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The largest U.S. maker of memory chips, Micron manufactures and sells various types of DRAM and NAND memory used in everything from PCs and smartphones to automobiles and data centers. Founded in the basement of a Boise dental office in 1978, the company has grown into a leader in both semiconductor R&amp;D and manufacturing, with more than 15,000 active U.S. patents and 7,500 active foreign patents to its name and a string of chip manufacturing facilities throughout the U.S. and Asia. The company announced plans in 2022 to construct a “megafab” in upstate New York, promising to spend $100 billion on the project over a period of 20 years.

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Q1 2025

Micron Technology (MU): Company Profile, Stock Price, News, Rankings

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Micron Technology

micron technology

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.

Thank you, and welcome to Micron Technology's fiscal Q1 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 xmicrontech. As a reminder, the matters we are 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, 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 the statements made today. We refer you to the documents we filed with the SEC, including our Form 10 ks, 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, Sathya. Good afternoon, everyone. I'm pleased to report that Micron achieved record revenue in fiscal Q1 with revenue, gross margins and EPS 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 center SSDs and achieved new records in market share for data center 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 4 times from the $16,000,000,000 level in 2024 and to exceed $100,000,000,000 by 2,030. Our TAM forecast for HBM in 2,030 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 center DRAM, including HBM, 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 bit shipments. We are now seeing a more pronounced impact of customer inventory reductions. As a result, our fiscal Q2 bit 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 bit shipments in the second half of fiscal and calendar twenty twenty five. We are on track to achieve our HBM 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 1 beta technology node, which supports HBM3e and we are preparing to ramp our 1 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 U. S. Department of Commerce for an award of up to $6,100,000,000 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 $275,000,000 for our Virginia fab that supports production of long lifecycle 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 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 expected 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 die based 128 gigabyte DIMMs and LP5 based server DRAM products continues to see robust demand and remains on track to generate multiple 1,000,000,000 of dollars in revenue in fiscal 2025.

We made excellent progress in 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 HBM 3e A tie is designed into NVIDIA's Blackwell B200 and GB200 platforms. Micron's HBM 3e operates at full speed, while maintaining leadership in power efficiency. This month, we commenced high volume shipments to our 2nd large HBM customer and will start high volume shipments to our 3rd large customer in cq1, expanding our HBM customer base.

We continue to receive positive feedback from our leading customers for Micron's HBM 3e 12 high best in class power consumption, which is 20% lower than the competition's HBM 3e 8 high even as the Micron product delivers 50% higher memory capacity and industry leading performance. We have increased our HBM market TAM estimates to now exceed $30,000,000,000 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 twenty twenty five. 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 1,000,000,000 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 1 beta process technology, we expect Micron's HBM-four will maintain time to market and power efficiency dealership, while boosting performance by over 50% over HBM-3e. 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 TSMC, we expect to be a leading supplier of HBM with the most robust, trusted and industry leading technology roadmap and execution record. 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 6,550 Ion SSD, which delivers the industry's fastest 60 terabyte SSD and the 1st in the industry with Gen 5 capability at this capacity point. Compared to the competition, Micron's 6,550 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 9,550 PCIe Gen 5 data center SSDs were qualified for the recommended vendor list for NVIDIA's GB200 NVL 72 system and offered a 34% higher throughput and over 80% lower energy per terabyte of data transfer versus the competition. We continue to expect to generate multiple 1,000,000,000 of dollars in datacenter 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 DRAM content with a minimum of 16 gigabyte of DRAM for entry level PCs and 24 gigabyte 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 remains 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 bit 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 tram 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 bit 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 bit supply growing roughly in line with bit demand, with tightness in leading edge nodes driven by HBM supply ramp in the industry. Our outlook for industry NAND bit demand growth in both calendar 20242025 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 center SSD purchases by customers

after several quarters of very rapid growth. In data

center, 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.

Thank you, Sanjay, and good afternoon, everyone. Micron delivered fiscal Q1 revenue and gross margins at the midpoint and EPS above the midpoint of the guidance range. Total fiscal Q1 revenue was approximately $8,700,000,000 up 12% sequentially and up 84% year over year and reached a new record. Fiscal Q1 DRAM revenue was $6,400,000,000 up 87% year over year and represented 73% of total revenue. Sequentially, DRAM revenue increased 20% with bit shipments up in the low double digit percent range and prices increasing in the high single digit percentage range.

Strong sequential bit shipment growth in DRAM was driven by demand in data center. Fiscal Q1 NAND revenue was $2,200,000,000 up 82% year over year and represented 26% of Micron's total revenue. Sequentially, NAND revenue decreased 5% with bit shipments and prices both decreasing in the low single digit percentage range. Now turning to revenue by business unit. Compute and Networking business unit revenue was up 46% sequentially to $4,400,000,000 and now represents over half of our total revenue.

