Micron Technology(US:MU)2025-12-17 22:32Financial Data and Key Metrics Changes - Micron reported fiscal Q1 revenue of $13.6 billion, up 21% sequentially and 57% year over year, marking a quarterly record for the third consecutive quarter [21] - DRAM revenue reached a record $10.8 billion, up 69% year over year and representing 79% of total revenue, with a sequential increase of 20% [21] - NAND revenue was a record $2.7 billion, up 22% year over year and representing 20% of total revenue, with a sequential increase of 22% [22] - Consolidated gross margin for fiscal Q1 was 56.8%, up 11 percentage points sequentially, driven by higher pricing and strong cost execution [22] - Non-GAAP diluted EPS for fiscal Q1 was $4.78, reflecting 58% sequential growth and 167% year-over-year growth [24] Business Line Data and Key Metrics Changes - Cloud Memory Business Unit (CMBU) revenue was a record $5.3 billion, up 16% sequentially, representing 39% of total revenue [22] - Core Data Center Business Unit (CDBU) revenue reached a record $2.4 billion, up 51% sequentially, representing 17% of total revenue [23] - Mobile and Client Business Unit (MCBU) revenue was a record $4.3 billion, up 13% sequentially, representing 31% of total revenue [23] - Automotive and Embedded Business Unit (AEBU) revenue was a record $1.7 billion, up 20% sequentially, representing 13% of total revenue [23] Market Data and Key Metrics Changes - Server unit demand is expected to grow in the high teens percentage range for calendar 2025, higher than previous expectations [10] - PC unit sales are forecasted to grow in the high single-digit percentage range in calendar 2025, above prior expectations [12] - Smartphone unit volumes are on track to grow in the low single-digit percentage range for calendar 2025 [13] - The aggregate industry supply is expected to remain substantially short of demand for the foreseeable future, with DRAM and NAND bit demand growth expectations revised higher [16][17] Company Strategy and Development Direction - Micron is focused on maximizing production output and ramping industry-leading technology nodes while investing in new cleanroom space to enhance supply capability [7] - The company anticipates substantial new records in revenue, gross margin, EPS, and free cash flow for both the second quarter and the full fiscal year 2026 [7] - Micron plans to increase fiscal 2026 CapEx to approximately $20 billion, primarily to support HBM supply capability and 1-gamma supply [17][18] Management's Comments on Operating Environment and Future Outlook - Management highlighted that AI-driven demand is accelerating, with strong year-over-year growth expected in HBM revenue [31] - The company expects tight supply-demand conditions to persist beyond 2026, with significant investments being made to address this [16][29] - Management expressed confidence in Micron's competitive position, driven by technology leadership and a differentiated product portfolio [7][8] Other Important Information - Micron generated record free cash flow of $3.9 billion in fiscal Q1, exceeding the previous record from fiscal Q4 2018 by over 20% [25] - The company reduced debt by $2.7 billion during the quarter, closing with $11.8 billion of debt and a net cash balance over $250 million [26] - Over 80% of Micron's professional workforce actively uses GenAI, significantly enhancing productivity across various functions [27] Q&A Session All Questions and Answers Question: Can you talk about the nature of the long-term agreements (LTAs) with customers? - Management indicated that these are multi-year contracts involving DRAM and NAND, with stronger contract structures compared to prior agreements [34] Question: Can you discuss the increase in CapEx and its implications? - Management confirmed that CapEx is increasing to support DRAM and HBM supply, emphasizing a disciplined approach to capital spending [51][56] Question: How is Micron managing the tight supply environment? - Management noted that they are working to maximize production efficiencies and are focused on technology transitions to support supply growth [56][59] Question: What is the outlook for gross margins moving forward? - Management expects gross margins to expand gradually beyond fiscal Q2, driven by favorable market conditions and cost execution [92] Question: How is Micron positioned in the HBM market? - Management expressed confidence in their competitive position, highlighting strong performance and low power consumption of their HBM products [78][81]