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

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Micron Technology

micron technology

Thank you for standing by, and welcome to Micron's Third Quarter twenty twenty May Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. 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 third quarter twenty twenty five financial conference call. On the call with me today are Sanjay Mehrotra, 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. Before we begin, let me remind everyone that today's discussion contains forward looking statements that are subject to risks and uncertainties.

These forward looking statements include statements regarding our financial and performance, including our guidance, as well as trends and expectations in our business, market, industry 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 Form 10 ks and our other filings with the SEC for more information on these 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.

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 LinkedIn, X, and YouTube. I'll now turn the call over to Sanjay.

Thank you, Satya. Good afternoon, everyone. Micron's strong competitive position and solid execution delivered record revenue in fiscal Q3, with revenue, gross margin, and EPS all exceeding the high end of our guidance ranges. Data center revenue more than doubled year over year and reached a record level, and consumer oriented markets had strong sequential growth. We generated substantial free cash flow in the quarter, even as we continue to make strategic investments critical to sustain long term growth.

I'm thankful to all our Micron team members for their focus and execution, which made these results possible. In fiscal Q3, DRAM revenue reached a new record, driven by a nearly 50% sequential growth in HBM revenue. We remain the sole supplier in volume production of LPDRAM in the data center. In NAND, we achieved a new quarterly record for market share across data center SSDs as well as client SSDs in calendar Q1. For the first time ever, during calendar Q1, Micron has become the number two brand by share in data center SSDs, according to third party data.

Looking ahead to fiscal Q4, we see a robust demand environment and expect to grow revenue by 15% sequentially to a record $10,700,000,000 at guidance midpoint. In June, we have completed a strategic reorganization of our business units around key market segments to capitalize on the tremendous AI growth opportunity ahead. As high performance memory and storage becomes increasingly critical to enabling AI driven innovation, this new structure enhances Micron's ability to engage more deeply with customers by shifting more resources to AI focused opportunities across our portfolio. We are making excellent progress on our one gamma DRAM technology node, with yield ramping ahead of the record pace we achieved on our one beta node. We completed several key product milestones during the quarter, including the first qualification sample shipments of one gamma based LP5 DRAM.

Micron one gamma DRAM leverages EUV, and the node provides a 30% improvement in bit density, more than 20% lower power, and up to 15% higher performance compared to one beta DRAM. We will leverage one gamma across our entire DRAM product portfolio to benefit from this leadership technology. In NAND, we reached a record high mix of QLC bits in the quarter. We started qualifications for new high performance SSD products based on our G9 two terabit QLC NAND, and we continue to ramp our G9 node at a pace consistent with demand. We are making disciplined investments in our global operations network to add to supply in line with demand over time.

Two weeks ago, with support from the Trump administration, Micron announced plans to invest approximately $200,000,000,000 in The U. S, which includes $150,000,000,000 in manufacturing and $50,000,000,000 in R and D over the next twenty plus years. As part of this $200,000,000,000 investment plan, Micron plans to invest an additional $30,000,000,000 beyond previously announced plans, which includes building a second leading edge memory fab in Boise, Idaho expanding and modernizing our existing fab in Manassas, Virginia, serving the automotive, aerospace, defense, and industrial markets, and bringing advanced packaging capabilities to The U. S. To support our long term HVM growth plans after we have established sufficient DRAM wafer scale in our U.

S. Operations. We are pleased with the strong endorsement we received for our technology, products, and investment plans from our customers and ecosystem partners as part of this announcement. Our first Idaho fab, ID. One, achieved another key construction milestone in June.

We expect first DRAM wafer output at ID. One to begin in the second half of calendar twenty twenty seven, with customer qualifications to follow. The second Idaho fab, ID. Two, will benefit from manufacturing economies of scale with ID. One and add to R and D colocation benefits with greater efficiencies and faster time to market.

To meet anticipated demand, ID. Two will begin production before the first New York fab. We expect to begin ground preparation in New York later this year, following the completion of state and federal environmental reviews. Turning to our end markets. In data center, we expect the CY25 server market to grow mid single digits percentage in units, largely driven by significant growth in AI servers.