CMBU revenue reached a new quarterly record driven by cloud server DRAM demand as well as HBM revenues, which more than doubled sequentially in the quarter. Mobile business unit revenue was $1,500,000,000 down 19% sequentially. As our mobile customers focused on improving their inventory health, we shifted supply to meet data center demand. Embedded Business Unit revenue was $1,100,000,000 down 10% sequentially. Auto, Industrial and Consumer customers continued to manage their inventories lower.

Revenue for the storage business unit was $1,700,000,000 up 3% sequentially. SBU revenue reached a new quarterly record driven by record revenue in the data center SSD segment. In fiscal 2025, we expect Micron's revenue mix with companies headquartered in Mainland, China and Hong Kong, including direct sales as well as indirect sales through distributors to be approximately mid teens percent of our worldwide revenue. This mix is impacted by market factors described earlier as well as by the China CAC actions announced in May 2023. The consolidated gross margin for fiscal Q1 was 39.5 percent, improving 300 basis points sequentially.

Gross margin improvement was driven by higher pricing in DRAM, improved product mix to data center in both DRAM and NAND, offset partly by lower pricing in NAND. Operating expenses in fiscal Q1 were $1,050,000,000 down $34,000,000 sequentially and benefiting from lower labor related costs and ongoing tight expense control. We generated operating income of $2,400,000,000 in fiscal Q1, resulting in an operating margin of 27.5 percent, which was up approximately 500 basis points sequentially and up 48 percentage points from the year ago quarter. Fiscal Q1 adjusted EBITDA was $4,400,000,000 resulting in an EBITDA margin of 50.6 percent, up 2 65 basis points sequentially and up 31 percentage points or $3,500,000,000 from the year ago quarter. Fiscal Q1 taxes were $333,000,000 on an effective tax rate of 14.1 percent, which was in line with our guidance.

Non GAAP diluted earnings per share in fiscal Q1 was $1.79 compared to $1.18 per share in the prior quarter and a loss per share of $0.95 in the year ago quarter. We delivered fiscal Q1 EPS at the higher end of our guidance range. Turning to cash flows and capital spending. Our operating cash flows were approximately $3,200,000,000 in fiscal Q1. Capital expenditures were $3,100,000,000 resulting in free cash flow of $112,000,000 in the quarter.

Our fiscal Q1 ending inventory was $8,700,000,000 or 149 days, a decline of 9 days from the prior quarter and driven by DRAM. On the balance sheet, we held $8,700,000,000 of cash and investments at quarter end and maintained $11,200,000,000 of liquidity when including our untapped credit facility. We ended the quarter with $13,800,000,000 in total debt, low net leverage and a weighted average maturity on our debt of 2,031. Now turning to our outlook for the 2nd fiscal quarter. We expect DRAM bit shipments to decline sequentially and expect a meaningful sequential decline in NAND bit shipments for reasons mentioned previously that are impacting near term demand.

We project our bit shipments to resume growth after fiscal Q2 and expect second half fiscal year bit shipments to be stronger than the first half. We expect fiscal Q2 gross margins to be impacted by NAND industry conditions, partly offset by continued growth in HBM and data center DRAM. In addition to these factors, we expect NAND underloading to affect fiscal Q3 gross margins. We forecast operating expenses in fiscal Q2 to be approximately $1,100,000,000 primarily reflecting planned increases in R and D spending. We expect fiscal 2025 OpEx to increase by a lowtomidteens percent below our prior mid teens plan.

We continue to prioritize R and D programs including for HBM, to capitalize on strong growth ahead. We expect both inventory dollars and days of inventory to increase sequentially in fiscal Q2 on lower volumes. With stronger bit shipments, we expect DIO to improve in the second half of the fiscal year. We expect to end fiscal 2025 with tight DRAM inventories below our target levels. For fiscal Q2 and the remainder of fiscal 2025, we estimate our non GAAP tax rate to be in the mid teens percent range.

We expect our fiscal 2026 tax rate to be in the high teens percentage range following Singapore's adoption of global minimum tax. In fiscal Q2, we forecast net CapEx to be approximately $3,000,000,000 For fiscal 2025, we are prioritizing our investments to ramp 1 Beta and 1 Gamma technology nodes as well as Greenfield fab investments for DRAM, which will help us support HBM and long term DRAM demand. We have cut our NAND CapEx and are prudently managing the pace of our NAND technology node ramps to manage our supply. We expect overall CapEx spending in fiscal 2025 to be approximately $14,000,000,000 plus or minus $500,000,000 The overwhelming majority of the fiscal 2025 CapEx is to support HBM as well as facility, construction, back end manufacturing and R and D investments. With all these factors in mind, our non GAAP guidance for fiscal Q2 is as follows.

