Thank you for standing by and welcome to Micron's Fourth Quarter 2024 Financial Call. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead, sir.

Thank you and welcome to Micron Technology's fiscal fourth quarter 2024 financial conference call. On the call with me today are Sanjay Mehrotra, our President and CEO, and Mark Murphy, our CFO. Today's call is being webcast from our Investor Relations site at investors.micron.com including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website, along with the prepared remarks for this call. Today's discussion of financial results is presented on a non-GAAP financial basis unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures can be found on our website. We encourage you to visit our website at micron.com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending. You can also follow us on X at MicronTech. As a reminder, the matters we are discussing today include forward-looking statements regarding market demand and supply, market and pricing trends and drivers, the impact of developing technologies such as AI, product ramp plans and market position, expected capabilities of our future products, our expected results and guidance, and other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We refer you to the documents we file with the SEC, including our Form 10-K, Forms 10-Q and other reports and filings 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 to conform these statements to actual results. I'll now turn the call over to Sanjay.

Thank you, Satya. Good afternoon, everyone. Micron delivered a strong finish to fiscal year 2024, with fiscal Q4 revenue at the high end of our guidance range and gross margins and EPS above the high end of our guidance ranges. In fiscal Q4, we achieved record-high revenues in NAND and in our storage business unit. Micron's fiscal 2024 revenue grew over 60%. We expanded company gross margins by over 30 percentage points and achieved revenue records in data center and in automotive. I am thankful to all our Micron team members for their focus and execution, which made these results possible. We are entering fiscal 2025 with the strongest competitive positioning in Micron's history. We have leadership 1-beta DRAM and G8 and G9 NAND process technology, and leadership products across our end markets. Robust data center demand is exceeding our leading-edge node supply and is driving overall healthy supply-demand dynamics. As we move through calendar 2025, we expect a broadening of demand drivers, complementing strong demand in the data center. We are making investments to support AI-driven demand and our manufacturing network is well positioned to execute on these opportunities. We look forward to delivering a substantial revenue record with significantly improved profitability in fiscal 2025, beginning with our guidance for record quarterly revenue in fiscal Q1. Micron is ramping production of the industry's most advanced technology nodes in both DRAM and NAND. Our 1-beta DRAM and G8 and G9 NAND nodes are ramping in high volume and will become an increasing portion of our mix through fiscal 2025. As a reminder, our G8 NAND node refers to our 232-layer NAND technology node. Our 1-gamma DRAM pilot production using extreme ultraviolet lithography is progressing well, and we are on track for volume production in calendar 2025. We delivered fiscal 2024…

Thanks, Sanjay, and good afternoon, everyone. In fiscal Q4, Micron delivered revenue at the high end of the guidance range and gross margin and EPS above the high end of the guidance ranges. We are exiting the fiscal year with excellent momentum, having expanded our industry-leading product portfolio, executed well on pricing, and improved our financial performance significantly from the start of the year. Total fiscal Q4 revenue was approximately $7.8 billion, up 14% sequentially and up 93% year-over-year. Fiscal 2024 total revenue was $25.1 billion, up 62% year-over-year. Fiscal Q4 DRAM revenue was $5.3 billion, up 93% year-over-year and represented 69% of total revenue. Sequentially, DRAM revenue increased 14%, with flattish bit shipments and prices increasing in the mid-teens percentage range. For the fiscal year, DRAM revenue increased 60% year-over-year to $17.6 billion, representing 70% of total revenue. Fiscal Q4 NAND revenue was $2.4 billion, up 96% year-over-year, and represented 31% of Micron's total revenue. NAND revenue increased 15% sequentially, with bit shipments increasing in the high single-digit percentage range and prices increasing in the high single-digit percentage range. Fiscal Q4 NAND revenue was a new quarterly record for Micron. For the fiscal year, NAND revenue increased 72% year-over-year to $7.2 billion, representing 29% of total revenue. Now turning to revenue by business unit. Compute and Networking Business Unit revenue was $3 billion, up 17% sequentially. Data center server DRAM achieved a quarterly revenue record in fiscal Q4, driven by strong demand for high-capacity solutions as well as our continued ramp of HBM. Revenue for the Mobile Business Unit was $1.9 billion, up 18% sequentially driven by seasonal product ramps. Revenue for the Storage Business Unit was $1.7 billion, up 24% sequentially and led by data center SSD, which reached a quarterly revenue record. We achieved record-high revenue for…

