Micron Technology, Inc.

Ladies and gentlemen, thank you for joining us and welcome to Micron Technologies Fiscal Second Quarter 2026 Financial Conference Call. After today's prepared remarks, we will host a question and answer session. I will now hand the conference over to Satya Kumar, Investor Relations. Satya, please go ahead.

Thank you and welcome to Micron Technologies Fiscal Second Quarter 2026 Financial Conference Call. On the call with me today are Sanjay Bharotra, our chairman, 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 contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance, as well as trends and expectations in our business, customers, market, industry, products, and regulatory and other matters. These statements are based on our current assumptions, and we assume no obligation to update these statements. Please refer to our most recent financial report on Forms 10-K, Forms 10-Q, and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. 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. I'll now turn the call over to Sanjay.

Thank you, Satya. Micron delivered an exceptional fiscal Q2 with stellar records in revenue, gross margin, EPS, and free cash flow. Quarterly revenue nearly tripled versus one year ago, and revenue for DRAM, NAND, HBM, and each business unit reached new highs. Our fiscal Q3 single quarter revenue guidance exceeds the full year revenue for every year in our company's history through fiscal 2024. For fiscal Q3, we anticipate exceptional records across revenue, gross margin, EPS, and free cash flow. Reflecting confidence in the sustained strength of our business, I'm pleased to announce that our board has approved a 30% increase in our quarterly dividend. The step up in our results and outlook are the outcome of an increase in memory demand driven by AI, structural supply constraints, and Micron's strong execution across the board. Our memory and storage solutions are at the heart of this AI revolution. Memory makes AI smarter and more capable, enabling longer context windows, deeper reasoning chains, and multi-agent orchestration. As AI evolves, we expect compute architectures to become more memory intensive. This is why we strongly believe that Micron is one of the biggest beneficiaries and enablers of AI. AI hasn't just increased demand for memory, it has fundamentally recast memory as a defining strategic asset in the AI era. We continue to work with customers on strategic customer agreements or SCAs that are different from prior LTAs and have specific commitments over a multi-year time horizon for improved visibility and stability in our business model. These SCAs also provide customers greater certainty to plan their businesses while reinforcing long-term engagement across our broad product portfolio. We are excited to have signed our first five-year SCA. We are making excellent progress ramping our industry-leading 1-gamma DRAM and G9 NAND technology nodes. We expect 1-gamma to become the highest volume node in Micron's history. Our 1-gamma node was already the fastest ramp to mature yields, is ramping volumes faster than all prior nodes in our history, and is on track to become a majority of our DRAM bitmix by mid-calendar 2026. We plan to increase EUV adoption at the 1-delta DRAM node, utilizing the latest generation EUV tools. These more advanced EUV tools will help us optimize both clean room space efficiency and patterning when scaling to 1-delta and beyond. In NAND, our G9 node also remains on track to constitute a majority of bids by mid-calendar 2026. We also achieved a record mix of QLC bits in the quarter. Looking ahead, we expect co-location of R&D and high volume manufacturing at our Boise and our Singapore sites to speed up time to market for our leading edge products. We see an unprecedented set of opportunities for memory and storage to enable the AI era across market segments. and expect to meaningfully increase our R&D investments in fiscal 2027. Micron's technology leadership, product excellence, and manufacturing execution is being recognized in quality scores from our customers. I'm pleased to report that a clear majority of our customers rank Micron number one in quality. Turning to our end markets, AI demand is driving DRAM and NAND data center bit TAM to exceed 50% of the industry TAM for the first time in calendar 2026. Traditional server demand is robust, driven by combination of demand from workloads initiated by agentic AI as well as broad-based server refresh. AI server demand continues to be strong. Both AI and traditional server demand are constrained by lack of adequate DRAM and LAN supply. We expect server units to grow in the low teens percentage range in calendar 2026, driven by growth in both AI and traditional servers. We expect server DRAM content to continue to grow in calendar 2026 with the introduction of new platforms. At NVIDIA's GTC, we announced