Micron Technology, Inc.

Thank you for standing by and welcome to Micron Technologies' fiscal first quarter 2025 financial conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Corporate Vice President, Investor Relations and Treasury. Please go ahead, sir.

Thank you, and welcome to Micron Technologies Fiscal First Quarter 2025 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 the 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 Micron Tech. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market, pricing and cost reduction trends and drivers, our plans for manufacturing, the impact of developing technologies such as AI, product ramp plans, technologies, and market position, Expected capabilities of our future products are 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 the statements made today. We refer you to the documents we filed 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 will now turn the call over to Sanjay.

Thank you, Satya. Good afternoon, everyone. I'm pleased to report that Micron achieved record revenue in fiscal Q1 with revenue, gross margins, and EPF all at or above the midpoint of our guidance range. Data center revenue grew over 400% year over year and 40% sequentially, reaching a record level with data center revenue mix surpassing 50% of Micron's revenue for the first time. We delivered record revenue in data centered SSDs and achieved new records in market share for data centered SSDs and overall SSDs. Our HBM shipments were ahead of plan and we achieved more than a sequential doubling of HBM revenue. Revenue from our largest data center customer was approximately 13% of total company revenue. The HBM market will exhibit robust growth over the next few years. In 2028, we expect the HBM TAM to grow four times from the $16 billion level in 2024 and to exceed $100 billion by 2030. Our TAM forecast for HBM in 2030 would be bigger than the size of the entire DRAM industry, including HBM, in calendar 2024. This HBM growth will be transformational for Micron, and we are excited about our industry leadership in this important product category. Leading-edge DRAM supply remains tight, driven by robust demand in data-centered DRAM, including HVM, which will underpin our business results throughout fiscal and calendar 2025. We had previously shared our expectation that customer inventory reductions in the consumer-oriented segments and seasonality would impact fiscal Q2 bid shipments. We are now seeing a more pronounced impact of customer inventory reductions. As a result, our fiscal Q2 bid shipment outlook is weaker than we previously expected. We expect this adjustment period to be relatively brief and anticipate customer inventories reaching healthier levels by spring, enabling stronger bid shipments in the second half of fiscal and calendar 2025. We are on track to achieve our HVM targets and also deliver a substantial record in micron revenue, significantly improved profitability, and positive free cash flow in fiscal 2025. Our technology roadmap continues to progress very well, and we are in production with the industry's most advanced DRAM and NAND nodes. We continue to ramp our one beta technology node, which supports HBM3e, and we are preparing to ramp our one gamma technology node, using EUV in calendar 2025. In NAND, we are maintaining technology leadership with our industry-leading G8 and G9 nodes and are managing the ramp of these nodes consistent with our demand. We expect fiscal 2025 DRAM front-end cost reductions excluding HBM to be in the mid to high single-digit percentage range. We expect fiscal 2025 NAND front-end cost reductions to be in the low teens percentage range. Earlier this month, we finalized an agreement with the US Department of Commerce for an award of up to $6.1 billion under the CHIPS and Science Act to support advanced DRAM manufacturing fabs in Idaho and New York. Additionally, We have entered into a preliminary memorandum of terms with the U.S. Department of Commerce for an award of up to $275 million for our Virginia fab that supports production of long life cycle chips in areas such as automotive, industrial, aerospace, and defense, and enables efficiencies across our global fab network. With the support of the Singapore government, We have finalized plans to expand our manufacturing footprint in Singapore, starting with an investment for a new HBM advanced packaging facility. This investment allows us to meaningfully expand our total advanced packaging capacity beginning in calendar 2027 to support AI-driven demand and will be synergistic with our existing operations in Singapore. These plans also include support for our long-term manufacturing requirements for NAND. Now turning to our end markets. Numerous advances are pushing the boundaries of AI capabilities as training model sizes continue to increase and inference models evolve to address different use cases. Multimodal models, post-training and chain of thought inferencing represent new frontiers of innovation all of which are memory