Micron Technology(US:MU)2025-09-23 23:00Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, the highest since mid-fiscal 2022, with operating margins also at their highest since November 2018 [32][33] - The company expects gross margins to improve further in the second quarter relative to the first quarter [33] Business Line Data and Key Metrics Changes - The NAND business is experiencing improved conditions, with expectations for tighter supply and increased demand driven by AI server deployments [6][7] - The DRAM segment is currently tight and expected to tighten further in 2026, contributing to improved pricing and margins [29][32] Market Data and Key Metrics Changes - The demand for high-capacity SSDs is increasing, with average capacities expected to escalate rapidly, particularly in AI servers [44] - The company anticipates significant growth in the data center segment, which has become a larger part of the total addressable market (TAM) and is driving overall profitability [54][55] Company Strategy and Development Direction - The company is focusing on enhancing its data center SSD business and has decided to exit the managed NAND market to improve overall ROI [9][71] - The strategy includes leveraging new product announcements and maintaining a strong competitive position in the data center SSD market [7][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for NAND and DRAM products, particularly due to the needs of hyperscalers for AI applications [6][7] - The company is optimistic about its ability to capture market share in HBM and expects to see higher share in HBM compared to previous years [13][18] Other Important Information - The company is investing significantly in DRAM construction and equipment, with CAPEX guidance increasing from approximately $13.8 billion in 2025 to about $18 billion in 2026, primarily for DRAM [11][19] - The company is ramping up production of one-gamma DRAM, which is expected to be the primary source of bit growth for fiscal 2026 [36] Q&A Session Summary Question: State of the NAND industry and pricing outlook - Management indicated that the bits down in the current quarter are noise based on segment mix and that demand from hyperscalers will drive NAND industry improvement [6][7] Question: HBM market share aspirations - The company expects to gain market share in HBM and is confident in its competitive positioning for HBM4, anticipating higher share compared to HBM3 [13][18] Question: CAPEX guidance and spending allocation - The majority of the increased CAPEX is directed towards DRAM construction and equipment, with minimal additional NAND spending [11][19] Question: DRAM revenue breakdown and margin contributions - Management clarified that while they do not provide specific margin comparisons, they expect tightening in the DRAM market to improve pricing and margins across the portfolio [29][32] Question: Long-term agreements with customers - There is interest in long-term agreements, but management is being cautious due to various market factors, including U.S. manufacturing and tariff implications [69][70] Question: Impact of exiting managed NAND on smartphone customers - Management confirmed that while customers may not be pleased with the exit from managed NAND, the strong relationship in DRAM remains intact [75]