In fiscal Q3, data center DRAM revenue reached a new record for the fourth consecutive quarter, driven by strong growth and share gains in HVM and robust performance by our industry leading portfolio of high capacity DIMMs and low power server DRAM products. We are executing well on our HBM ramp and product development roadmap. Our yield and volume ramp on HBM3E 12i is progressing extremely well, and we expect shipment crossover in FQ4. We expect to reach HBM shares similar to our overall DRAM share sometime in the second half of calendar twenty twenty five. At AMD's Advancing AI event earlier this month, we announced that Micron's HBM3E 36 gigabyte 12 high has been designed into AMD's Instinct MI355X GPU platform.

We are now shipping HBM in high volume to four customers, spanning both GPU and ASIC platforms. As generative AI workloads grow in size and complexity, the performance demands on HBM continue to rise. Micron's HBM4 leverages our well established one beta DRAM technology, along with an internally developed and manufactured advanced CMOS logic based die, to deliver bandwidth exceeding two terabyte per second per memory stack, over 60% higher performance than the previous generation. Additionally, Micron's HBM4 offers a 20% lower power consumption compared to the already industry leading power performance on our HBM3E12i product, setting new benchmarks in power efficiency for this product category. The expanded interface for HBM4 facilitates rapid communication and a high throughput design that accelerates the inference performance of large language models and chain of thought reasoning systems.

Micron has delivered samples of HBM4 to multiple customers and expects to ramp volume production in calendar twenty twenty six, aligned with our customers' plans. We are exceptionally well positioned for the ramp of HBM4. Building on the success of our HBM3E ramp, we have high quality, field proven technology and have executed a robust and significant ramp in our HBM manufacturing capacity. We have deep relationships with practically every major customer of HBM and have earned their trust with our execution, delivering the world's lowest power, highest performance HBM. Our portfolio of high capacity DIMMs and low power server DRAM solutions delivered another record revenue quarter.

Micron has pioneered the adoption of LPDRAM for servers, and we continue to maintain our sole source position for LP in server. Together, our high capacity DIMM and LP server products have already generated multiple billions of dollars in revenue in fiscal twenty twenty five, reflecting a remarkable fivefold growth compared to the same period in the previous year. During calendar Q1, for the third consecutive quarter, Micron achieved a record for data center SSD market share, driven by our portfolio of differentiated products enabled through vertical integration. In fiscal Q3, our data center 9,550 performance SSD, which is on the NVIDIA GB200 NVL72 recommended vendor list, completed additional customer qualifications at multiple OEMs. Micron's 9,550 SSDs provide an industry leading performance and energy efficient Gen five data center storage solution for AI server systems.

We continue to qualify additional customers and ramp revenue for our 6,550 ION 60 terabyte capacity SSDs. Turning to PC. We expect PC market units to grow in the low single digit percentage range in calendar twenty twenty five. In the quarters ahead, key catalysts for growth include the increasing adoption of AI enabled PCs and the Windows 11 upgrade cycle. Micron is focused on bringing differentiated high performance products to the PC market.

Our strong SSD portfolio resulted in Micron achieving a record high client SSD market share in calendar Q1. Tomorrow, we will be announcing our new G9 QLC two terabit based SSD, featuring our proprietary adaptive write technology, which enables 4x faster write performance. This technology expands the addressable market for QLC SSDs by delivering performance equivalent to TLC NAND for most consumer use cases. Turning to mobile. We expect smartphone units to grow low single digits in calendar twenty twenty five.

AI adoption remains a key driver of DRAM content growth for smartphones, and we expect more smartphone launches featuring 12 gigabyte or more compared to eight gigabyte of capacity in the average smartphone today. Micron is focused on providing solutions to the high end smartphone segments, leveraging our leading one beta and one gamma technology nodes for LP5X DRAM and G8 and G9 technology nodes for our UFS4 NAND products. During the quarter, we began shipping qualification samples of the industry's first LP5X memory build on the one gamma node, offering a wide range of capacities and industry leading speed grades for twenty twenty six flagship smartphones. Micron's One Gamma LP5x DRAM is engineered to accelerate AI applications in high end devices, delivering over 25% faster recommendations across several use cases, while reducing power consumption by 20%, all in an ultra thin form factor ideal for mobile. In NAND, we secured a key customer design win and ramped high volume production of our G9 based UFS4 products.

