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    Micron Technology Inc (MU)

    CEO Change

    Business Description

    Micron Technology, Inc. is a leader in innovative memory and storage solutions, offering a portfolio of high-performance DRAM, NAND, and NOR memory and storage products through its Micron® and Crucial® brands. The company operates through four main business units, focusing on different market segments, including data centers, mobile devices, automotive, and consumer markets . Micron emphasizes technology leadership and operational excellence to maintain its competitive edge in the semiconductor memory and storage markets .

    1. Compute and Networking Business Unit (CNBU) - Develops memory products for data centers, PCs, graphics, and networking markets.
    2. Mobile Business Unit (MBU) - Provides memory solutions for the smartphone and mobile-device markets.
    3. Embedded Business Unit (EBU) - Targets the automotive, industrial, and consumer embedded markets with specialized memory products.
    4. Storage Business Unit (SBU) - Offers SSDs and storage solutions for data centers, PCs, and consumer markets.

    Q1 2025 Summary

    Initial Price$97.09August 27, 2024
    Final Price$98.20November 27, 2024
    Price Change$1.11
    % Change+1.14%

    What went well

    • Micron expects to generate multiple billions of dollars in HBM revenue in fiscal 2025, driven by strong demand in AI applications; they have already begun shipments to a second large HBM customer and will add a third in CQ1, aiming to achieve HBM market share in line with overall DRAM share by the second half of calendar 2025.
    • Leading-edge DRAM nodes like HBM, LP5, and DDR5 are in tight supply, positioning Micron favorably due to expected healthy demand and supply tightness continuing into 2025. This tightness supports higher ASPs and margins for Micron.
    • Micron is shifting its product mix towards higher-profit pools, focusing on high-end markets such as data center and AI, reducing exposure to lower-end segments and competition from China-based suppliers. This strategic focus leverages Micron's technology and advanced product roadmap to capture higher margins.

    What went wrong

    • Micron is experiencing near-term demand weakness due to inventory adjustments in consumer markets and a moderation in data center SSD purchases, impacting its fiscal Q2 outlook.
    • Weakness in the NAND market is expected to persist into fiscal Q3, leading to margin pressures. Supply response costs will weigh on third-quarter margins and constrain the ability to expand margins during that period.
    • Increased competition from China-based suppliers in lower-end DRAM and NAND products could pose challenges, especially as these suppliers expand their production, though Micron is focusing on higher-end markets.

    Q&A Summary

    1. Gross Margin Outlook
      Q: Will gross margins improve in fiscal Q3 despite constraints?
      A: Management is not guiding third-quarter gross margins. Unfavorable items persist into Q3, including NAND market challenges extending into calendar Q1 and underload charges impacting margins by about 100 basis points. However, they expect favorable effects from growth in data center, mix benefits from higher-margin products like HBM, high-capacity DIMMs, and LPDRAM. Volume growth and better market conditions in NAND, and continued growth in data center SSDs, are expected to support margin expansion beyond Q3.

    2. Incremental Caution and Demand Outlook
      Q: What has changed to cause incremental caution in the outlook?
      A: The PC refresh cycle has been delayed, leading to a flat PC shipment forecast for calendar 2024. Customer inventories have not reduced as quickly as expected, impacting near-term outlook. There's also moderation in data center SSD demand into CQ1 after significant buying in calendar '24. The impact is mainly limited to consumer-oriented segments, while data center demand remains robust.

    3. Data Center SSD Growth
      Q: Do you expect data center SSD growth to reaccelerate in fiscal Q3?
      A: Yes, management expects growth in bit shipments for data center SSDs to restart in fiscal Q3 and continue into future quarters. They anticipate strong AI-driven demand and are confident due to their industry-leading products like the newly announced 60-terabyte PCIe Gen5 SSD. Overall data center CapEx from end customers is expected to remain strong, offering significant opportunities.

    4. HBM Capacity Impact on DRAM
      Q: How will increasing HBM capacity affect conventional DRAM capacity?
      A: As they ramp HBM, the trade ratio between HBM3E and conventional DRAM is 3:1, requiring three times more wafer starts for HBM to produce the same number of bits. They aim to maintain DRAM bit share during this transition, expecting overall DRAM bit growth to align with industry demand in calendar 2025.