intensive and can benefit from higher memory bandwidth and capacity. AI agents will become ever more capable and address vertical market consumer and enterprise use cases, driving accelerating monetization of AI. Micron is extraordinarily well positioned to leverage this long-term growth opportunity, which has the potential to transform the dynamics of our business. We have upgraded our view of server unit percentage growth and now expect it to reach low teens in calendar 2024, fueled by strong AI demand, as well as a robust traditional server refresh cycle, and we anticipate server unit growth to continue in 2025. Micron achieved new records in both total data center revenue and the revenue mix for data center in fiscal Q1. Our portfolio of high-capacity DRAM products, including monolithic DAI-based 128-gigabyte DIMMs and LP5-based server DRAM products, continues to see robust demand and remains on track to generate multiple billions of dollars in revenue in fiscal 2025. We made excellent progress on HBM, more than doubling our revenue sequentially during the quarter, and exceeding our plans as a result of solid execution on yield and capacity ramps. In fiscal Q1, our HBM gross margins were significantly accretive to both DRAM and overall company gross margins. We are proud to share that Micron's HBM3E A8i is designed into NVIDIA's Blackwell B200 and GB200 platforms. Micron's HBM3E operates at full speed while maintaining leadership in power efficiency. This month, we commenced high volume shipments to our second large HBM customer and will start high volume shipments to our third large customer in CQ1, expanding our HBM customer base. We continue to receive positive feedback from our leading customers for Micron's HBM3E 12 high best-in-class power consumption, which is 20% lower than the competition's HBM3e 8i, even as the Micron product delivers 50% higher memory capacity and industry-leading performance. We have increased our HBM market TAM estimate to now exceed $30 billion in 2025, and we continue to expect to achieve HBM market share commensurate with our overall DRAM market share sometime in the second half of calendar 2025. As we have said before, our HBM is sold out for calendar 2025 with pricing already determined for this timeframe. In fiscal 2025, we expect to generate multiple billions of dollars of HBM revenue. We are excited about Micron's HBM leadership roadmap through the rest of this decade. Leveraging the strong foundation and continued investments in proven one beta process technology, we expect Micron's HBM4 will maintain time to market and power efficiency leadership while boosting performance by over 50% over HBM3e. We expect HBM4 to ramp in high volume for the industry in calendar 2026. Development work is well underway with multiple customers on HBM4E, which will follow HBM4. HBM4E will introduce a paradigm shift in the memory business by incorporating an option to customize the logic-based die for certain customers using an advanced logic foundry manufacturing process from TSMC. We expect this customization capability to drive improved financial performance for Micron. Based on our customer design wins and success in establishing deep partnerships with customers, industry enablers, and key technology partners like DSMC, we expect to be a leading supplier of HBM with the most robust, trusted, and industry-leading technology roadmap and execution records. Micron has also been leading the adoption of LPD RAM in data centers with NVIDIA's Grace CPU. Micron's LP5X provides greater than 500 gigabyte of capacity and memory bandwidth of greater than 540 gigabyte per second, thus delivering attractive performance per watt for AI platforms. NVIDIA's Grace CPU utilizes Micron's LP5X to provide systems with additional cache coherent memory to supplement HBM for the ever-growing memory needs of AI workloads. Our overall SSD and data center SSD revenue reached new quarterly revenue records in fiscal Q1, and we are on track to deliver another year of share gains in calendar 2024. We continue to strengthen our data center SSD product roadmap leveraging our leadership G8 NAND technology and vertical integration. We announced the 6550 ION SSD, which delivers the industry's fastest 60TB SSD and the first in the industry with Gen 5 capability at this capacity point. Compared to the competition, Micron's 6550 ION SSD delivers 20% lower power while providing 60% better performance and better data center footprint efficiency with up to 67% more density per rack for exascale data centers. Our 9550 PCIe Gen 5 data center SSDs were qualified for the recommended vendor list for NVIDIA's GB200 NVL72 system and offer a 34% higher throughput and over 80% lower energy per terabyte of data transfer versus the competition. We continue to expect to generate multiple billions of dollars in data-centered SSD revenue in fiscal 2025 and to grow our market share once again in calendar 2025. Turning to PC, the PC refresh cycle is unfolding more gradually and we expect PC unit volume