Thank you, Mark. Fiscal 2024 was a year of many records as we discussed earlier and I expect fiscal 2025 to be even better. With the advent of AI, we are in the most exciting period that I have seen for memory and storage in my career. Micron's memory and storage innovations are enabling tremendous breakthroughs, transforming how the world uses information to enrich life for all. Micron has sustained multiple generations of technology leadership in DRAM and NAND. Our unique culture and our industry-leading product portfolio, combined with our world-class manufacturing execution and quality are enabling us to deliver differentiated, high-value solutions across end markets. This has made us the partner of choice for our customers as they plan their long-term roadmaps and our momentum lays the foundation for an exciting fiscal 2025. Thank you for joining us today. We will now open for questions.

Certainly. Thank you. And our first question comes from the line of Timothy Arcuri from UBS. Your question please.

Thanks a lot. Mark, I guess my first question is, some of the assumptions in guidance. I think you've been saying kind of on the conference circuit that bits would be pretty flat in fiscal Q1 for both DRAM and NAND. Is that what you're still assuming so that most of the increase in the revenue is basically pricing? Is that correct?

Tim, what we see now and we had provided a slight update in August, but we now see that DRAM bits, we expect to be up somewhat higher than what we had said before. We had said before they were going to be flat and then we revised that to flat to slightly up and in this latest guide, we now view DRAM to be up somewhat higher from that. NAND bits, we expect to be sequentially flattish. Keep in mind that our guide also contemplates a healthy supply-demand environment and an increasingly favorable mix in the business with HBM, high-capacity DIMMs, LP, data center SSD. So we see stronger data center demand and we had indicated that it was robust and that's been favorable. And then we're just executing well on our product road maps, our product execution, our overall manufacturing execution.

Thanks, Mark. And then just one last thing. You had said that HBM revenue last quarter in May was a little over $100 million. Can you give us the number in August? Was it -- it looks like it was $300 million to $350 million something like that. Is that about right for your HBM revenue in fiscal Q4?

So we are not disclosing a specific revenue for FQ4. We have said earlier that we will have several hundred million dollars of revenue in fiscal year '24 and we achieved that objective. And really very proud of all the execution from our team in terms of putting in place the capacity, managing the yield ramp successfully to our goals, and of course, continue to deliver a strong product to our customer base. So not providing -- we're not going to be providing specifics on a quarter-by-quarter basis. But keep in mind, yes, we delivered several hundred million dollars of revenue in fiscal year '24 and we look forward to delivering multiple billions of dollars of revenue of HBM in fiscal year '25.

Okay. Thank you, Sanjay.

Thank you. And our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question please.

Yes. Good afternoon. Thank you for taking the question. I guess first question on gross margins. You guided up a robust 300 basis points. I was hoping you could spend a little bit of time kind of walking us through what's driving that? How much is from like-for-like DRAM ASP increases, mix, HBM yield improvements and cost downs. And I guess, as you kind of walk through that, can you give us a flavor of how to think about those drivers beyond the November quarter?

So C.J., in the fourth or first quarter, as we look at that margin expansion, it's similar to the themes we've talked about before. The supply-demand environment is healthy. So we're seeing that play through on -- in pricing. We're also seeing the execution of our product road map and the ramp of the higher-value products and that's contributing. On costs, we are doing well on cost downs. However, in the first quarter because of the mix with HBM, we are going to see DRAM costs go up slightly. And that's so as we look forward into the first quarter, things are coming together as we had hoped, tied at the leading edge, good supply demand, favorable pricing environment and certainly favorable mix and that becoming a more important part of the business and good cost execution.

Very helpful. And then I guess maybe as a follow-up, you've reiterated your CapEx outlook, but obviously, the end market environment has changed a bit in the last three months. So curious if you've changed your prioritization of CapEx at all? Obviously, you talked about a focus on shelves and HBM. Any other change in terms of your spending?