We expect revenue to be $7,900,000,000 plus or minus $200,000,000 gross margin to be in the range of 38.5 percent plus or minus 100 basis points and operating expenses to be approximately $1,100,000,000 plus or minus $15,000,000 As mentioned, we expect the fiscal Q2 tax rate to be in the mid teens percent range. Based on a share count of approximately 1,140,000,000 shares, we expect EPS to be $1.43 per share, plus or minus 0 $0.10 In closing, Micron will remain circumspect and flexible with all our spending, including operating expenses and capital investments. We are making disciplined investments in DRAM and are driving the ramp of high bandwidth memory. In NAND, we are taking prompt and decisive actions to cut our capital spending and cut our wafer output to maintain supply discipline. We expect to deliver a substantial revenue record, significantly improved profitability and positive free cash flow in fiscal 2025.

Thank you, Mark. At our 2022 Investor Day, we had laid out a bold plan to shift our portfolio mix and to increase our share of high growth and less seasonal segments from approximately 45% in fiscal 2021 to 62% in fiscal 2025. In fiscal Q1 2025, we have already significantly exceeded that goal, driven by strong demand for AI enabled solutions and reflecting Micron's technology, product and manufacturing leadership. Micron is in the strongest competitive position in its history, and we continue to gain share in all high margin strategically important product categories in our industry, while maintaining overall stable bit share in both DRAM and NAND. Thank you for joining us today.

Certainly. And our first question for today 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, could you speak to what gives you the confidence that we're going to see a May quarter kind of a seasonal pickup and or cyclical pickup across both DRAM and NAND? And I guess if there's any sort of cyclical pickup across both DRAM

of magnitude we should be thinking about for each would be very helpful.

C. J, I'll take this one. As we said, our FQ2 outlook is impacted by inventory adjustments in consumer oriented markets and, of course, the typical seasonality that exists in CQ1 as well. And we have also seen some moderation in purchases of data center SSDs after several quarters of rapid growth in that part of the market. So that's what is impacting our FQ2 outlook here.

And we believe that customer inventories, in the consumer oriented markets will improve in the spring timeframe. Keep in mind that the sell through that's happening in these consumer oriented markets like smartphone and PCs is okay. It's more that they have built inventory, and therefore, their purchases are less than their sell through. And we saw that their inventories improved in CQ4, and we expect them to improve further in CQ1 time frame. So by spring time frame, we expect the inventories to add customers in the consumer oriented markets to improve, and that's what will drive shipment growth in the fiscal second half for us.

And of course, data center SSD as well, we expect it tends to be that part of the market. Data center storage can sometimes be lumpy, and we expect that data center storage demand, given the data center build out that is happening, continues to be happening, driven by AI demand growth, will also return toward growth in the fiscal second half. That's why we said fiscal second half stronger than our fiscal first half.

Very helpful. And then a quick question to Mark. Can you help us with a little more granularity in terms of the impact from NAND under loadings into the current guide as well as whether there's an impact beyond that? And then for all of calendar 'twenty five, is there a framework for thinking about the tailwind from increasing HBM mix in the revenues? Thank you.

Sure, CJ. So let me start with providing granularity on the Q2 guide. So we're down 100 basis points first to Q2 in the guide and that's driven by NAND. First, as Sanjay mentioned, the NAND industry market conditions are weak, weaker than we had expected. And that consumer market, PC, smartphones, demand is weaker and inventory adjustments are occurring.

Secondly, NAND data center SSD volumes moderated. And so there's this period of digestion and that was as we know higher and so there's this period of digestion and that was as we know higher margin NAND business. So those two things are the principal driver. Of course with revenue down in the guide 800,000,000 dollars we see some negative leverage effects on ongoing period costs. But those costs do not include under load charges in the 2nd quarter.

So those charges will begin to affect us in the Q3. And so in the Q3 as NAND continues to have a period where there are some challenging conditions into the calendar first quarter and that improves through the calendar year, our supply response in NAND will weigh on 3rd quarter margins and it will somewhat constrain our ability to expand gross margins in the Q3. Now beyond the Q3, the business volume growth, AI driven data center and edge driven growth, favorable mix effects, including HBM, where we talked about multibillion. And then just a more constructive environment, especially in DRAM where we have tight inventories on the leading edge and have indicated that we basically were below our target and inventories by end of year. So we see the conditions for margin expansion occurring after 3rd quarter.