    5. Shift to Leading-Edge DRAM Products
      Q: Has Micron structurally shifted its DRAM production to leading-edge products?
      A: Yes, only about 10% of global DRAM sales will be from DDR4 and LP4 for the remainder of the fiscal year. They have shifted significantly to leading-edge products like DDR5, HBM, and specialty DRAM, dedicating capacity to a rapid HBM ramp. This shift supports growth in data center and flagship smartphones.

    6. LPDDR5X and Data Center Opportunity
      Q: What is Micron's position in the LPDDR5X data center market?
      A: Micron is the pioneering supplier of LPDDR5X in the data center, effectively driving the entire market worldwide. They have led innovations allowing data centers to deploy LPDDR5X memory and are partnering with customers to capitalize on this significant opportunity. Combined with their high-capacity DIMMs, these categories are expected to contribute multi-billion dollars, with data center revenue now accounting for over 50% of Micron's revenue.

    7. Inventory Levels and Customer Demand
      Q: When will inventories normalize, and shipments align with consumption?
      A: Customer inventories are expected to be healthier by spring. Currently, Micron is shipping less than customers are consuming but expects to start shipping in line with consumption by fiscal Q3. They are confident in demand and anticipate inventories will draw down through the year.

    8. DRAM Bit Shipments and Market Alignment
      Q: Will Micron's DRAM shipments align with industry growth in 2025?
      A: Yes, Micron expects to maintain stable bit share and ship in line with industry demand, projecting mid-teens growth in DRAM bit demand for calendar 2025. Despite volume declines in Q2, they anticipate shipping in line with the industry for the year.

    9. NAND Shipment Expectations
      Q: Will Micron's NAND shipments grow in line with industry demand?
      A: Yes, Micron expects to maintain stable bit share in NAND, shipping in line with industry demand projected to grow in the low double digits for calendar 2025 . They aim to ship roughly in line for both DRAM and NAND in the calendar year.

    10. HBM Volume Agreements and Cancellations
      Q: Are HBM volume and pricing agreements cancelable?
      A: While customers can make changes beyond certain lengthy lead times, once firm orders are placed within those lead times, they are committed. Given strong demand and long lead times, customers have been placing consistent orders, and cancellations are unlikely.

    11. HBM Ramp and Constraints
      Q: What are the prospects and constraints for HBM ramp?
      A: Micron is pleased with the HBM ramp and expects solid revenue growth quarter-over-quarter through fiscal 2025 and into calendar 2025. They are adding capacity gradually, installing new equipment, and growing capacity week-over-week. Constraints are being managed, and as they introduce 12-high stacks, a larger portion of their mix will support growth.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    Compute and Networking1,25,7101,7372,1852,5733,0189,5134,395
    Mobile1,2113,6301,2931,5981,5881,8756,3541,527
    Embedded863,6371,0371,1111,2941,1724,6141,052
    Storage7392,5536539051,3531,6814,5921,731
    All Other-1062534384
    - DRAM--------
    - NAND--------
    - Trade Non-Volatile Memory--------
    - Non-Trade Non-Volatile Memory--------
    - Other (primarily 3D XPoint memory and NOR)--------
    Total Revenue4,0115,5404,7265,8246,8117,7525,1118,709
    Revenue by Geography - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    United States-7,805----13,168-
    Taiwan-2,697----4,708-
    Mainland China-2,181----3,045-
    Other Asia Pacific-752----1,330-
    Hong Kong-340----1,071-
    Japan-987----840-
    Europe-682----818-
    Other-96----131-
    Total Revenue4,0115,5404,7265,8246,8117,7525,1118,709