Not really. We don't have any other change. I mean again continuing to focus our CapEx on HBM investment, which as you know, is a high-value solution and product tends to be accretive to the margins. And of course, long-term construction CapEx, and that is -- the construction CapEx that is targeted for longer term bit growth for the second -- latter part of this decade.

Thank you.

Thank you. And our next question comes from the line of Krish Sankar from TD Cowen. Your question please.

Yes, I have two questions. One, Sanjay, your AI GPU customers are moving to a one-year cadence of your products. And it looks like the HBM road map is also moving to that 12 months from a prior 18-month cadence. Do you think that this puts you and your peers at a yield disadvantage, i.e., in other words, as HBM3E yield and gross margin improves, you have to migrate to HBM4 and that new node might come at a lower yield. So I'm just kind of curious how to think about that cadence of HBM progression and how that impacts yield and gross margin? And then I had a quick follow-up.

As we mentioned, we are doing well with respect to our goals on HBM3E yields with 8 high. And in '25, of course, we will be increased -- beginning our output in early 2025 with 12 high. And of course, 12 high will be going through its own yield ramp and 12 high will be ramping through our calendar year '25 and HBM4 will be a 2026 product. And like any other new product, of course, there are in the early stages, always ramp-up of yield involved. But we are very pleased with the technical expertise that we have, manufacturing expertise and doing really quite well in terms of continuing to ramp up the yield and the quality of our products. And at the end of the day, you know, that cadence of -- our customers' cadence moving faster only benefits those who have the best product and technology because they are the ones who are able to work with the customers at the pace that they need. And we are with our HBM3E, which has demonstrated clear leadership in performance, in power and overall product feature set for our customers, we absolutely plan to maintain that leadership going forward with our road map from 8 high to 12 high of HBM3E and HBM4 and 4E in the future years. Along with our expertise in manufacturing, that should play to our strength in the time frame ahead. And we work very closely with our customers.

Got it. Very helpful.

We work very, very closely with our customers to understand their cadence, to understand their requirements and make sure that our road map, both from technology, product and manufacturing capabilities is aligned well with their requirements.

Got it. Thanks a lot for that Sanjay. Super helpful color. And a quick follow-up for Mark on inventory. I understand you're going to draw that down in FY'25. But just in the last quarter, it went up, any color on where that inventory level is going up? Is that within PCs? Is it mobile DRAM? Any color there would be helpful. Thanks a lot.

Sure. We were clear about this in the August conferences that we were seeing -- while we were seeing robust data center demand, we were seeing some customers had -- were buying ahead in anticipation of price increases, the rollout of AI-related devices and just surety of supply, given that leading edge is tight. So we did see some inventory build and we communicated that inventories would remain elevated going into FY'25. So as what you see, so our days did go up. We continue to be prudent with our supply and walking away from less profitable business. We do expect the environment, supply-demand environment to be constructive for improved profitability in '25. And given the tight leading-edge nodes and our outlook, we're going to need these inventories to bridge us to when our production on tech node transitions ramps. So that's why we've given an outlook that our inventories by the end of the fiscal year, we expect to be approaching our target inventory levels. Now our volumes happen to be a bit more second half weighted of the fiscal year. So we'll see a bit shallower improvement at the first half of the fiscal year and then that improvement in DIO will steepen as we move through the second half. But we're confident in our inventory outlook and definitely need these leading-edge inventories to supply the market.

Thanks, Mark.

Thank you. And our next question comes from the line of Joseph Moore from Morgan Stanley. Your question please.

Great. Thank you. In terms of your target for getting to HBM market share that's more in line with your overall market share, can you kind of characterize how you get there? Do you anticipate that it's still a supply-constrained environment for everybody or are we sort of more -- a little bit more balanced in the quality of the Micron product drives us through? Just what's the determinant of that market share that gets you to that level?

