Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, the highest since mid-fiscal 2022, with DRAM margins also higher than that period [42][43][44] - The operating margin is the highest since November 2018, indicating improved market conditions and pricing [42][43] Business Line Data and Key Metrics Changes - The NAND business is improving, with a focus on higher-value SSD products, although it remains below 2022 levels [42][43] - The company is transitioning from $13.8 billion in net CAPEX in 2025 to approximately $18 billion in 2026, primarily for DRAM construction and equipment [12][13] Market Data and Key Metrics Changes - The demand for NAND SSDs in servers and data centers is expected to increase significantly in calendar 2026, driven by large hyperscalers needing more storage for AI deployments [8][9] - The DRAM market is currently tight, with expectations for further tightening due to robust demand and limited supply growth [40][42] Company Strategy and Development Direction - The company is focusing on the data center market, having exited the managed NAND segment to concentrate resources on higher ROI areas [11][86] - The strategy includes leveraging new product announcements and maintaining a strong competitive position in the data center SSD market [9][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the NAND industry's improvement, particularly with the expected increase in demand from AI server deployments [8][9] - The company anticipates that the HBM business will have a higher ROI compared to non-HBM DRAM, with expectations of increased market share in HBM by 2026 [17][20] Other Important Information - The company is ramping up one-gamma DRAM production, which is expected to be the primary source of bit growth for fiscal 2026 [47] - The company is also preparing for the introduction of high-capacity SSDs, with average capacities expected to escalate rapidly [55] Q&A Session Summary Question: State of the NAND industry and pricing expectations - Management indicated that bits down in the current quarter are noise based on segment mix, and they expect demand from hyperscalers to drive improvements in the NAND industry [8][9] Question: HBM market share aspirations - The company expects to gain higher market share in HBM compared to previous years, with a focus on ROI and disciplined investments [17][20] Question: CAPEX guidance and spending allocation - The majority of the increased CAPEX is directed towards DRAM construction and equipment, with limited additional NAND spending [12][13] Question: DRAM and HBM gross margins - Management noted that HBM margins are expected to remain higher than non-HBM DRAM, with stable ROI from long-term contracts [19][20] Question: Long-term agreements with clients - There is interest in long-term agreements, but the company is being cautious due to market dynamics and potential tariff impacts [83][84] Question: Impact of exiting managed NAND on DRAM sales - The company maintains strong relationships with smartphone customers, ensuring that exiting managed NAND does not negatively impact DRAM sales [89]

Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, the highest since mid-fiscal 2022, with DRAM margins also higher than that period [42][44] - The operating margin is the highest since November 2018, indicating improved market conditions and pricing [42][44] - CapEx guidance increased from $13.8 billion in 2025 to approximately $18 billion in 2026, primarily for DRAM construction and equipment [13][14] Business Line Data and Key Metrics Changes - The NAND business is expected to improve due to increased demand from hyperscalers for AI server deployments, despite a current decrease in bits [8][9] - The company is focusing on data center SSDs, having exited the managed NAND segment to concentrate resources on higher ROI areas [11][85] - HBM (High Bandwidth Memory) is expected to gain market share, with aspirations to exceed previous levels due to strong product performance [17][24] Market Data and Key Metrics Changes - The demand for NAND SSDs in data centers is projected to increase significantly in calendar 2026, driven by shortages in HDDs [8][9] - The DRAM market is currently tight, with expectations for further tightening in 2026 due to robust demand and limited supply growth [40][44] - The average capacities for SSDs in AI servers are expected to escalate rapidly, with new high-capacity drives being introduced [55][57] Company Strategy and Development Direction - The company aims to leverage its strong position in the data center SSD market and has announced new product launches to enhance its competitive edge [9][24] - There is a strategic focus on high-value segments such as HBM and high-capacity DIMMs, which are expected to drive significant revenue growth [65][66] - The company is being thoughtful about long-term agreements with customers, considering the evolving landscape and potential tariff impacts [82][83] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving NAND industry conditions and the tightness in the DRAM market, which is expected to enhance pricing and margins [9][40] - The company anticipates that the HBM business will continue to provide high ROI due to its unique product capabilities and customer demand [20][49] - Management highlighted the importance of adapting to the evolving AI market and the need for diverse memory solutions to meet various workloads [72][73] Other Important Information - The company is ramping up its one-gamma DRAM production, which is expected to be a significant contributor to bit growth in fiscal 2026 [47][48] - The company has achieved significant improvements in HBM3E yields and is well-positioned for the HBM4 market [61][62] - The exit from the managed NAND segment is part of a broader strategy to focus on areas with higher profitability potential [85][86] Q&A Session Summary Question: Current state of the NAND industry and pricing outlook - Management indicated that the current quarter's bit decrease is noise and that demand from hyperscalers will drive future growth in NAND [8][9] Question: CapEx guidance clarification - The company confirmed that the increase in CapEx is primarily for DRAM construction and equipment, with minimal additional NAND spending [13][14] Question: HBM market share aspirations - Management expects to gain higher market share in HBM compared to previous years, driven by strong product performance and customer demand [17][24] Question: DRAM and HBM margin comparisons - Management stated that while HBM margins are stable, the overall DRAM portfolio is expected to tighten and improve margins as demand increases [40][49] Question: Long-term agreements with customers - The company is exploring long-term agreements but is cautious about pricing and value creation in light of market changes [82][83] Question: Impact of exiting managed NAND on DRAM sales - Management reassured that exiting managed NAND would not negatively impact DRAM sales, maintaining strong relationships with customers [88][89]