The strength of our mobile portfolio was further recognized through top quality awards from seven smartphone OEMs during the quarter. Turning to automotive, industrial, and consumer embedded markets. We expect increasing adoption of L2 and L3 ADAS features and AI enabled in vehicle infotainment systems to drive memory and storage content growth as well as higher bandwidth requirements. Micron is positioned for long term success in the automotive market with new product introductions, such as the industry's first one beta dual channel LP5 DRAM with high speed 9.6 gigabits per second support, which achieved production readiness during the quarter. In industrial, we are seeing a resumption in our growth as customers increase their investments for the adoption of AI, including in key areas like factory automation.

Micron is driving price improvements with a market backdrop of constrained D4 and LP4 supply and low distributor channel inventory. Now turning to our market outlook. Customer inventory levels have been healthy overall across end markets, and there may have been some tariff related pull ins by certain customers. Our customers continue to signal a constructive demand environment for the remainder of this calendar year, and we remain agile to adjust to any unforeseen demand changes that may occur due to macro conditions or the evolving tariff related situation. We expect CY25 industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double digit percentage range.

We expect Micron's bit supply growth to be below industry bit demand growth for non HBM DRAM and NAND. Over the medium term, we anticipate industry bit demand growth of mid teens CAGR for both DRAM and NAND. As previously communicated, our efficient node conversions will result in 10% structurally lower NAND wafer capacity ending fiscal twenty twenty five versus the end of fiscal twenty twenty four levels. Additionally, given NAND technology transitions provide a significant increase in overall bit output, Micron plans to manage our node conversions at a measured pace consistent with our demand. Recent press reports have discussed the end of life of D4 and LP4 products.

Micron's leading edge DRAM nodes, such as one beta and one gamma, are focused on the latest generation products, such as D5, LP5, and HVM, and are not utilized to produce D4 and LP4. D4 and LP4 products are largely produced in our one alpha DRAM node. Micron has sent EOL notices for these products to customers in high volume segments, like mobile, client, data center, and consumer, several months ago, with final shipments occurring in two to three quarters from now. This EOL process is similar to prior transitions from one generation of memory to another, and consistent with history, Micron intends to support its longevity customers with long term and relatively lower volume requirements in segments like automotive, industrial, defense, and networking with supply of these one alpha DRAM products for several years. In the near term, customers in the high volume segments are starting to see increasing shortages of D4 products.

We are now on allocation for these products and are working with customers to try and support their high priority near term demand. D4 revenues are low single digit percentage of our revenues in second half of fiscal twenty twenty five. We anticipate LP4 shortages may also increase as a result of EOL. In closing, Micron's record Q3 revenue performance and strong Q4 outlook are the results of our strategic focus and consistent execution. As AI drives unprecedented demand for high performance memory and storage, Micron is exceptionally well positioned to capitalize on this transformative era.

Our leadership in technology, highlighted by progress in HBM, one Gamma DRAM, and G9 NAND, alongside disciplined global manufacturing investments, supports our path to sustained growth. We are confident that our strategic direction, innovation capabilities, and the execution by our exceptional team will continue to create meaningful value for our shareholders, customers, and employees. We are on track to deliver record revenue with solid profitability and free cash flow in fiscal year 'twenty five, while we invest to build on our leadership to addressing growing AI driven memory demand. I will now turn it over to Mark for our financial results and outlook.

Thank you, Sanjay, and good afternoon, everyone. Micron delivered strong results in fiscal Q3 with revenue, gross margin, and EPS all above the high end of the guidance ranges provided in our last earnings call. Total fiscal Q3 revenue was $9,300,000,000 up 15% sequentially and up 37% year over year and a quarterly revenue record for Micron. Higher sequential revenue was driven by growth across our end markets, including record data center revenues and strong sequential growth in consumer oriented markets. Fiscal Q3 DRAM revenue was $7,100,000,000 up 51% year over year and represented 76% of total revenue.

Sequentially, DRAM revenue increased 15% with bit shipments increasing over 20% and prices decreasing in the low single digit percentage range, primarily due to a higher consumer oriented revenue mix. Fiscal Q3 NAND revenue was $2,200,000,000 up 4% year over year and represented 23% of Micron's total revenue. Sequentially, NAND revenue increased 16% with bit shipments increasing in the mid-20s percentage range and prices decreasing in the high single digit percentage range. Now turning to revenue by business unit. Compute and networking business unit revenue was $5,100,000,000 up 11% sequentially and a quarterly record.