    Executive Team

    NamePositionStart DateShort Bio
    Sanjay MehrotraPresident, CEO, and Board ChairMay 2017Sanjay Mehrotra joined Micron in May 2017 as President, CEO, and Director. He co-founded SanDisk Corporation in 1988 and led it until its sale in May 2016 .
    Mark J. MurphyExecutive Vice President and Chief Financial OfficerApril 2022Mark J. Murphy joined Micron in April 2022. Previously, he was the CFO of Qorvo, Inc. from June 2016 to April 2022 .
    Scott R. AllenCorporate Vice President and Chief Accounting OfficerOctober 2020Scott R. Allen joined Micron in September 2020 and became Chief Accounting Officer in October 2020. He previously held executive roles at NetApp, Inc. .
    April S. ArnzenExecutive Vice President and Chief People OfficerDecember 1996April S. Arnzen joined Micron in December 1996. She became Chief People Officer in October 2020 and Executive Vice President in October 2023 .
    Manish BhatiaExecutive Vice President, Global OperationsOctober 2017Manish Bhatia joined Micron in October 2017. He previously served as EVP of Silicon Operations at Western Digital Corporation .
    Michael W. BokanSenior Vice President, Worldwide Sales1996Michael W. Bokan joined Micron in 1996 and became Senior Vice President, Worldwide Sales in October 2018 .
    Scott J. DeBoerExecutive Vice President, Technology & ProductsFebruary 1995Scott J. DeBoer joined Micron in February 1995. He became Executive Vice President, Technology & Products in September 2019 .
    Michael RaySenior Vice President, Chief Legal Officer, and Corporate SecretaryJanuary 2024 (expected)Michael Ray is expected to join Micron in January 2024. He previously served as Chief Legal Officer of Western Digital Corporation .
    Sumit SadanaExecutive Vice President and Chief Business OfficerJune 2017Sumit Sadana joined Micron in June 2017. He has over 30 years of technology industry experience and oversees Micron's business units, strategy, and corporate development .
    Lynn DugleLead Independent Director2020Lynn A. Dugle has been a director at Micron since 2020. She has over 30 years of experience in the defense, intelligence, and technology industries .

    Questions to Ask Management

    1. With your OpEx increasing by 15% and a higher mix of HBM in your capacity, what is your confidence level in operating margin expansion throughout fiscal '25, and how are you managing the risks associated with higher costs?

    2. As you transition to 12-high HBM stacks and anticipate a higher trade ratio, how do you plan to address the potential increase in production costs and maintain competitiveness in the market?

    3. Given the increased supply from China in lower-end DRAM and NAND products, how does this impact your strategy to focus on higher-profit segments, and what measures are you taking to mitigate any potential disruptions?

    4. Can you provide more transparency on the percentage of your DRAM bit shipments that are still DDR4, and how quickly do you expect to reduce your exposure to lagging-edge products amid concerns about excess supply?

    5. With your reliance on yield improvements for the aggressive ramp of HBM products, what contingencies are in place if yields do not improve as expected, and how might this affect your ability to meet growing AI customer demand?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateMay 2018
    End Date/DurationNo expiration
    Total additional amount$10 billion
    Remaining authorization amount$2.81 billion
    DetailsThe program does not obligate the company to repurchase any specific amount of common stock. The purpose can vary based on operating results, cash flows, and other priorities. Share repurchases could increase stock price volatility and reduce cash reserves.

