Summary of Micron Technology Inc. (MU) Conference Call Company Overview - **Company**: Micron Technology Inc. (MU) - **Industry**: Semiconductors Key Points 1. HBM Revenue Growth - Micron plans to grow High Bandwidth Memory (HBM) revenue from several hundred million dollars in FY2024 to multiple billions in FY2025, aiming for a market share in HBM comparable to its overall DRAM position by the end of CY2025 [7][4][2] 2. HBM Margins and Pricing - HBM margins are expected to exceed overall DRAM and corporate gross margins for the foreseeable future, with strong visibility into HBM volumes and pricing through CY2025 based on current long-term agreements (LTAs) [1][7][4] 3. DRAM Supply and Demand Dynamics - Overall DRAM supply/demand is anticipated to remain tight through CY2024 and into CY2025, supported by the transition to HBM and prudent supply-side actions within the industry [1][8][4] 4. Data Center Inventory Improvement - Data Center inventories, particularly related to traditional computing, have improved over recent quarters, while inventories for PCs and smartphones show mixed results due to customer stockpiling in anticipation of price increases [4][8] 5. AI-Enabled Devices Demand - The proliferation of AI at the edge is seen as a potential tailwind for future demand growth, particularly for AI-enabled PCs and smartphones, which require higher DRAM content (12GB for smartphones and 16GB for PCs) [4][8] 6. HBM Visibility and Customer Negotiations - Micron has established LTAs that fix HBM pricing and volume through CY2025, with negotiations already underway for CY2026 capacity [7][4] 7. Data Center SSD Growth - Data Center SSD revenue increased over 100% year-over-year, with strong demand noted, especially for high-capacity solutions (e.g., 30TB). This segment is highlighted as the most profitable within Micron's NAND portfolio [8][4] 8. Risks and Valuation - The 12-month price target for Micron is set at $122, based on an 18x normalized EPS estimate of $6.80. Key risks include weaker-than-expected demand for servers, smartphones, and PCs, as well as potential supply discipline issues among competitors [9][4] 9. Power Consumption Advantage - Micron's demonstrated power advantage, with 30% lower power consumption, has been crucial in gaining customer traction in the HBM market [7][4] Additional Insights - The transition to HBM is expected to consume three times the number of wafers on a per-bit basis compared to conventional DDR5, contributing to the tight supply/demand environment in the overall DRAM market [8][4] - The company is focusing on resource allocation towards the most profitable segments, particularly in Data Center SSDs, indicating a strategic shift towards high-margin products [8][4]

30 May 2024 | 9:45PM EDT 17% of total revenue). Organically, the Total System Solution approach continues to be at the core of the company's strategy, while management also remains open to tuck-in deals as evidenced by the recent acquisition of Neuronix AI Labs. Management expects pricing to return to more historical patterns (i.e. flat to slightly down) over the medium- to long-term, but does not expect absolute pricing to revert to pre-pandemic levels given elevated depreciation costs across the industry. ...

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