Well, certainly, I mean we are being responsible and disciplined in terms of managing our market share. We have industry's best HBM3E product, and it's the best product with 30% lower power with 8 high. And in fact when you go to 12 high, we are 20% lower power despite 50% increase in capacity versus others 8 high products. So we are well positioned with our product, with its performance, with this power. And that's what is really putting us in the strong position of being -- product being sold out for our '24 and '25 time frame. And when we look at HBM, we have talked about that next year, we project a TAM of $25 billion, consuming about 6%, over 6% of the industry best, in fact, a TAM of greater than $25 billion in 2025. And we are pretty confident that with our product, with our yield ramp, and with the agreement that we have in place with our customers, we will deliver sometime in 2025 get to our share to be in line with our industry share. So of course, it's limited at this point by our production ramp, but we are really on a very good trajectory there. So we feel very confident with our product and with the production ramp and with share opportunities. And frankly our HBM3E product is getting premium in the industry as well versus other products. So it just puts us on a good trajectory ahead as well.

Great. Thank you. Congratulations.

Thank you. And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question please.

Thanks for taking my questions. I had two as well. Sanjay, on that same topic of HBM, there is some concern about the potential for HBM oversupply in '25, let's say, there are three suppliers instead of the two that are right now. Is that something you see that there is any potential for oversupply? And let's say if you take the other scenario where there continue to be only two suppliers of NextGen HBM, do you think the third supplier could flood the market with additional DRAM, just sort of the reverse of this trade ratio argument? So just curious to hear how you think about the supply-demand dynamics for both traditional DRAM and HBM4 next year?

So we certainly assume that the third supplier will ultimately succeed in having HBM3E product as well and we'll have some share in the marketplace as well. And again, as I pointed out earlier, with the solid product that we have, our product has sold out through 2025 time frame and we are really well positioned with this product. I think the part that you have to keep in mind is that leading-edge supply, as we have mentioned here is tight. Leading-edge supply is tight because industry in '22, '23 time frame with reductions in CapEx and CapEx-efficient industry-wide transitions to the newer technology nodes, the wafer capacity has come down from the peak levels in meaningful ways. So the lower wafer capacity compared to the peak of 2022 as well as the HBM 3:1 trade ratio, these are the ones that are overall keeping the industry in a tight supply. And tight supply, not just for HBM, but also for non-HBM part of the market. So we, of course, feel very good about our own plans with HBM. And of course we always stay completely focused on managing the mix of our business between non-HBM and HBM and remaining extremely disciplined about CapEx, about our share objectives. We have shared those share objectives about HBM here. Overall, we have said we maintain our DRAM as well as NAND supply share to be stable. And this is how we look at the overall market. But when you look at the market trends, it's not just about demand trend on HBM, which is, of course, growing substantially becoming more than $25 billion market in 2025. It's also about, past spring, we see that demand for memory in smartphones and PCs as AI-enabled smartphones become bigger and bigger part of the market in the quarters and the years to come. And of course, customer inventories by spring time frame in smartphone and PCs for memory get to earlier levels, we see that to be a driver of demand as well to complement the strong data center demand. And we are looking at strong momentum, not just with HBM. We have talked about multiple billions of dollars of revenue that we target to generate in our fiscal year 2025 from high-capacity DRAM modules as well as LP memory in data center, so these are all the elements that point to strong demand trends and demand trends driven by AI in data center as well as in smartphone and PCs where more and more content is required in an environment where the leading-edge supply is today tight. So I think the opportunity is tremendous and we see healthy demand supply balance and a constructive environment for our financial performance in fiscal 2025. And that's why we say with confidence that we'll deliver a substantial revenue record in fiscal year 2025, the significant improvement in our profitability as well.

Got it. Very helpful. And maybe a quick follow-up for Mark. Mark, on the Q3 call, I think you were a little more explicit about both industry pricing and your gross margins expanding through fiscal '25. Is that still a useful construct from where you see -- from what you see today or do you think there is a scenario where gross margins or your pricing start to flatten out or even go in the other direction through fiscal '25? What is the operating assumption for fiscal '25 as you see it right now? Thank you.