that Micron has begun volume shipment of its HBM4 36-gigabyte 12i in the first quarter of calendar year 2026 and is designed for NVIDIA Vera Rubin. With our HBM4 production ramp and volume shipments underway, we expect to reach mature yields faster than HBM3e. We have also sampled our HBM4 16i product which provides 48 gigabytes of HBM capacity in each HBM cube, a 33% increase in HBM capacity compared to HBM4, 12 high. Development of HBM4e, our next generation HBM product, is well underway, and we expect to ramp volume in calendar 2027. Our HBM4e will leverage Micron's production-proven, industry-leading, one gamma DRAM technology node and is set to deliver another step function improvement and performance, enabling a whole new generation of AI compute platforms across the industry. Additionally, HBM4E customization options offer us further differentiation opportunities and even deeper R&D engagement with customers. Micron pioneered the development of LPD RAM for the data center which consumes one-third the power of DDR, DRAM server modules. Building on this leadership, we sampled the industry's first 256 gigabyte LP SOCAM2 product, which is built using our one gamma node and enables a massive two terabytes of capacity per CPU, quadrupling the content from just a year ago. We see expanding use of LPD-LAM in the data center in the years ahead, and we are excited to maintain an industry-leading innovative product roadmap in this market. Rapid growth in AI influence is driving the emergence of new architectures optimized for the token economics of specific workloads. Micron's broad portfolio of HBM, LP, DDR, and SSD is a critical enabler across these architectures. At GTC, the recent announcement of NVIDIA GROK 3 LPX implements up to 12 terabytes of DDR5 in a rack-scale architecture. We are seeing an acceleration in NAND-based demand in the data center due to AI use cases such as vector database and KV cache offload, and due to growing share of SSDs in capacity storage tiers. Micron's data-centered SSD product portfolio, enabled by our technology leadership and vertical integration, covers the spectrum from highest performance to highest capacity. We are now in high-volume production of our G9 NAND-based PCIe Gen 6 high-performance data-centered SSDs. Our 122-terabyte high-capacity SSD is seeing strong adoption and delivers 16 times the sequential read throughput per watt of a capacity-matched HDD configuration. Our strategy and execution are delivering results. Our data center FSD market share increased for the fourth consecutive calendar year in 2025 to a new record. In fiscal Q2, data centers' NAND revenues more than doubled sequentially reaching a substantial new record, and we expect further growth in the quarter ahead. Micron's data-centered SSD portfolio is industry-leading, and we have secured a robust set of design wins across our customer base. We are now seeing NAND demand significantly in excess of our available supply for the foreseeable future. In calendar 2026, a number of factors, including DRAM and NAND supply constraints, could cause PC and smartphone units to decline in the low double digits percentage range. Over time, we expect the value of on-device AI to drive strong memory content growth in PCs and smartphones. In PCs, there has been exciting innovation recently with agentic AI applications, such as OpenClaw. where AI agents can perform tasks independently on the host PC and also initiate workloads in the cloud. PCs with on-device agentic AI capabilities have recommended memory configurations of at least 32 gigabytes, twice as much as the average PC. Additionally, the fast-growing new category of personal AI workstations, such as NVIDIA DGX Spark and AMD Ryzen AI Halo, come in 128-gigabyte configurations, ideal for using large language models on device. Likewise, in smartphones, OEMs have recently announced new flagship devices such as Samsung Galaxy S26 and Google Pixel 10 with Agentech AI integrated into their mobile operating systems. The mix of flagship smartphones shipping with 12-gigabyte or more of DRAM increased to nearly 80% in calendar Q4, up from under 20% a year ago. Micron is well positioned to accelerate the opportunities in these markets with our industry-leading portfolio of products. In PC, Micron completed qualifications for LPCAM2 at a major OEM. At CF, we launched the industry's first Gen 5 QLC client SSV based on G9 NAND. Micron's LPDDR5X is now designed into leading personal AI workstations, expanding our addressable market with high volumes shipped to key customers. In smartphones, Micron continues to receive strong interest and feedback from OEM and ecosystem partners on our one gamma-based LPDDR6 samples. We built momentum with additional qualifications and mass production of our 10.7 gigabit per second 1 gamma LPDDR5X 16 gigabit product. We saw continued pricing improvement across automotive, industrial, and