Micron Technology - Q2 2024 Post Call

Transcript

Operator (participant)

Thank you for standing by and welcome to Micron's post-earnings analyst call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. 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 Treasurer. Please go ahead, sir.

Satya Kumar (Corporate VP, Head of Investor Relations and Treasurer)

Thank you, and welcome to Micron Technology's fiscal second quarter 2024 post-earnings analyst call. On the call with me today are Sumit Sadana, Micron's Chief Business Officer, Manish Bhatia, EVP of Global Operations, and Mark Murphy, our CFO. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, our expected results and guidance in other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We refer you to documents we filed with the SEC, including our most recent Form 10-Q and upcoming 10-Q, 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. We can now open up the call for Q&A.

Operator (participant)

Certainly. One moment for our first question. Our first question comes from the line of Thomas O'Malley from Barclays. Your question, please. Thomas, you might have your phone on mute. All right. I think we will move on. Thomas, you can get back into the queue as time allows. One moment for our next question. Our next question comes from the line of Krish Sankar from TD Cowen. Your question, please.

Speaker 13

Hey guys, this is Eddie for Krish. Thanks for setting up this callback. A two-part question for Sumit, if I may. The biggest bottleneck for HBM supply today is probably in back-end capacity. Please correct me if I'm wrong. In case your market share opportunity in HBM turned out to be better than you guys are expecting, do you see a scenario where back-end capacity may limit the opportunity next year? And obviously, you have HBM taking away most of the CapEx dollars today, and you have higher DRAM gross margins than NAND. So it seems DRAM and HBM may continue to consume the majority of the CapEx next few quarters.

But do you see a scenario where you increase NAND CapEx this calendar year based on pricing action in that market, or are you at a point where you think it's still early to invest in NAND despite the improving profitability prospects of that market? Thank you.

Sumit Sadana (Chief Business Officer)

Yeah. I'll make a couple of comments, and then I'll also request Manish to jump in and talk about some of the items you mentioned. First, at a company level, our goal is to maintain our bit share in both DRAM and NAND at fairly consistent levels. We target flat, consistent overall bit share in both DRAM and NAND. It's not just one or the other, but both. We'll continue to invest in a very disciplined fashion with a close eye on how the demand is shaping up to ensure that our supply and our CapEx investments enable us ultimately to have that flat bit share. HBM is a very exciting product. We have an industry-leading product here, best performance specs, 30% lower power, a lot of customer demand, more customer demand than we know how to meet.

You have heard already in our prepared remarks and in the following Q&A that 2024 is sold out, 2025 overwhelming majority already allocated. We are going to obviously continue to be very focused on disciplined investments in CapEx, whether it's for HBM, whether it's for DRAM, whether it's for NAND, to ensure that our target of sometime in 2025 getting HBM share to be equal to our DRAM share, we get to that point. As regards to your comments about where some of the bottlenecks in HBM are, how we look at those things, I'll request Manish to comment on some of that.

Manish Bhatia (EVP of Global Operations)

Sure. So I think I want to start. I mean, HBM, our HBM3E, is an industry-leading product, Eddie. And one of the backbones of that is the fact that it's built on our 1-beta process. And we've had, I think, on this call 12 months ago, we probably talked to you about the fact that we had reached our sort of mature yield milestone on 1-beta so a year ago. So the fact that we're ramping HBM3E on a very mature, strong, industry-leading platform gives us a lot of confidence in our ability to build the HBM wafers. You're right that we are ramping our assembly and test capacity to be able to now that we've productized, we've begun production shipments.

We announced today that we started production shipments for our customer, and the ramp is on for us throughout this year and into next year. We've made really good progress on our yields and on our capacity. And the throughputs within that capacity, we feel very good about and feel good about being able to reach the targets that Sumit just talked about with regard to having our share of HBM match our share of overall DRAM capacity in bits sometime next year. In terms of your question on CapEx, just to Sumit's point, we make these decisions with regard to how much CapEx we'll spend in DRAM or NAND, both based on the demand that we see but also independently, right?

I think we'll be looking at the market for and the demand for DRAM across all the drivers, and then similarly looking at the market for NAND and trying to decide how much we would invest there to be able to meet the demand that we see in that market separately.