Maybe just following up here to draw on Sanjay's comments. I mean we see a very positive setup in fiscal '25 and so had said substantial revenue record significantly improved profitability. The supply-demand setup is quite good. The market's leading-edge is very tight. As we've talked about, the industry wafer capacity has come down, and so in HBM, of course, is creating supply constraints in the marketplace as share bits increase. So we still see that the supply-demand environment is healthy through the year. We also are constructive for the year. We also see the trend we've talked about that our volume is increasingly moving to support higher-value ad products with our differentiated portfolio. So HBM, high-capacity DIMMs, more LP and then our NAND SSD for data center portfolio products. So I think the margin expansion through the year supported by those elements and continued good cost performance gives us confidence on a very good year.

Thank you.

Thank you. And our next question comes from the line of Toshiya Hari from Goldman Sachs. Your question please.

Thank you. I had a two-part question on the HBM business. Sanjay, you talked about you all being sold out through calendar '25. I'm curious if there's an opportunity for Micron to present upside or deliver upside to what the plan is currently for '25 or are equipment lead times such that you're essentially capped vis-a-vis what your expectations are today for HBM specifically. And then my second part is on gross margin for HBM. We all understand that the business is accretive to both the corporate average and also relative to DRAM. As you look forward into calendar '25 with volumes locked in and pricing locked in, I would assume you've got decent visibility on gross margin. Should we expect HBM gross margins to stay kind of where they are or could they move further up as long as you execute on the yield side? Thanks.

So regarding your part of your question on the upside for HBM in 2025. So again let me emphasize that we are extremely focused on delivering our goals of getting to our share in HBM to be in line with DRAM share sometime in 2025, extremely focused on continuing to ramp up our production capacity and yield ramp, which are going well according to our plan. I'm very pleased with that. So remaining focused on that. And of course if there are opportunities to be opportunistic, with any upside, of course, we will be capturing those. And those upsides always remain. And yields, we expect to get to mature yields on our HBM in fiscal year '25. Yields are always an upside opportunity, productivity of the equipment always can be an opportunity as well. So we'll manage our business responsibly and with total focus on delivering to our goals and maintaining our focus on keeping our HBM commitments to our customers coming through successfully. Now regarding your questions on gross margin being accretive, yes, we would expect our HBM business to be accretive for our fiscal year 2025. Beyond that really not providing any further details. And, yes, you are right that our volume and pricing for HBM is locked up for 2024 as well as for 2025 time frame, calendar year 2024 and calendar year 2025.

Great. And then as a quick follow-up on DRAM industry bit growth. I think you raised your '24 outlook to high-teens and you gave a preliminary '25 outlook of mid-teens. I'm curious what's driving the decel from '24 to '25. Is the '25 number a supply-constrained number. From a demand perspective, Sanjay, you sounded pretty constructive on PCs and smartphones and obviously, the content opportunity, and you remain pretty positive on data centers. So I'm just curious what's driving the expected decel in '25. Thank you.

Yes. We'll just point, I mean, by the way, we have, in the past, talked about DRAM CAGR being mid-teens. At 2024, we have increased the outlook to high-teens based on the strength in the data center. And 2025 as we look at it just keep, in fact, mind two factors. One is we are now comparing it to the higher base of 2024, which has gone to high-teens. So that, of course, impact the percentage of the '25. And second piece is that, as we have noted, that smartphone and PC, which at the end market level are continuing to do fine. But given for the three factors that we have mentioned in our earnings call script that the customers built some inventory. The sell-in is somewhat less than their sellout in terms of memory and we have said that by spring of 2025, we expect in PCs customer inventory levels to get to healthier levels versus now and these will continue to improve. So that too plays a factor. And of course I would just like to remind you that we have pointed out that overall smartphone and PC unit growth will be occurring in 2025 and of course increasing penetration of AI phones and second half that acceleration, that growth will be obviously stronger than the first half. So all of these factors are included in our current outlook of 2025 DRAM growth being in mid-teens. And let me just point out that previously we have said that HBM, we would expect it to be greater than $20 billion opportunity in 2025. We have now said HBM is more than $25 billion opportunity in 2025. So as you know HBM has a trade ratio of 3:1, it takes three times as many wafers to produce the same bit as standard products in the technology nodes. So obviously the growth of HBM also impacts the total bit growth year-over-year in aggregate.

Thank you

Thank you. And this does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.