embedded markets. Total AEBU revenue reached a record with automotive and industrial revenue together exceeding $2 billion in the quarter. In automotive, OEMs are deploying level 2 plus ADAS across their fleets at an accelerating pace. The average car today has less than L2 ADAS capability, containing approximately 16 gigabytes of DRAMs, while vehicles with L4 autonomy require over 300 gigabytes. As more advanced ADAS and smart cabin adoption scales, we expect robust long-term growth in automotive memory demand. We have shared samples of the industry's first automotive-grade 1 gamma LPDDR5 DRAM, and in NAND, we were first in the industry with a G9-based UFS 4.1 automotive solution, further reinforcing our technology leadership in this market. Rapid improvements in AI are supercharging the capabilities of robots. We believe we are on the cusp of a 20-year growth vector in robotics, and expect robotics to become one of the largest product categories in the technology world. Humanoid robots will be AI-enabled and will be powered by a compute platform that rivals that of a high-end L4-capable automobile, thus requiring significant memory and storage capacity. We expect this exciting new category of growth to further underpin the long-term favorable dynamics that shape our industry environment. Micron is very well positioned to leverage this opportunity in close partnership with our customers, enabled by our industry-leading technology, product solutions, and operational capabilities. Now turning to our market outlook. We expect both DRAM and NAND industry bid demand in calendar 2026 to be constrained by supply. We continue to expect supply demand conditions for both DRAM and NAND to remain tight beyond calendar 2026. We expect industry DRAM bid shipments in calendar 2026 to grow in the low 20s percentage range, slightly above our prior outlook. In DRAM, clean room constraints and long construction lead times, higher HVM trade ratio, higher HVM growth rates, and declining bids per wafer growth from node migrations, constrained bid supply growth. We expect industry NAND bid shipments in calendar 2026 to grow approximately 20%. In NAND, some industry suppliers redirecting clean room space for DRAM and overall limited clean room space constrained bid supply growth. We expect Micron DRAM and NAND supply to grow approximately in line with the industry in calendar 2026. Micron is working to address the unprecedented gap between supply and demand, and we achieved several important milestones in expanding our global manufacturing footprint this past quarter. In DRAM, earlier this week, we announced the successful closing of the acquisition of the Tongluo site from Powerchip Semiconductor, completing the transaction ahead of schedule. We expect this site to support meaningful product shipments from the existing FAB beginning in fiscal 2028. Adding to the existing FAB, we plan to begin construction of a similar sized second clean room at this site by the end of fiscal 2026. We continue to expect initial vapor output at our first Idaho FAB in mid-calendar 2027, and ground preparation has begun for our second Idaho FAB. We broke ground on our first FAB at the New York site and initial ground preparation activities are ahead of plan. In Japan, we are making good progress on ground preparation for our cleanroom expansion to enable future technology transitions in our Hiroshima site. In NAND, the combination of our higher demand outlook and our decision to co-locate R&D cleanroom in our manufacturing fab underpin our decision to break ground for a new NAND fab at our Singapore site. We expect initial wafer output from this FAB in the second half of calendar 2028. In assembly and test, we commenced commercial shipments from our new facility in India. The state-of-the-art facility will be among the largest single-floor assembly and test clean rooms in the world. Our Singapore Advanced Packaging Facility for HBM is on track to contribute meaningfully to Micron's HBM supply in calendar year 2027. We expect fiscal 2026 CAPEX to be above $25 billion. From our last earnings call estimate, the majority of the increase is driven by clean room facility-related CAPEX, of which the largest factor is Dongluo, followed by construction spend increase in our U.S. FAB projects. We project our fiscal 2027 CAPEX to step up meaningfully to support HVM and DRAM-related investments. We expect construction-related CapEx to increase by over $10 billion year-over-year in fiscal 2027 as we build out our global manufacturing sites to address long-term demand opportunities. In addition, we expect higher equipment spent year-over-year in fiscal 2027. As we make these investments, we will continue to be responsive to the market environment and our customer demand to appropriately align our supply plans. I will now turn it over to Mark for our fiscal Q2 financial results and outlook.