growth to be flattish in calendar 2024, slightly below prior expectations. We remain optimistic about AI PC adoption over time. AI PCs will require additional DLAM content with a minimum of 16 gigabytes of DLAM for entry-level PCs and 24 gigabytes and above for higher end segments versus 12 gigabyte average PC content last year. Windows 10 end of life in October 2025 and an aging installed base will provide a catalyst for PC market growth in 2025. We expect PC market units to grow in the mid single digit percentage range in calendar 2025 with growth weighted toward the second half of the calendar year. Turning to mobile, smartphone unit volumes in calendar 2024 remain on track to grow in the mid single-digit percentage range, and we expect low single-digit percentage growth in 2025, both consistent with our prior expectations. AI adoption continues to be a strong driver for mobile DRAM content growth, where we see the technology used in applications such as local search and contextually aware user interfaces increasing over time. DRAM content growth remained robust in CQ3, with a mix of smartphones with 8 gigabyte or greater growing to over 60%, significantly higher than a year ago. Smartphone customer inventory dynamics continue to play out as expected, and we expect bid shipments to be weighted to the second half of our fiscal year. Micron remains focused on the high end of the mobile market. We are leveraging our industry-leading portfolio of DRAM and NAND products to support the most demanding applications, which will require increased content, high performance, and power efficiency. Turning to the automotive market, lower than expected automotive unit production, combined with a shift toward value-trained vehicles from premium models and EVs have slowed memory and storage content growth and resulted in inventory adjustments at OEMs. Longer term, we remain optimistic that ADAS, infotainment, and AI adoption across auto will drive long-term memory and storage content growth. Industrial market demand continues to be impacted by inventory adjustments, and we expect a recovery in this market later in calendar 2025. Now turning to our market outlook. We expect industry DRAM bid demand growth to be in the high teens percentage range in calendar 2024, and in the mid teens percentage range in calendar 2025. We see overall calendar 2025 DRAM industry bid supply growing roughly in line with bid demand, with tightness in leading-edge nodes driven by HVM supply ramp in the industry. Our outlook for industry NAND bit demand growth in both calendar 2024 and 2025 is now in the low double-digit percentage range, which is lower than our prior expectations. Key drivers include slower growth in NAND content in consumer devices, ongoing inventory adjustments and demand dynamics in different end markets, as outlined earlier, and a temporary moderation in near-term data-centered SSD purchases by customers after several quarters of very rapid growth. In data centers, we remain enthusiastic about long-term demand growth as NAND is a key enabler for AI workloads, providing faster data access, lower power, and better overall total cost of ownership essential for AI infrastructure. In the next few years, We also expect high-capacity NAND SSDs to start displacing capacity HDDs in the data center, an inflection that will drive long-term NAND demand growth. The decline in 2024 and 2025 industry NAND demand growth outlook implies that supply actions will be necessary to achieve balance. As mentioned previously, since NAND technology transitions provide a significant increase In overall bit output, the pace of technology transitions will also need to slow in order to align supply to industry demand. Micron is decisively taking actions to align our NAND supply with industry demand trends. We have reduced NAND capex versus prior plan and have slowed the pace of technology node transitions. In addition, we are reducing NAND wafer starts by a mid-teens percentage versus prior levels. These actions will align our supply to current market demand. Consistent with analyst reports, we have seen an increase in BIT supply at legacy technology nodes from a China-based DRAM and a China-based NAND supplier. In calendar 2024, analyst reports indicate that China-based supply will represent a mid-single-digit percentage of industry BIT supply for DRAM and a high single-digit percent of supply for NAND. Competition from China supply is focused on China market demand in DRAM with DDR4 and LP4 products and in NAND with consumer, client, and lower performance mobile products. We expect Micron's worldwide revenue related to LP4 and D4 DRAM products for the remainder of fiscal 2025 to be approximately 10%. We expect Micron's sales of products to China-headquartered customers to be concentrated in the high end of our customers' portfolio, leveraging our technology and product leadership and the performance and quality requirements of our customers. I will now turn it over to Mark for our financial results and outlook.