.5 billion plus, minus 5% to $9 billion now. So, we continue to stay vigilant and we are making decisive actions with respect to meaningful CapEx reductions in fiscal year 2020. But with respect to the further details, we will be in a better position to provide you information at the next earnings call.

Okay, I appreciate that Sanjay. And then as a quick follow-up, and it's not a multi-part day for you, what's the AR or DSO target that we should be thinking about as we go through the next couple of quarters? Thank you.

Yes. So, it got up there and we did kind of work it down this quarter. I think we got it down to about 62 days. I would say ideally, it should be in the 50s, it was a little bit of a mix challenge this quarter that kind of drove it up a bit. And there is a couple of customers that have extended terms and they kind of hit us at that point, but ideally, we'd like to be somewhere in the mid-50s.

Okay, thank you. Good luck.

Thank you. Our next question comes from Chris Danely of Citi. Your question please.

Thanks guys. You said you've mitigated I think 90% of the tariff so far. Now we're looking at another $300 billion in tariffs. Can you estimate the approximate impact to your business if that goes through?

I would say that as we of course, we don't know for sure what the list looks like. We have a general sense based on what we've seen there is minimal impact from the incremental list. Most of what affects us was contemplated in the first two 1A, 1B, and then the second list.

Got it. And then for my follow-up. Sanjay talked about 5G and the big driver with the Huawei issue is that impacting the development of 5G, have you seen any change in like the ongoing development of the standards out there?

So, I think it is too soon to tell. And keep in mind that in certain countries 5G has already started to be deployed, such as Korea and there are of course leading suppliers, other than Huawei as well for 5G. So, will remain to be seen how this deployment occurs over the course of next few quarters, in particular here. But there is no doubt that you know 5G will bring about greater applications for memory and storage, not only in smartphones, but also in machine-to-machine on the IoT front. And all of this will drive greater demand for memory and storage and we remain absolutely well prepared, of course, in a flexible fashion to meet the growing demand requirements for the business. That 5G, we think will provide over the course of next many years. But near term, in terms of exactly what happens with respect to Huawei aspects, I think really it is too soon to tell.

Okay, thanks a lot, guys.

Thank you. Our next question comes from Harlan Sur of JPMorgan. Please go ahead.

Good afternoon and thanks for taking my question. In DRAM, given the transition to 1Y and early 1Z move, can you guys just help us understand qualitatively your cost reduction profile as you move to the second half of this calendar year? Maybe compare that versus the cost downs in the first half of this year.

With respect to the cost declines, of course, we are continuing to execute well with respect to our nodes transitions, as well as continuing to drive cost declines the 1Y and 1Z nodes that you talked about, and we are on plan in terms of ramping up these nodes as well. And as I said before, we don't break out the cost reductions on first half versus second half. Of course, our expectations of cost reductions are baked into for FQ4, the gross margin guidance, as well as of course that takes into account our price decline assumptions as well for FQ4. So, all of that is really baked into it, we don't break it down, but keep in mind that as the new technology nodes advance, the cost reduction coming from new technology nodes is less and less compared to the prior nodes just because as we have explained several times before they naturally give you – given the challenges of scaling less per wafer bit growth capability and less cost reduction capability.

Yes, thanks for the insights there. And then back in April, the team announced its 9300 series NVMe, this is their new cloud in enterprise, the SSD family. I think you guys have had solid momentum in cloud and enterprise with your SATA family and that's helped to sustain a better margin profile for the NAND business. So, what's the design win momentum been like on the 9300 series and when do you anticipate your cloud customers to start ramping these new NVMe products? Thank you.

As we have discussed in the past that we would be introducing over the course of our fiscal year 2019, actually during calendar year 2019, our NVMe products and we started that first with consumer NVMe and later with our OEM NVMe that we talked about today. And now also for cloud and enterprise applications NVMe drive and these will take some period of time over the course of next few months in terms of getting qualified by customers, in terms of gaining traction with customers and that's why we had mentioned that 2019 will basically be a year of transition for us from SATA to NVMe. I just want to remind you that couple of years ago, Micron did not actually have investments in NVMe product development. We did very well and are continuing to do very well in SATA as you noted, and we began to significantly increase our investments in NVMe product development couple of years ago, and it takes a while to have these products in the marketplace. So, in 2020, as our NVMe solutions get adopted by our customers and as we ramp those into production, we do expect to be gaining share with NVMe all throughout the 2020 timeframe.

Thanks Sanjay.

Thank you. Our next question comes from the line of Timothy Arcuri of UBS. Your question please.