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

Thanks a lot. I'm trying to get at what the magnitude of the revenue ramp is going to be in the fiscal back half. And I'm sort of looking at what you were saying about CapEx. You had said that it would be mid-30s of the full year revenue. So if I take the 14% and which was a little better than what people thought, I think most people were thinking 13.5%.

So you actually are doing a bit more CapEx. And if I divide by the mid-30s, I get to a number like $40,000,000,000 for the fiscal year. Is that I'm not asking you to guide the fiscal year, but I'm just asking you to provide some sort of magnitude for like the fiscal back half versus the fiscal front half?

So let me just answer the fiscal second half. And of course, the drivers of growth, there would be improved inventory in consumer oriented markets, data center SSD demand, resuming and of course, HBM, continued momentum in HBM. We are excited about our product position there, and we have indicated to you that in the second half of the calendar year, we target reaching our HBM share to be in line with DRAM share. And we are executing very well on the HBM momentum. So HBM is also, of course, continuing to drive our revenue growth as you look ahead to the second half of the year.

And then just keep in mind that we have discussed smartphone and PC units. We have provided you color in the script on those in calendar year 2025 as well. And there will be increasing penetration of AI smartphone and PC units, which tend to have higher DRAM content as well. So all of these factors will contribute, primarily AI from data center to edge, consumer inventory adjustments, getting past the seasonality of CET1, all of these will be the factors that will determine that will really give us optimism toward

second half shipments and, of course, healthier revenue outlook in the second half as well. And Mark, you can comment on the CapEx.

Yes. Tim, we had we've made it clear we're cutting NAND CapEx. We are there's still going to be elevated levels of DRAM spend and our previous guidance of mid-30s will be higher 30s percent of sales now.

Got it, Mark. Okay. Thank you. And then I want to ask on the share repo. So in the 8 ks last week, that was related to the Chips Act, it contained language that you can only buy back to offset dilution during the 1st 2 years and really you're only free to jack up the repo more than that during years 3 to 5 to bring down share count.

How do you think about that in sort of in the broader capital return? Thanks, Mark.

Yes, Tim, we're we don't see any meaningful constraints on our ability to return capital. Our ordinary course dividends are unaffected, so we would still expect to pay a dividend and grow that over time. We are able to repurchase shares. During the 1st 2 years, we're able to repurchase shares to help offset stock comp shareholder dilution. And then in years 3 through 5, we're unrestricted if certain financial and other conditions are met.

And we think those conditions are reasonable. They involve how much we're spending on R and D, how much we're spending on CapEx and our credit and so forth. And these things are how we would normally run the business in a shareholder and broader stakeholder way. So we think that we don't have any meaningful constraints under the agreements.

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

So Sandeep, you upgraded the HBM TAM by I think about 20% or so. What has changed to increase that estimate? And I think you kind of kept your target share to be the same as before, even though I think you kind of shifted it more to the second half. But what is the bottleneck? Why can't your share get to the target level earlier?

Is it just a matter of rolling out in different products? Just what changed the TAM estimate? And then what is causing the change for you to get to your target more in the second half rather than, I think you said, sometime in 2025 before?

So we continue to work closely with our customers to assess the market requirements, and we provide you updates. And we, from time to time, update our outlook. And based on our latest estimates with our customers and, of course, all the build out related to AI data centers and the tremendous opportunity, And it is we haven't seen our estimate from $25,000,000,000 to $30,000,000,000 for calendar year 2025. And this is driven by increased demand, increased volume that will be required in 2025 for HBM. And just keep in mind that HBM just continues to be still in tight supply in calendar year 2025.

And regarding our own momentum, we have a very strong momentum. We previously had said that sometime in calendar year 2025, we will reach our share target in HBM to be equivalent to our DRAM industry share. And now as 2025 is approaching, we are providing you further specificity around the timing, and we are specifying that we'll be reaching that in second half of twenty twenty five. Of course, HBM ramp up, just keep in mind, it was not long ago. It was FQ3 of 'twenty four when, Mike, we had indicated that we have over $100,000,000 of revenue in HBM.

We are our team is doing a great job in continuing to ramp up the capacity as well as yield. We pointed out that in our FQ1, we delivered more HBM than our plan and our yields were also ahead of our plan. So we continue to do well and we are extremely focused on ramping up capacity, continue to ramp up yields toward mature yields, and we feel very confident about our opportunities for HBM in 2024. We have said that we expect to reach multiple 1,000,000,000 of dollars of revenue in the coming year, in 2025. So a tremendous opportunity.

Micron Technology (MU) Q1 2025 Earnings Call Transcript

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