This performance was driven by a nearly 50% sequential increase in HBM, along with growth in our high capacity DRAM and low power server DRAM. Revenue for the storage business unit was $1,500,000,000 up 4% sequentially. This growth was primarily driven by an increase in consumer oriented revenue. Mobile business unit revenue was $1,600,000,000 up 45 sequentially. Sequential revenue growth was due to reduced customer inventories and strong demand from DRAM content growth.

Embedded business unit revenue was $1,200,000,000 up 20% sequentially, supported by growth in industrial and consumer embedded markets. The consolidated gross margin for fiscal Q3 was 39, up 110 basis points sequentially and up two fifty basis points versus the midpoint of our guidance. Gross margins were above the high end of our guidance range, primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer oriented mix. Operating expenses in fiscal Q3 were $1,100,000,000 up $87,000,000 quarter over quarter and in line with our guidance range. The increase was primarily driven by higher R and D investments and labor related costs.

We generated operating income of 2,500,000,000 in fiscal Q3, resulting in an operating margin of 26.8%, up approximately 190 basis points sequentially and up 13 percentage points year over year. Fiscal Q3 taxes were $3.00 $6,000,000 on an effective tax rate of 12.3, lower than our guidance due to the effects of one time discrete items in the quarter. Non GAAP diluted earnings per share in fiscal Q3 was $1.91 above the high end of the guidance range, with 22% sequential growth and up over 200% versus the year ago quarter. Turning to cash flows and capital spending, in fiscal Q3, our operating cash flows were over $4,600,000,000 and our capital expenditures were $2,700,000,000 Free cash flows in the quarter were over $1,900,000,000 the highest quarterly amount in over six years. Ending inventory for fiscal Q3 was $8,700,000,000 or one hundred and thirty nine days.

Inventory was down $280,000,000 sequentially and inventory days were down nineteen days sequentially, driven by strong sequential bit shipment growth in both DRAM and NAND. On the balance sheet, we held a record $12,200,000,000 of cash and investments at quarter end and maintained $15,700,000,000 of liquidity when including our untapped credit facility. During fiscal Q3, we refinanced our $900,000,000.20 27 notes with $1,700,000,000 in new notes maturing in fiscal years 2033 and 02/1936. We closed the quarter with $15,500,000,000 of debt, maintaining low net leverage and a weighted average debt maturity of 02/1932. Now turning to our outlook for the fourth fiscal quarter.

We expect our revenue growth to be weighted towards DRAM, supported by robust pricing execution, favorable product mix and continued cost improvements, all of which benefit gross margins. Operating expenses for fiscal Q4 are projected to be approximately $1,200,000,000 with the sequential increase primarily driven by planned R and D investments in future technology nodes and HBM product development. Our fiscal twenty twenty five capital spending plans remain unchanged at approximately $14,000,000,000 The overwhelming majority of the fiscal twenty twenty five CapEx is to support HBM as well as facility, construction, back end manufacturing and R and D investments. We expect a fiscal Q4 tax rate of around 13%. As previously disclosed, our fiscal twenty twenty six tax rate is expected to be in the high teens percentage range following Singapore's adoption of the global minimum tax.

Any impacts that occur due to potential new tariffs are not included in our guidance. With all these factors in mind, our non GAAP guidance for fiscal Q4 is as follows. We expect revenue to be 10,700,000,000 plus or minus $300,000,000 gross margin to be in the range of 42% plus or minus 100 basis points and operating expenses to be approximately $1,200,000,000 plus or minus $20,000,000 We expect our fiscal Q4 tax rate to be around 13%. Based on a share count of approximately 1,150,000,000.00 shares, we expect EPS to be $2.5 per share plus or minus $0.15 With another quarter of shipment growth forecasted in fiscal Q4, we expect to exit fiscal twenty twenty five with tight DRAM inventories, significantly reduced NAND inventories and overall company DIO near our target levels. With low inventories on hand and a constructive demand environment, we will continue to focus on improving pricing and further strengthening our product mix.

In fiscal Q3, Micron delivered earnings above the guidance range, achieved record revenue and continued ramping our industry leading HBM. We also began transitioning to a new market segment focused business unit structure. Starting in fiscal Q4, we will report revenue, gross margin and operating margin metrics across these new business units. With strong execution and a differentiated product portfolio, Micron is well positioned to maintain our leadership and to deliver record revenue and significantly improve profitability once again in fiscal Q4. Thank you for joining us today. We will now open up for questions.

Certainly. Our first question comes from the line of Timothy Arcuri from UBS. Your question please.

