Tom O'Malley

Tom O'Malley asked for color on the percentage of Micron's DRAM business that HBM represents from a dollar perspective today. He also questioned Micron's competitive positioning for HBM into next year, particularly concerning a large competitor's increasing competitiveness in HBM3E and the lack of information on their HBM4 plans, and if Micron would make strategic decisions differently based on competitor certifications. Finally, he asked for specific HBM contribution in the November quarter and expectations for the current guide, referencing a historical $8 billion run rate.

Answer

CEO Sanjay Mehrotra expressed confidence in Micron's competitive position, highlighting HBM4's industry-leading performance (over 11 gigabits per second) and low power consumption, and a strong roadmap beyond HBM4. He noted that Micron's HBM share was in line with its DRAM share in Q3 and that in the current tight supply environment, Micron manages the mix of HBM and non-HBM based on strategic customer relationships and profitability goals. He reiterated that HBM revenue was a record in FQ1 and expects strong year-over-year HBM revenue growth in 2026, but did not provide specific HBM revenue breakouts for the November quarter or the current guide.

Tom O'Malley from Barclays asked for color on HBM's percentage contribution to Micron's total DRAM business from a dollar perspective, and how Micron's competitive positioning for HBM4 compares to competitors, especially regarding a large competitor's HBM3E certification. He also sought specific HBM contribution figures for the November and February quarters.

Answer

CEO Sanjay Mehrotra expressed confidence in Micron's competitive position, product roadmap, and HBM4's industry-leading performance (over 11 gigabits per second) and low power consumption. He reiterated that Micron's HBM share reached parity with its DRAM share in Q3 and that the company will manage the mix between HBM and non-HBM based on strategic customer relationships and profitability goals. Sanjay confirmed HBM revenue was a record in FQ1 and expects strong year-over-year HBM revenue growth in 2026, but declined to provide specific HBM revenue breakouts for the November and February quarters.

Tom O'Malley inquired about the current state of the NAND industry, including reports of hyperscaler demand, pricing increases, and Micron's bit growth trajectory, asking if a continued decline in bits is expected to drive ASPs. He also asked for clarification on the fiscal 2026 CapEx guidance, specifically if the $18 billion is a net number and if the incremental spend is primarily for DRAM.

Answer

Sumit Sadana, Chief Business Officer, clarified that recent NAND bit fluctuations were mix-driven noise and confirmed strong hyperscaler demand for AI server storage, expecting NAND industry conditions to improve in calendar 2026, particularly benefiting Micron's data center SSD position. Mark Murphy, CFO, added that Micron continues to reduce NAND wafer outs, slow node transitions, and work down inventories. Manish Bhatia, EVP of Global Operations, noted that exiting managed NAND would free up supply for the data center market. Mark Murphy confirmed the $18 billion CapEx for 2026 is net and primarily for DRAM construction and equipment.

Tom O'Malley inquired about the current state of the NAND industry, including reports of hyperscaler demand, pricing increases, and Micron's bit growth and capacity plans. He also asked for clarification on the company's CAPEX guidance, specifically the net amount and the allocation between DRAM and NAND spend.

Answer

Sumit Sadana, EVP and Chief Business Officer, clarified that FQ4 NAND bit performance was mix-driven noise, highlighting strong hyperscaler demand for AI servers and expected NAND SSD deployment growth in 2026, which will improve industry conditions. Mark Murphy, CFO, added that Micron is structurally reducing NAND wafer output, slowing node transitions, and lowering CAPEX. Manish Bhatia, EVP of Global Operations, noted the exit from managed NAND to focus on the data center market. Mark Murphy confirmed the net CAPEX guidance of $13.8 billion for 2025 increasing to approximately $18 billion for 2026, with the vast majority allocated to DRAM construction and equipment.

Tom O'Malley asked for KLA's perspective on Lam Research's statement that $100 billion of AI spend is roughly equivalent to $8 billion in WFE, with most of that related to memory, and if KLA agrees or has any qualifications.

Answer

CEO Rick Wallace generally agreed with the $8 billion WFE figure for $100 billion AI spend, suggesting about half of the AI spend is semiconductor-related. He added that KLA would include packaging, bringing the total closer to $10 billion, and noted KLA's participation is above its average intensity due to the challenging process control elements in larger, more valuable dies, HBM, and packaging.

Tom O'Malley asked for KLA's perspective on the ratio of AI spend to WFE, specifically if they agree with the statement that $100 billion of AI spend is roughly equivalent to $8 billion in WFE, with most of that related to memory, and if KLA has any qualifications for this ratio.

Answer

CEO Rick Wallace generally agreed with the ratio, suggesting that about half of $100 billion AI spend would be semiconductor-related. He added that KLA's view would bring the WFE equivalent closer to $10 billion due to the inclusion of advanced packaging, where KLA's participation is above its average intensity for the rest of the industry, especially in challenging process control elements like HBM.

Tom O'Malley asked for details on the strong performance of NXP's Industrial & IoT business in Q4, specifically identifying whether the strength was in core industrial or IoT, and the underlying drivers. He also inquired about the performance of the S32 automotive processing platform, its contribution to overall auto growth, and any divergence between the processor business and other auto segments.

Answer

Rafael Sotomayor, President and CEO, explained that NXP's Industrial & IoT business (60% core industrial, 40% consumer, 80% via distribution) is seeing improving end customer backlog and strong demand signals. Consumer benefits from company-specific drivers like smart glasses, while core industrial sees broad-based improvements driven by energy storage systems and building automation. He emphasized that NXP's strength in I&IoT is company-specific. For Automotive, Mr. Sotomayor noted Q3 was only 3% below its prior peak, driven by core accelerated growth drivers such as the S32 automotive processing platform, radar, and connectivity, reflecting the secular shift to software-defined vehicles. Kurt Sievers, Executive Director and Advisor, added that a full year update on accelerated growth drivers would be provided on the Q4 call, but inter-quarter performance was strong.

Tom O'Malley asked for details on the strong performance of NXP's Industrial and IoT business in Q4, seeking clarification on whether the strength is driven by core industrial or IoT segments. He also inquired about the performance drivers within the S32 automotive processing platform portfolio in Q3 and Q4, and any divergence from the broader auto business.

Answer

President and CEO Rafael Sotomayor explained that Industrial and IoT strength comes from improving end customer backlog through the channel and company-specific drivers in the consumer side (e.g., smart glasses). Core industrial sees broad-based improvements, particularly in energy storage systems and building automation, though NXP doesn't consider itself a bellwether for the segment. For automotive, Mr. Sotomayor noted Q3 was only 3% below its prior peak, driven by core accelerated growth drivers like the S32 platform, radar, and connectivity, reflecting the secular shift to software-defined vehicles. Executive Director and Advisor Kurt Sievers added that a full year update on accelerated growth drivers would be provided on the Q4 call.