And that's been asked a couple of times. And I'm just trying to figure out how lower CapEx, you're going to cut CapEx by a couple of billion and you're certainly cutting wafer starts quite a bit, how that does ultimately have some negative impact on your costs? I think you've been costing down in DRAM, maybe low to mid-teens and the expectation was that you'd be down somewhere that 2020 would be kind of another good year for DRAM cost downs and you've been down kind of like mid-20s in NAND. So, yet it sounds like you're saying that it does not having much of an effect on your costs, so I'm just trying to fit those two things? Thank you.

No, I'm not saying that it will not have effect on cost. What I'm saying is that we will be in good position with cost because our technologies – underlying technologies, give us good cost reduction capabilities from one node to the next node. Overall, from our cost point of view, we'll be in good position and for NAND I'll just remind you that you know our CMOS under the array technology gives us the smallest die size in the industry and that has meaningful implications with respect to the cost competitiveness that we have. So, overall, we feel good about the technology and the production mix that we will be driving through the remainder of fiscal year 2019, as well as through fiscal year 2020 in terms of meeting our demand expectations, as well as remaining cost competitive.

Thanks for that. And then I guess just related to that maybe Dave, can you maybe break down CapEx sort of how much is building versus equipment, it sounds like there is roughly 2 billion that was buildings this year in fiscal 2019. Is the cut next year going to be almost all in infrastructure so that WFE is kind of flat to down smidge, year-over-year? Is that kind of how to think about it? Thanks.

So, getting back to the FY 2019 just to be clear, what Sanjay said was about $2 billion was kind of construction related spend, the rest is front-end and back-end. So, there is some – and some miscellaneous capital spend for R&D group and so forth. So, there is more to it than even that. I'll be honest with you, we have not, you kind of completely finalized CapEx budget for next year. We have a pretty good sense of directionally where it is going, but all the pieces specifically were not quite there yet. And so, what we'd like to do is wait and give you more granularity around that in the next quarter's call. But I would anticipate that both areas would have some reduction to them.

Okay, awesome. Thanks.

And our next question comes from Blayne Curtis of Barclays. Your line is open.

Hi guys, thanks for taking my question. Sort of follow up on the Huawei point. Just want to make sure I understood what you're saying. Are you able to ship because the IP resides in another country? Just trying to understand how exactly are you able to continue to ship? And then just kind of curious as you look out, I'm sure there's going to be some components that go into these phones from other vendors that don't have an ability to ship, so I'm kind of just curious your thoughts on kind of downstream impacts and whether you've encapsulated all that?

So, with respect to what we are able to ship to Huawei, as I said before that what we are able to ship is what is not under the export administration regulations. And that's what we are able to ship and actually export administration regulations have various complex aspects and considerations several criteria that you have to go through, if you're interested in that, you can certainly go to the BIS site and look for those and we assess our products versus those and you know these considerations are not just limited to any one or two aspects such as what you mentioned, I mean they have several aspects and we assess our products that we can ship to Huawei versus those and have made determination or shipments and we, as we said, we began those shipments in last two weeks. With respect to your question around other components etcetera, of course this is a company by company decision and each company has to evaluate its own situation and obviously Huawei has to look at its own supply chain. So, with respect to the products that we can ship to them, we work closely with them to understand what is their latest demand on those products, and that is what is baked into our FQ4 guidance. What I would like to point out here is that at the end of the day since you asked the question about mobile phones. The smartphone demand overall from consumers point of view is really going to be the same. I mean, consumers are going to be buying the phones that they're going to buy, based on the features, the new models, all of that will be bought there may be some share shift that maybe occurring between the various suppliers of smartphones and as you know, we are well engaged with customers across the smartphone ecosystem as a supplier to them. Of course, you know Huawei was our number one customer, we continue to engage with other customers as well. And we have had growing presence with those other customers and we'll continue to look for opportunities to best optimize our business while always of course continuing to comply with US laws and regulations and for that matter we always comply with laws and regulations in all countries that we operate in.

Thanks. And then I just wanted to ask you on the cloud data center, obviously an important segment and you did have some encouraging comments, just kind of curious on that pace of recovery maybe versus what you had thought a quarter ago, just kind of the health of the channel and the pace of recovery there. Thanks.

Pace of recovery …

In cloud and data center.

For cloud and data center. I mean, as we said I think cloud customers, as well as several other customers had operated with high levels of inventory in the – starting late last year and through the course of first half of this year those inventory levels have been largely worked to normal levels. Except for in enterprise, as we noted in our prepared remarks and we look forward to robust growth in fiscal fourth quarter in the area of cloud and you know we are, of course, continuing to broaden our product portfolio as well with solutions such as NVMe solutions and that will bring us bigger opportunities in the future as well.

Okay.

Thank you, ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may disconnect your lines at this time.