Speaker 13

Got it. Thank you, guys.

Operator (participant)

Thank you. One moment for our next question. Our next question is from Thomas O'Malley from Barclays. Your question, please.

Thomas O'Malley (Director and Research Analyst)

Hey guys. Thanks for looping me back in. I appreciate it. I have a little bit of connectivity issues here. But mine's a two-parter. One is, I think, capacity constraints was a common theme on the call that kept coming back up again. Could you talk about what is causing the capacity concern? Is it just the time it takes to put tools in your fabs in order to build HBM? Is it potentially a tool that you're unable to get? Just any kind of color on what is the limiting factor there and if there could be some potential upside if something were to go a bit better. And then the second part of the question is you obviously have a public announcement with NVIDIA.

Just given your capacity constraints, how should we be thinking about your ability to serve some of the other AI accelerator names in the market next year as well? Thank you very much.

Manish Bhatia (EVP of Global Operations)

So thanks, Tom, and welcome back. So I'll take the CapEx part, and then I'll let Sumit take the capacity part, and I'll let Sumit take the customer-related question. So really, there are three factors, I think, in terms of what's creating the supply tightness at leading-edge nodes. And two of them are common to DRAM and NAND, and then the last one is really unique to DRAM.

But the first one is that we, as well as the rest of the industry, have had significant capital reductions as we went through the downturn of the last 18 months. And so the lower basis of CapEx that we've had and I mentioned on the previous call, WFE for us is down fiscal 2024 over fiscal 2023. So those decisions and the timing of that certainly impact our supply on the leading-edge nodes.

It was done, obviously, as we have had very, very high inventory levels. So we're trying to make sure we time any increases in CapEx in line with inventories coming down. The second is this comment that we've been making, and we've been trying to be transparent, that we have undertaken a strategy to structurally reduce the wafer start capacity across both DRAM and NAND. We're doing that to be able to take some of that capacity and equipment and actually apply it to converting to these leading-edge nodes. It's a capital-efficient way to get the benefits of these new technologies.

These new technologies, in and of themselves, have lower costs, but they also have better performance, lower power. In particular, 1-beta, again, that's the building block for our HBM, has higher performance and lower power than others in the industry and certainly than our prior node.

But that structural reduction also reduces our capability overall on supply. Those two factors are common to DRAM and NAND. The third one, of course, is the trade ratio for HBM. As we increase the mix of HBM in our business and as HBM increases in penetration across the industry, this trade ratio of needing to start for HBM3E approximately 3 wafers in order to get the same number of bits as you would were you to be starting a 1 DDR5 wafer, this also weighs on the supply capacity for everyone in the industry, frankly. So that's sort of a little bit of a breakdown on sort of what's creating this. Of course, our levels of profitability are still below where they need to be, even with the results we reported.

Thomas O'Malley (Director and Research Analyst)

So we are trying to be disciplined and make sure that we're able to return good ROI on any increases in capital investment that there would be, say, in fiscal year 2025. Sumit, do you want to talk about?

Sumit Sadana (Chief Business Officer)

Yeah. Sure. I'll talk about the customer angle. We have been engaged with practically all of the key purchasers of HBM in the world. As you know, there aren't that many of them. There are just a handful who account for the substantial majority of the TAM for HBM. Our engagements relate to all of the product roadmap, certainly HBM3E, but also closely engaged on HBM4 and the full future developments that relate to that. Of course, on HBM3E, it is 8-high, 12-high, which, as we have mentioned, we have already shipped samples of 12-high as well for HBM3E. Now, we have made the announcement with NVIDIA, of course, but you know that we are in the early stages of a substantial capacity ramp in HBM3E. As we get to more capacity, you will hear about new customers.

Our goal is very clear that in 2025, we'll have a more diversified customer base for our HBM products. We are making great progress toward that with the allocation to customers for the substantial majority of our 2025 capacity. We are in really good shape and continuing discussions with the rest of the customers.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Mehdi Hosseini from Susquehanna International Group. Your question, please.

