Micron Technology, Inc. (MU) Presents at Deutsche Bank Technology Conference Transcript

Micron Technology, Inc. (NASDAQ:MU) Deutsche Bank Technology Conference August 28, 2024 Industry and Company - Industry: Semiconductor, specifically DRAM and NAND memory - Company: Micron Technology, Inc. Key Points and Arguments 1. Near-term Trends and Market Demand - Data Center: Robust demand trends for DRAM and NAND products, driven by AI and traditional servers. - Smartphone and PC Markets: Stable sell-through, with inventory build-up due to pricing trends, strong data center demand, and AI content growth. - Consumer Retail Channels, Industrial, Automotive: Relatively weaker demand, but long-term trends remain strong in industrial and automotive markets. - Fiscal Q1 2025: Bit shipments expected to be flattish to slightly up compared to Fiscal Q4 2024, with gross margins strengthening sequentially. - 2025: Substantial revenue growth and robust profitability expected due to AI and tight supply environment. 2. HBM (High Bandwidth Memory) - Market Growth: HBM market expected to grow from 1.5% of industry bits in 2023 to around 6% in 2025, with a TAM of over $25 billion. - Micron's Position: Well-positioned with HBM products, aiming to reach HBM share in line with DRAM share by 2025. - Technology Advantage: HBM3E offers 30% lower power consumption compared to competitors, driven by advanced DRAM technology and packaging technology. - Manufacturing Challenges: HBM3E requires three times as many wafers as standard products, with increased yield challenges in assembly and testing. - Customization: Micron is working on HBM4E solutions that enable customer logic integration, providing greater value to customers. 3. DRAM and NAND - Industry Growth: DRAM industry expected to grow in the mid-teens over time, with HBM contributing to this growth. - AI Impact: AI will have a positive impact on all major end markets, driving demand for memory. - Edge Devices: AI-enabled smartphones and PCs will require more memory content, with NAND storage content also increasing. 4. Profitability - HBM: HBM is accretive to gross margins, with a 3:1 trade ratio contributing to pricing dynamics in the rest of the business. - DRAM Margins: Micron expects core DRAM margins to improve as well, with pricing environments remaining tight. 5. Capital Expenditure (CapEx) - Fiscal 2025: CapEx expected to increase meaningfully compared to Fiscal 2024, with a focus on construction CapEx and HBM assembly capacity CapEx. - Capacity Needs: New capacity will be required to meet AI demand through the decade, with construction CapEx addressing these needs. - Supply-Demand Discipline: Micron remains focused on maintaining supply-demand discipline and maintaining overall bit share of DRAM and NAND.