I wanted to ask sort of how you see the HBM TAM scaling with the Accelerator TAM. One thing that's been clear over the past three months or so is that the Accelerator TAM is definitely upsiding and growing a lot. And it seems if I take their projections and I take your HBM projections, it kind of seems like the HBM market is going to remain 15% to 20% of what the overall accelerator market is. I guess, how do you see the HBM TAM scaling with that market? And then is there some sort of limit or, like, asymptote that we begin to reach in terms of HPM attached to these GPUs and these custom ASICs?

So with respect to HPM growth, we certainly see that HPM demand grows in the future. I'll tell you that in this year, if you look at calendar year 'twenty five, HBM is growing from last year about $18,000,000,000 in revenue to approximately $35,000,000,000 in calendar year 'twenty five. We see in calendar year 'twenty six, if you look at HVM bit demand growth, it will significantly exceed the overall DRAM industry demand growth. And of course, the transition from eight high to 12 high in HBM in 2016, transition to HBM four as well, which is even a higher value product. All of that essentially bodes well in terms of the value of HBM and the overall need for HBM in these accelerator platforms that are of course evolving fast.

And of course, our customers are very much focused on working with us and looking at their platforms, assessing the mix of 12 high and HBM4. And then when we look at '27 that goes into HBM 4E, '28 starts introducing customization in HBM as well. So the trajectory of HBM in terms of the value proposition in these accelerators continues to be strong and healthy. And of course, we are well positioned. As we shared with you, we have already begun to sample our HBM4 products, and these again, we plan to maintain our leadership with respect to specifications here, and we have certainly demonstrated a capacity ramp up as well.

So we remain excited about HBM. We see this as clearly strong growth driver as well as value driver for our business.

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 question. I wanted to talk about gross margins. So first, what is driving the upside sequentially? And then, is this the new baseline for gross margins? And then, what would be kind of the puts and takes as we look at the next few quarters beyond Q4? Thank you.

Vivek, it's Mark. So in third quarter, I think maybe start with what happened in gross margin in the third quarter. We a strong sequential volume growth in the quarter. But versus the guide, the defining factor was we had prices were down, as I said in the opening comments, but we had better than expected pricing that drove the margin improvement versus expectations. I'll add to that we had good cost performance all, but certainly the price was better than we had expected.

Now that carries on into rebaselining on the fourth quarter. We provided an indication of the fourth quarter before when the market was in transition. And we said at that time that the inventory outlook that we would was improving when it had weakened a bit late last year. And we had intended to work to inflect price. And as you know, a few weeks later, situation with Liberation Day tariffs, the environment got a bit more challenging.

The condition of the market is better than expected since then and it strengthened through the quarter. You saw that outperformance and then we've executed well. And so what you see here from this rebaseline of the business, you see us add to that through favorable mix Q3 to Q4, that's more DRAM growth than NAND. So you have favorable mix there and then more data center than consumer oriented mix, which was weighing down the margins in the third quarter. It's again, it's a continued good market backdrop.

We're going to continue to focus on pricing. But third quarter to fourth quarter, we have favorable mix effects that is helping drive margins up to the current guide of 42%.

And anything beyond this, Mark? Any puts and takes as we look at the next several quarters? Is this kind of the new baseline or is it going to be entirely dependent on the direction of pricing?

Yes, we're not going to provide Q1 guidance. We are positive on the trajectory of the business. The market environment does remain constructive, particularly in DRAM versus NAND. Again, we're focused on pricing and making sure to put our bits in the right places. As we said in the prepared remarks, our inventories are very tight, particularly on leading edge and then now even pockets of some of the legacy and DRAM.

So we're going to have some bit constraints going into first quarter, but we're going to mix to DRAM, higher value DRAM and higher value NAND products. And so we think gross margins can be up.

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 was hoping to revisit your comments on HBM. You're talking 23%, 24% market share. And it sounds like you're now calling not exiting the year, but sometime in the second half.

So that's coming in better. And so I guess, first question is, should we be thinking that that number is kind of a two, two, two, three depending, I guess, on seasonality of the $35,000,000,000 number? And then perhaps more importantly, as you think about HBM growth in calendar twenty twenty six, how should we be thinking about the contributions to that growth, both from bits as well as higher ASPs as you go to next generation products? Thanks so much.

PJ, I didn't quite understand the question around 02/02/2023. What exactly did you say there?