Mehdi Hosseini (Senior Equity Research Analyst)

Yes, sir. Thanks for taking my question. You guys have been talking about 2025 as becoming a record year. The team and Sanjay have consistently been talking about this for quite some time. What I want to follow up here is what happens to the overall margin profile? We understand that you may not be able to share with us a trajectory of a price increase. But when you think about what you're doing with the cost structure and the product mix, does that give confidence that perhaps on a gross margin, you can at least meet the prior peaks? And if you cannot confirm it, can you talk about the dynamics of the margin profile in the confines of a record year in 2025?

Mark Murphy (CFO)

Maybe I'll start, Mehdi, and Sumit, and Manish can continue, but you may want to go on mute, Mehdi. There we go. I tried to lay out on the general call or the main call the arc of gross margin over the next few quarters and then how that extends into next year. Price has been the dominant factor in the margin expansion over the last couple of quarters, including the second quarter of 19 points and then this increase in second to third quarter of 650 basis points. Price is the dominant factor. But increasingly, price, while it will continue to increase into 2025 and we believe through 2025, other factors will contribute to margin expansion.

Favorable mix effects through a number of value-added products that you heard about today, first and foremost, HBM, and then also just the resumption of more normal cost downs excluding this HBM effect because the period costs are coming off and the node transitions are occurring and so forth that drive those cost downs. So, we can't. We'll provide more specific gross margin guidance on 2025 on a future call. But those factors of increasing price, improving mix, cost competitiveness, those factors will contribute to margin expansion 2024 to 2025. I will comment a bit more on fourth quarter. We do expect bits to be up slightly for DRAM, third to fourth, somewhat for NAND. And then for the remainder of the quarters this calendar year, we would expect sort of flattish bit shipments but somewhat higher mix of NAND.

So I just think about that as you model gross margins the next quarters beyond third quarter. We do see, again, the improvement of stronger mix of leading-edge products and richer mix. And so we would expect in the fourth quarter to be somewhat above 30% on gross margin. And that includes, obviously, the effects of higher pricing. But keep in mind that higher NAND mix.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Chris Caso from Wolfe Research. Your question, please.

Chris Caso (Managing Director)

Yes, thanks. Good afternoon. The question is about some of the commitments that you spoke about on the call with respect to HBM. Could you go into a little more detail on that? It wasn't clear in the call whether those pricing and volume commitments extended into calendar 2025 as well. Obviously, as Sanjay said in the call, it's not something that's very usual. What's driving that? And does it have any effect in capacity planning in that, at least the HBM part of the business, you're getting better visibility as compared to normal?

Sumit Sadana (Chief Business Officer)

Yeah. I mean, we do have better visibility into HBM for a couple of reasons. Number one, the growth in the industry is pretty substantial. So the HBM TAM and overall opportunity is growing rapidly. And you've seen even earlier this week, the Blackwell GPU has 33% more HBM attached. And every new GPU that has been announced by NVIDIA has had, starting from A100, 40 GB of HBM to H100, 80 GB, H200, 144 GB, and now Blackwell at 192 GB. So there has been a substantial increase in HBM. And hence, the TAM is going up, and it gives us good visibility there. The other, perhaps even more important part is we are really feeling good about our HBM3E product. We spoke about the leadership capabilities of this product.

Not only does it have really high performance, but all of the testing that has been done with customers shows it has tremendous headroom on the performance side for even going beyond the rated specs. We have 30% benefit on power consumption. All of you know how much of an impact that makes on data centers from both an operating cost perspective as well as just having the constraints on power define the specs of the data center sometimes. These are really good capabilities. Because of that, we are seeing a lot of preferential demand from customers for our HBM3E product. In terms of the unusual nature that Sanjay mentioned, being in Q1 for the overwhelming majority of our 2025 capacity that we are intending to put in place to be allocated is a very unusual thing in our business.

We are not only able to have these agreements done with customers, but some of these have already included price being negotiated for 2025. Of course, 2024, volume and price is all done for the full year. In 2025, some of the agreements have price already done. The rest of it will be done, my expectation, is fairly soon. The other aspect I will mention is that these agreements tend to have more teeth in them, more stringent terms in terms of commitments from customers. So that's another positive. I think that's all consistent with longer lead times, more complex products, and also the very good capability that the Micron team has created with this product. All of this is a testimony to that.