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: Q1 2025
    • Guidance:
      • Revenue: Expected to be $8.7 billion, plus or minus $200 million .
      • Gross Margin: Projected to be in the range of 39.5%, plus or minus 100 basis points .
      • Operating Expenses: Expected to be approximately $1.085 billion, plus or minus $15 million .
      • Non-GAAP Tax Rate: Estimated to be in the mid-teens percent range .
      • Capital Expenditures: Forecasted to increase sequentially to approximately $3.5 billion .
      • Days of Inventory Outstanding (DIO): Projected to decline in fiscal 2025 and approach the target by the end of fiscal 2025 .
      • Operating Expenses Growth: Planned to grow by a mid-teens percentage versus fiscal 2024, with growth being second half weighted .
      • Capital Expenditures: Expected to be around the mid-30s percentage range of revenue .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024
    • Guidance:
      • Revenue: Expected to be $7.6 billion, plus or minus $200 million .
      • Gross Margin: Expected to be in the range of 34.5%, plus or minus 100 basis points .
      • Operating Expenses: Expected to be approximately $1.06 billion, plus or minus $15 million .
      • Tax Expenses: Expected to be approximately $320 million .
      • Earnings Per Share (EPS): Expected to be $1.08 per share, plus or minus $0.08, based on a share count of approximately 1.1 billion shares .
      • DRAM Bit Shipments: Expected to be flattish .
      • NAND Shipments: Expected to be up slightly .
      • Capital Expenditures (CapEx): Expected to increase sequentially to approximately $3 billion in fiscal Q4 .
      • Free Cash Flow: Despite the increase in CapEx, they projected continued positive free cash flow in fiscal Q4 .
      • Non-GAAP Tax Rate: To be in the mid-teens percent range .
      • Days of Inventory Outstanding (DIO): Expected to decline through fiscal 2025 and approach their target by the end of fiscal year 2025 .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024
    • Guidance:
      • Revenue: Expected to be $6.6 billion, plus or minus $200 million .
      • Gross Margin: Expected to be in the range of 26.5%, plus or minus 150 basis points .
      • Operating Expenses: Expected to be approximately $990 million, plus or minus $15 million .
      • Tax Expenses: Expected to be approximately $240 million .
      • Earnings Per Share (EPS): Expected to be $0.45, plus or minus $0.07, based on a share count of approximately 1.1 billion shares .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024
    • Guidance:
      • Revenue: Expected to be $5.3 billion, plus or minus $200 million .
      • Gross Margin: Expected to be in the range of 13%, plus or minus 150 basis points .
      • Operating Expenses: Approximately $950 million, plus or minus $15 million .
      • Tax Expenses: Approximately $45 million .
      • Loss Per Share: Expected to be $0.28, plus or minus $0.07, based on a share count of approximately 1.1 billion shares .
      • Capital Expenditures: Planned to be in line with first quarter levels .
      • Operating Cash Flows: Expected to improve substantially in the second half of the fiscal year, with positive free cash flow forecasted in the fiscal fourth quarter .
      • Operating Loss: Projected to be much reduced in fiscal Q2, with a return to operating income in Q3 .
      • Tax Forecast for the Year: Increased from under $200 million to over $300 million .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Kioxia Holdings Corporation; intense competition in the semiconductor memory and storage markets
    • Samsung Electronics Co., Ltd.; intense competition in the semiconductor memory and storage markets
    • SK hynix Inc.; intense competition in the semiconductor memory and storage markets
    • Western Digital Corporation; intense competition in the semiconductor memory and storage markets
    • Yangtze Memory Technologies Co., Ltd. (YMTC); threat of increasing competition due to significant investment by the Chinese government
    • ChangXin Memory Technologies, Inc. (CXMT); threat of increasing competition due to significant investment by the Chinese government

    Latest news

    Recent developments and announcements about MU.

    Financial Reporting

      Earnings Call

      ·
      Dec 19, 2024, 5:36 AM

      Micron Technology recently held its Fiscal First Quarter 2025 Post-Earnings Analyst Call, where several key points were discussed regarding the company's performance and outlook.

      1. Revenue and Profit Performance: The company is experiencing challenges in the NAND market, which is expected to account for most of the sequential revenue decline. However, the data center segment remains strong, with continued growth expected in data center SSDs and HBM products .

      2. Management’s Forward Guidance: Micron anticipates a robust trajectory in data center revenue through fiscal and calendar 2025, despite some near-term moderation in data center SSDs. The company expects sequential increases in DRAM and NAND volumes starting in the third fiscal quarter .

      3. Market Conditions and Strategic Initiatives: The company is taking decisive actions to align supply growth with demand, particularly in the NAND segment. There is a focus on ramping up HBM production, with expectations to reach a market share equivalent to their DRAM supply share by the second half of calendar 2025 .

      4. Analyst Questions and Management Responses: Analysts inquired about the impact of NAND on revenue decline, DRAM pricing, and inventory levels. Management highlighted the challenges in the NAND market and the strategic focus on high-margin products like HBM and data center SSDs. They also discussed the expected improvement in inventory levels by spring 2025 .

