Micron Technology(MU)2024-12-19 01:35Financial Data and Key Metrics - Gross margin declined by 100 basis points in Q2, primarily due to NAND-related challenges, including pricing and lower shipments [8] - DRAM pricing is expected to improve sequentially in Q2, driven by positive mix impacts, HVM, and server DRAM, partially offset by weak commodity pricing [8] - Data center revenue remains robust, with a 40% sequential growth in F Q1 and over 50% of total revenue now coming from the data center segment [34] Business Line Data and Key Metrics - Data center SSD business has seen significant growth, with market share increasing from 3-5% in 2021 to 10-12% by the end of last year, and further to 14% in Q3 [14] - The company expects a restart of bit shipment growth for data center SSD in F Q3, driven by strong data center CapEx from end customers [17] - HBM growth continues on a strong trajectory, with the company expecting to reach its natural bit share in the second half of calendar 2025 [113] Market Data and Key Metrics - The company anticipates a delay in the PC refresh cycle, with flat year-over-year PC shipment forecasts for calendar 2024 [40] - Inventories are expected to improve by spring, with a resumption of shipment growth in both DRAM and NAND starting in F Q3 [45] - DRAM supply remains tight, with HBM continuing to pressure non-HBM availability [47] Company Strategy and Industry Competition - The company is focusing on high-margin products like HBM, high-capacity DIMMs, and LPDRAM, which are expected to support margin expansion beyond Q3 [25] - Micron is the pioneering memory supplier for LP in the data center, with significant innovations in reliability, availability, and serviceability for data center environments [30] - The company is reducing NAND wafer starts to align supply with demand, while maintaining DRAM bit growth in line with industry demand [66] Management Commentary on Operating Environment and Future Outlook - Management highlighted near-term challenges, including seasonality and NAND-related issues, but remains optimistic about the long-term growth trajectory of the data center segment [11] - The company expects a strong ramp in HBM revenue, with a 30 billion-plus TAM for calendar 2025, and is working to increase capacity to meet demand [112] - The delay in the PC refresh cycle is seen as temporary, with a recovery expected in 2025, driven by higher memory content in PCs [40] Other Important Information - The company is investing heavily in HBM-related CapEx, which is the largest portion of its capital expenditure for the fiscal year [60] - DRAM inventories are expected to be below target levels by the end of the fiscal year, while NAND inventories will improve sequentially through the year [27] Q&A Session Summary Question: What is driving the decline in gross margin in Q2? - The decline is primarily due to NAND-related challenges, including pricing and lower shipments, with DRAM pricing expected to improve sequentially [8][9] Question: What is the outlook for data center SSD growth? - The company expects a restart of bit shipment growth in F Q3, driven by strong data center CapEx from end customers [17] Question: How is the company managing NAND supply? - The company is reducing NAND wafer starts to align supply with demand, while maintaining DRAM bit growth in line with industry demand [66] Question: What is the outlook for HBM growth? - The company expects a strong ramp in HBM revenue, with a 30 billion-plus TAM for calendar 2025, and is working to increase capacity to meet demand [112] Question: How is the company addressing inventory levels? - Inventories are expected to improve by spring, with a resumption of shipment growth in both DRAM and NAND starting in F Q3 [45]