Manish Bhatia (EVP of Global Operations)

And just to your point and just to your point, Chris, yes, I mean, having this much visibility certainly does help with supply planning and justifying the capital that we need to put in place. We talked about the margin structure for HBM3E being accretive already to DRAM. But the overall DRAM or overall company profitability is still not where we'd like it to be. So we're being very disciplined and careful, and investments we'll make for the rest of the business, but.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Karl Ackerman from BNP Paribas. Your question, please.

Karl Ackerman (Managing Director)

Yes. Thank you, gentlemen. I was hoping you could discuss which areas of the market you are seeing the strongest rebound in volume, both in the May quarter as well as the August quarter. Secondarily, do you see a stronger-than-expected recovery in pricing in DRAM excluding HBM than NAND over the next couple of quarters? Thank you very much.

Sumit Sadana (Chief Business Officer)

Yeah. So in terms of volume, I think if I may just zoom out a little bit, over the last couple of quarters, we had mentioned to you that our expectation was that PC OEMs and smartphone OEMs would be purchasing first because they were the first to go into a downturn. That is exactly what had happened. That's where the strength had been focused in the last few quarters. We had also mentioned to you that our expectation was that sometime in the first half of calendar 2024, data center will start getting normalized in terms of inventory, and more normal buying patterns would slowly return in the data center. Right on cue, we have seen in the last many weeks, last couple of months, upsides in data center from our customers. These upsides have served to tighten the market.

Of course, the PC volumes and the smartphone volumes expectations for calendar 2024 haven't really changed much in the last several months. They are pretty much very similar levels as what it was for end unit and sell-through of units. But data center is stronger. The traditional data center server sales are starting to improve. We are getting upsides on the DRAM side as well as on the data center SSD side. And we are also seeing, obviously, exceptionally strong demand coming from AI servers. And this AI server demand, of course, there is the HBM angle, which we have discussed ad nauseam, but very strong DDR5 demand. And our DDR5 has certainly far more demand than we have supply. So we are chasing supply there on very tight on the leading edge there.

Of course, the strength in the data center SSD is also very notable. A couple of data points that we shared in our prepared remarks that I just wanted to highlight to you. For example, robust growth in DRAM sequentially in the data center in FQ2, cloud revenue in FQ2 doubling, more than doubling sequentially. Data center SSD has been performing really well for us year-on-year, up over 100% in FQ2. We have been hitting new record share levels as our share of data center SSD continues to hit new peaks for the last several quarters. Based on all of this, I think the pricing has been in a good trajectory for both DRAM and NAND.

The strength in the data center has served to tighten the supply situation, supply-demand balance, which is pushing up pricing and having that ripple effect we mentioned across all segments. So that's how we look at it. Of course, some of the focus that you saw from us on CapEx, we haven't changed our view on CapEx. We remain very disciplined in our CapEx. We remain very disciplined in our supply planning. Our goal is to substantially improve our financial performance before we commit any more capital. That's the approach we are taking. You know that the lead times are very long in this business. You order a tool to expand capacity, 9+ months to get the tools, and then you get cycle time through the fab and through the backend.

Add another 5 months, you're looking at 14 months from the time you order tools to the time you get output. So that's really part of what was behind our expectation that we expect the pricing to continue to strengthen through calendar 2024.

Karl Ackerman (Managing Director)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question, please.

Aaron Rakers (Managing Director)

Yeah. Thanks for doing the follow-up call. I guess my one question, and I'll leave it at that, is just as you see the fundamental improvement in the business and clearly a path that appears to be sustainable free cash flow. Mark, I'm just curious how you're thinking about capital return. It's been a while since we've got to talk about share repurchase, but just curious of how you think about share repurchase activity as the model moves forward and looking out over the next couple of quarters. Thank you.

Mark Murphy (CFO)

Yeah. It's a good question to think about, Aaron. As you say, we're pleased with the improved profitability outlook and also the continued working capital performance, CapEx discipline that Sumit was talking about. So pleased to be near break-even free cash flow. And then as you heard in the call today, expect free cash flow generation third quarter and fourth. The balance sheet remains the highest priority, and fortunately, it's in great shape. We've still got very high liquidity, which we maintained through the downturn. I'll note our leverage has peaked prior quarter and has started coming down this last quarter. And it's always been low on a net basis, but again, we're in a great spot there and, of course, have absolute commitment to investment grade.