      Overall, Micron is navigating a challenging market environment with strategic initiatives focused on high-growth areas like data center and HBM, while managing headwinds in the NAND market.

      Earnings Call

      ·
      Dec 19, 2024, 5:35 AM

      Micron Technology has released its fiscal Q1 2025 earnings call transcript, highlighting several key points:

      • Revenue and Profit Performance: Micron reported a record fiscal Q1 revenue of approximately $8.7 billion, marking a 12% sequential increase and an 84% year-over-year increase. The DRAM segment contributed $6.4 billion, representing 73% of total revenue, with a significant year-over-year increase of 87% .

      • Management’s Forward Guidance: The company expects continued growth in the data center segment, driven by AI demand, and anticipates a strong second half of fiscal 2025. However, it also noted challenges in the NAND market, with expectations of improvement in the second half of the fiscal year .

      • Market Conditions and Strategic Initiatives: Micron is focusing on high-growth areas such as AI and data centers, with plans to expand its manufacturing footprint in Singapore and investments in advanced packaging facilities. The company is also managing its supply chain to align with market demand, particularly in the NAND segment .

      • Analyst Questions and Management Responses: Analysts inquired about the impact of NAND underloadings and the expected growth in HBM (High Bandwidth Memory) revenues. Management highlighted the challenges in the NAND market and the strategic focus on HBM, which is expected to drive significant revenue growth in the coming years .

      • Financial Metrics: The company reported a gross margin of 39.5%, operating income of $2.4 billion, and an adjusted EBITDA of $4.4 billion. Non-GAAP diluted earnings per share were $1.79, up from $1.18 in the prior quarter .

      • Capital Expenditures and Cash Flow: Micron's capital expenditures for fiscal Q1 were $3.1 billion, resulting in a free cash flow of $112 million. The company ended the quarter with $8.7 billion in cash and investments .

      Overall, Micron is optimistic about its growth prospects, particularly in the AI and data center markets, while managing challenges in the NAND segment and aligning its supply chain with market demand.

      Earnings Report

      ·
      Dec 18, 2024, 9:22 PM

      Micron Technology, Inc. has released its earnings results for the first quarter of fiscal 2025, ending November 28, 2024. The company reported record revenue of $8.71 billion, a significant increase from $7.75 billion in the previous quarter and $4.73 billion in the same period last year. This growth was primarily driven by strong demand in the AI sector, with data center revenue growing over 40% sequentially and over 400% year-over-year .

      Net income for the quarter was $1.87 billion on a GAAP basis, translating to $1.67 per diluted share. On a non-GAAP basis, net income was $2.04 billion, or $1.79 per diluted share. Operating cash flow was reported at $3.24 billion, slightly down from $3.41 billion in the previous quarter but significantly up from $1.40 billion in the same period last year .

      Micron's CEO, Sanjay Mehrotra, highlighted that the company's data center revenue accounted for more than 50% of total revenue for the first time. Despite weaker consumer-oriented markets in the near term, Micron anticipates a return to growth in the second half of the fiscal year, leveraging AI-driven growth to create substantial value .

      For the second quarter of fiscal 2025, Micron has provided guidance with expected revenue of $7.90 billion ± $200 million and a gross margin of 37.5% ± 1.0% on a GAAP basis. Non-GAAP guidance includes a gross margin of 38.5% ± 1.0% and diluted earnings per share of $1.43 ± $0.10 .

      Micron's Board of Directors declared a quarterly dividend of $0.115 per share, payable on January 15, 2025, to shareholders of record as of December 30, 2024 .

    Corporate Leadership

      CEO Change

      ·
      Oct 30, 2024, 12:00 AM

      Micron Technology, Inc. announced on October 30, 2024, that Sanjay Mehrotra, the current CEO, has been elected as the new Chair of the Board of Directors, effective upon the retirement of the current Chair, Robert Switz, at the annual shareholders meeting on January 16, 2025 .