Just trying to understand how you talked about getting to your DRAM market share, which I think you said 23%, 24% for the HBM market. And your previous comments were exiting the year. Now you're saying sometime in the second half. So trying to get an idea of of kind of what that revenue number looks like.

We are already at if you look at our performance based on FQ3, we are already at more than $6,000,000,000 run rate here with our HBM, and certainly continuing to ramp up our HBM output shifting production to 12 high HBM as well. So yes, it could be that compared to what we said before in terms of toward the end of the calendar year, we expect to get to our HPM share in line with our DRAM share. So versus that, it could be that we do end up getting to our industry share for in line with industry share for HBM share earlier than that. So it could be. And that's really absolutely based on our very, very strong execution.

And strong execution in terms of output, in terms of yield ramp. We noted that our 12 high yield ramp is actually going faster than our eight high yield ramp, of course, built on all the learning that we have had. The team has done an excellent job with capacity ramp as well. All of that is contributing to our strong performance on HPM, extremely pleased with where we are and extremely pleased with not just execution today and our ability to ramp up yield and capacity successfully and build in the process trust with the customers, but very pleased with the roadmap that is ahead for us for the HBM as well. So, I mean, are things that will obviously play an important role in calendar year 'twenty six as we work closely with the customers to understand their overall mix requirements for 2026.

Thank you. And our next question comes from the line of Thomas O'Malley from Barclays. Your question, please.

Hey guys, thanks for taking the questions. Two here. So my first on HBM side, you're obviously reaching your share target a little bit earlier. Going into next year, are you guys ready to talk about what you think that your normalized share will be? Obviously, there's difficulties with some of your competitors getting qualified.

If that continues into next year, do you guys have a view of if you're able to increase capacity? And if you are, what that share may look like? And then two, on the NAND side, where does utilization stand today? And obviously, you're going through some bit transitions right now internally, which has allowed you to kind of keep some things offline. But as you move into next year, what is your plan for utilization?

Is that going to be market dependent? Or at some point, do you need to start bringing on utilization just from the fact that there's a gross margin headwind? Thank you.

So as I said, we are very pleased that we are executing well and with what we told you several quarters ago in terms of our shared objectives with HBM, that we are going to be able to achieve that goal for this year in second half of twenty twenty six. Now our HBM is really at scale, it has healthy shares, and we are successfully delivering. So going forward, of course, this becomes like part of our overall product portfolio. And just like we manage the rest of the portfolio with respect to total eye on ROI and profitability, and of course, HBM really positions us very well with respect to our profitability objectives. We will of course continue to manage the mix of our products in the portfolio, including that of HBM, including the share that sometimes can move around in different parts of the end market segments that we address.

So I think that's how you have to look at it. Overall, really very pleased with our HBM products, 12 high as well as HBM4, built with our well proven one beta technology, which also gives us cost effective benefits. And of course, the packaging technology well established, and company of course has been investing in expanding our HBM backend capacity as well. You know, we have talked about investments in Singapore, bringing assembly and packaging capacity there in line, starting production, targeting that for 2027 timeframe. And I'll tell you that HBM, given that it uses our well proven one beta technology, is really fungible capacity with the rest of the portfolio as well.

So this gives us plenty of flexibility in terms of managing our business, and extremely focused on really meeting customers' requirements and continuing to deliver and enhance our product capabilities to meet their growing requirements. And your second question around NAND in terms of utilizations, so we have said before that toward the end of fiscal twenty five, our NAND overall capacity would be down versus end of fiscal twenty twenty four by about 10%, and that's a structural reduction in capacity. And of course, as we have discussed before, that structural reduction was implemented to achieve capital efficient next node transition for us, like G9 node transition. So as that capacity has come down, of course, our underutilization has come down as well, although part of NAND continues to remain underutilized. I must note here that of course leading edge of NAND is fully utilized.

Thank you. And our next question comes from the line of Harlan Sur from JPMorgan. Your question, please.

Hey. Good afternoon. Thanks for taking my question. If I rewind back one year ago during your June earnings call, you guys did say back then that you were sold out on your HPM supply through calendar twenty five and that majority of that committed supply was locked in from a pricing perspective. One year later, you know, where are you on your negotiations for your calendar twenty six HPM supply and pricing discussions?

Micron Technology (MU) Q3 2025 Earnings Call Transcript

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