Over time, as the free cash flow generation strengthens, as we said in our Investor day, we intend over time to grow the dividend and then return excess cash to shareholders. So we're very much consistent with what we said in Investor day, and we'll be in a position at some point to make those decisions.

Aaron Rakers (Managing Director)

Mark, is there a liquidity level that you kind of think about or excess cash level you kind of think about?

Mark Murphy (CFO)

We've put out there at Investor Day, we have this 35% of sales, but I'd say we have more than ample liquidity now. And again, it improves steadily from we maintain high liquidity through the downturn. Obviously, the outlook's been improving, and we're in the mode of generating free cash. And we'll just take in a number of factors as we go forward, but nothing's changed from our commitments we laid out Investor Day.

Aaron Rakers (Managing Director)

Fair enough. Thanks, Mark.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Timothy Arcuri from UBS. Your question, please.

Timothy Arcuri (Managing Director)

Thanks. Mark, inventory was up. I kind of expected it to come down. I think you also thought that it would probably come down a little bit. And I know you said finished goods are down. So I guess is that WIP that's up? And I assume it's mostly related to the HBM ramp. Can you kind of talk about that?

Mark Murphy (CFO)

Yeah. You've hit on some of the things already. I mean, in the end, listen, it was around where we thought it would be. It's if you adjust for the low-cost inventory that was in there, we were actually down on dollars and DIO. So I think inventories continue to track as consistent with what we thought. And importantly, we still see them going down on a DIO basis through 2024 and into 2025.

We think we'll be in a real good position relative to our target levels by end of 2025. So again, completely in control and things happening there as we expect. We're extremely tight on leading edge. In fact, a decent amount of what sold out in finished goods was DDR4. And then as you talk about what's building in WIP, a sizable part of that is HBM and some other leading-edge products.

So again, in control, kind of what's happening in inventory is what we would like to be happening. At a macro level, it's going down. At a more tactical level, it's mixing as we need for the business and feel good about it.

Manish Bhatia (EVP of Global Operations)

Yeah. I'll just add it's not just HBM, but as we transition the portfolio to higher-value products, Tim, right, so data center SSDs and other good example, these higher-value products are system-level products. They do have longer cycle time, and so there will be sort of a lengthening of the supply chain for that just as we gain more traction. Sumit talked about how we're doing it, how well we're doing in data center SSDs and how bright our future looks there. HBM, also longer cycle time in assembly and test as well. So that will be something.

But at the same time, we're definitely focused on across the board trying to make sure that as we kind of have this longer-term visibility from our customers with them committing to demand with longer lead times and as part of these LTAs, obviously, that gives us the ability to be able to be more lean as we do run things through the supply chain. So that's why Mark and I are confident that we're going to gradually be working down inventory as we go through the next few quarters.

Timothy Arcuri (Managing Director)

Got it. Okay. Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Nicholas Doyle from Needham. Your question, please.

Quinn Bolton (Senior Analyst)

Hey, guys. I'm Quinn Bolton. Thanks for letting me ask the question. On the call, you talked about total industry server unit shipments growing mid to high single digits. In calendar 2024, I think that's in line with consensus. Can you expand on the quarterly trajectory given your customer conversations? Do you see a significant ramp in the second half, or is it more stable through the year? Maybe traditional CPU coming back drives a second-half acceleration. And any thoughts on how you're thinking about 2025 server units would be helpful. Thanks.

Sumit Sadana (Chief Business Officer)

Yeah. In terms of the server units, the first quarter was not great. First calendar quarter 2024 was not great for traditional servers, but we started to see some of that demand starting to come back late in the first quarter. So we do think that Q2, it improves from Q1 sequentially, and then second half of the calendar year stronger than the first half. And it helps that the economy seems to have better footing as well. Most of the concerns around recession, etc., that were there last year have abated. And so the traditional server demand is starting to improve. AI servers are exceptionally strong. Our view is it is more supply-limited in terms of how much AI servers can ship. But the demand for traditional servers should continue to improve through the calendar year.

With 2025, we have an optimistic view that 2025 will be the first year in several years when the data center will be buying robustly for the full year because if you think about 2024, it's still more of the first half is when the inventory normalizes sometime in the first half of calendar 2024. So the buying patterns would be starting to get normal only in the second half of 2024. So 2025 is the first full year in a while for data center to come back, both the traditional data center purchases as well as continuing robust ramp of AI servers in 2025. So we expect 2025 to be a very strong year for the data center overall across both DRAM and NAND and across both AI servers and traditional servers.

Timothy Arcuri (Managing Director)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Brian Chin from Stifel. Your question, please.

Brian Chin (Director)

Hi there. Thanks for taking the question. Maybe I'll kind of ask a little bit about cost roadmap here. Regarding the DRAM wafer conversion loss, can you touch on how we went from, I think, a 2:1 ratio to an even more severe 3:1? And also, if the die size is 3X, is cost also 3X, or what's a better way to look at that? And then just the second part to that, what happens to cost down when you start ramping 1-gamma? And is it likely that we won't see our 1-gamma qualified for HBM until HBM4?

Manish Bhatia (EVP of Global Operations)

Okay. So Brian, a couple of questions there. Let me start with the last one first, which is that we're not really commenting on HBM4 yet. We feel good about 1-gamma overall. 1-gamma is on track.

We may have some comments in the script around it coming to market for us in calendar year 2025 and starting to ramp supply of that in calendar year 2025, and it's making good progress. In terms of your question about how we went how the trade ratio for HBM3E, how we arrived at 3, I think we've always said it was more than 2, and I think we're just kind of providing more color on where we're seeing it landing now. There are a few different factors there in that trade ratio. One is the die size between the HBM die and a standard DDR5 die. The second is the yield trade-offs that are there in trying to be able to deliver a high-performance product with such a high die stack and, in particular, a complex assembly and test process.

And then the third is the fact that we now have a logic interface wafer that we need to produce as well, which also takes DRAM capacity. So we're including all of those in our trade ratio, and we do believe that this is similar for us with everyone else in the industry because the HBM die is standard across the industry based on the JEDEC standard. And keep in mind that even with what we've talked about today, for us, as we're starting to ship production revenue this quarter, it's already margin accretive versus the rest of DRAM. So we are getting a pricing premium for the higher cost that we're incurring to build the HBM product.

Mark Murphy (CFO)

Maybe Brian, on that question, maybe just some housekeeping on cost downs. We do, as we mentioned on the call, that the FY 2024 front-end cost ex-HBM, as we've said many times, is mid- to high single digits for DRAM and then NAND low double digits, cost down for NAND. So FY 2024 all-in for DRAM, we would expect it to be similar. But what we're seeing is the benefit from this period cost and all these inefficiencies coming off is helping offset the HBM mix initially. Now, eventually, that HBM mix is sequentially going to become, you're not going to have that favorability associated with the period cost rolling off. You're going to have increasing volume of HBM, so you're going to see that, again, dampen cost downs and contribute to cost. But as Manish said, good trade given the favorability of that product.

Brian Chin (Director)

Mark, when you said the all-in for DRAM, you mean front-end and back-end all-in for the year be a similar range to what we said the front-end mid to high single-digit range is?

Mark Murphy (CFO)

Correct.

Manish Bhatia (EVP of Global Operations)

Obviously, the including HBM cost would be somewhat lower.

Mark Murphy (CFO)

And then on NAND, I mean, a little lower on NAND all-in, as Manish said, considering all the components and back-end, it would be high single digits cost downs for FY 2024 because we've got larger components, as I said, HBM stacks. Again, premium products and good trade on that incremental cost. I think as we look out to 2025, we're obviously forecasting HBM to ramp in 2025, fiscal 2025, so that would impact cost downs in DRAM. And then likewise in NAND, you're still going to see this SSD mix and other things would, again, would be dampening cost-down effects. But again, it's a value-added mix rate.

Brian Chin (Director)

All right. Great. Thanks, Mark. Thanks, Manish.

Operator (participant)

Thank you. This does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.